Hospital systems tap into tax credits to implement sustainable initiatives

The healthcare industry isn’t exactly known for being the greenest, with some data suggesting the sector contributes to 4.4% of the world’s greenhouse gas (GHG) emissions—particularly in the US, which produces 546 million metric tons of carbon dioxide, making up about 7.6% of the country’s total carbon output, according to a September 2019 study.

But with federal funds from the Inflation Reduction Act (IRA), some hospital systems are able to make green moves while benefiting from tax breaks, Modern Healthcare reported.

Though hospital systems seem to be financially going through it lately (see Steward Health Care), IRA tax credits can cover up to 30% of “qualifying investments in wind, solar, energy storage, and other renewable energy projects,” according to the Department of Treasury, with additional benefits available for systems in low-income areas or those that use clean energy materials manufactured in the US. These funds can be further bundled with state or federal grants, according to Modern Healthcare, and are used for everything from implementing solar energy to setting up electric vehicle charging stations in parking lots and switching to more eco-friendly lighting.

A spokesperson from the Department of Health and Human Services (HHS) told Modern Healthcare that the federal government has seen increased interest from healthcare providers about how to leverage their tax credits for energy-related projects.

The department also shared two case studies in June about how nonprofit systems Boston Medical Center and OhioHealth tapped into the IRA as a way to “offer health organizations in similar situations a road map to use the IRA to serve their core mission, reduce climate-related health impacts, and advance health equity.”

Making strides. Some hospital systems have been able to cut hundreds of thousands to tens of millions of dollars in costs by switching to renewable energy sources and leaning into green initiatives.

In 2018, Oakland, California-based Kaiser Permanente partnered with the California Energy Commission to install a 250-kilowatt solar panel microgrid at its hospital in Richmond, California, allowing for up to three hours of emergency electricity if the power goes out, Rame Hemstreet, the health system’s chief energy officer, told MedCity News in May.

Since that first installation, the system has expanded solar power to more than 100 of its hospitals and medical office buildings, including a building in West Oahu, Hawaii, that reportedly pulls three-quarters of its power from a microgrid, reducing electricity costs by $100,000 a year and cutting greenhouse gas emissions by approximately 400 tons per year, Hemstreet told the outlet.

Florida-based AdventHealth is also reportedly working on a solar project with a local developer to install 7,500 panels on its main campus in Orlando, cutting its traditional electricity use by one-third and saving the system an anticipated $20 million, Director of Environmental Sustainability John Culver told MedCity News.

The outlet also reported that AdventHealth is collaborating with Scout Clean Energy to funnel electricity to its hospitals through the renewable energy developer’s 14,000-acre wind farm. Culver told MedCity News that the system aims to have both projects live by 2026.

And these sustainable initiatives can also be internally focused, such as New Jersey-based Hackensack Meridian Health’s initiatives to reduce its carbon output through measures like switching to LED lighting and better toilet flushing, Chief Growth Officer Jose Lozano told MedCity News.

In April, the system also partnered with infrastructure firm Bernhard on a 30-year solar and energy battery project, bringing 50,000 solar panels to its 18 hospitals, according to MedCity News. Hackensack Meridian has put $134 million into the project so far, with about $50 million covered by IRA tax credits, Lozano told the outlet.