Glossary for the Sustainability Roadmap for Health Care

Understand the basics of health care sustainability starting with this glossary of terms.

Sustainability Roadmap for Health Care
Sustainability for Health Care Facilities Glossary
    • The point at which an asset is no longer practical, reliable, safe, or cost-effective to maintain due to age, declining performance, increasing repair costs, obsolete technology, unavailable replacement parts, or loss of manufacturer support. End of Life indicates that replacement planning should begin.

    Example: 20-year-old HVAC Unit has increasing failure rates, replacement parts are no longer available, and the manufacturer has discontinued technical support. The Engineering Department classifies the equipment as End of Life and recommends replacement through the capital equipment planning process.

    • Credits purchased from low- or zero-emissions electricity providers by paying for emissions reductions.
    • A measure of the carbon dioxide equivalents emitted by an organization, individual or country due to the consumption of fossil fuels.
    • The removal of more carbon dioxide equivalents than those produced.
    • A status achieved when an organization’s carbon dioxide equivalent emissions are equal to the amount removed from the atmosphere, either through that organization’s efforts or offset to make overall emissions zero.
    • In addition to energy consumption (scope 1 and 2 emissions), carbon neutrality includes emissions beyond the entity's direct control (scope 3 emissions).
    • The production of sustainable energy to counterbalance the use of fossil fuels.
    • A state wherein carbon dioxide equivalent emissions are not being produced.
    • The prevention of future expenses through proactive maintenance, repairs, upgrades, or operational improvements that eliminate or reduce the likelihood of higher costs, equipment failures, or service disruptions. Cost avoidance represents costs that were prevented rather than expenses that were reduced after they occurred.

    Example: During preventive maintenance, a technician identifies worn bearings in an operating room air handling unit and replaces them for $600. The repair prevents a motor failure that would have cost $12,000 in emergency repairs and caused operating room downtime. Cost Avoidance = Approximately $11,400 plus avoided clinical disruption.

    • The minimum rate of return an organization must earn on an investment to justify using its financial resources. It represents the cost of obtaining funds through debt, equity, or internal capital and is often used as the hurdle rate when evaluating projects.

    Example: A hospital is considering a $2 million chiller replacement. If the project's expected return is 8% and the hospital's cost of capital is 6%, the project creates value and is more likely to be approved.

    • The effort to reduce greenhouse gases emissions and integrated into strategies and planning.
    • The process to phase out carbon dioxide equivalent emissions, in the form of both operational and embodied carbon.
    • Encompasses removing carbon from the process chain as well as carbon released from producing building materials.
    • The postponement of the replacement or major renewal of assets that have reached or exceeded their expected useful life, despite being appropriately maintained. “Deferred Maintenance” is often mistakenly used in the place of “Deferred Capital Renewal”, when in fact the maintenance has been completed but the equipment has not been funded for replacement as part of life cycle planning.

    Example: A 30-year-old chiller continues to receive regular preventive maintenance and remains operational, but replacement funding has been deferred. As a result, the hospital faces increasing repair costs, reduced reliability, and a greater risk of an unplanned outage.

    • The postponement of required maintenance, repairs, inspections, or corrective actions that are necessary to keep an asset operating as intended. “Deferred Maintenance” is often mistakenly used in the place of “Deferred Capital Renewal”, when in fact the maintenance has been completed but the equipment has not been funded for replacement as part of life cycle planning.

    Example: Scheduled bearing replacements on an air handling unit are repeatedly postponed, leading to increased vibration, reduced efficiency, and a higher likelihood of equipment failure.

    • The percentage used to convert future cash flows into today’s value, reflecting the time value of money.

    Example: $10,000 saved each year for 5 years is worth about $40,000 today at an 8% discount rate instead of $50,000 nominal.

    • The process of replacing technologies that use fossil fuels with technologies that use electricity as a source of energy.
    • The greenhouse gas emissions associated with the manufacturing, transportation, installation, maintenance and disposal of purchased products/materials.
    • Includes indirect emissions, such as construction materials.
    • A financing and service model that allows an organization to modernize infrastructure, reduce energy consumption, improve resiliency, and address deferred capital renewal without requiring significant upfront capital investment. The cost of the improvements is repaid over time through a combination of energy savings, operational savings, avoided maintenance costs, and service payments.

    Example: A hospital has aging chillers and building controls that have exceeded their useful life but lacks capital funding for replacement. Through an EaaS agreement, a provider finances and installs new high-efficiency equipment, reducing energy and maintenance costs. The resulting savings help fund the upgrades over time while reducing deferred capital renewal, improving reliability, and preserving hospital capital for patient care initiatives.

    • A project, modification, or piece of equipment intended to reduce energy consumption or energy costs while maintaining required facility operations.

    Example: Installing LED lighting and occupancy sensors reduces electricity use by 30%.

    • An Energy Savings Performance Contract (ESPC) is a financing and project delivery method in which an Energy Service Company (ESCO) designs, installs, and often helps finance energy conservation improvements, with the cost of the project paid back over time through the verified energy and operational savings generated by those improvements.

    Example: How ESPC Works

    1. The hospital identifies opportunities to reduce energy consumption.
    2. An ESCO performs an investment-grade energy audit.
    3. The ESCO designs and installs the improvements.
    4. The ESCO guarantees a certain level of energy savings.
    5. The hospital uses the resulting utility and operational savings to pay for the project over the contract term.
    6. After the contract is paid off, the hospital retains the ongoing savings.
    • A firm that develops, designs, finances, installs, and often maintains energy-saving projects for an organization. ESCOs are responsible for identifying energy-saving opportunities and typically guarantee that the project will achieve a specified level of savings.

    Example: A hospital hires an ESCO to replace aging chillers, install LED lighting, and upgrade building controls. The ESCO guarantees annual energy savings that are used to pay for the project over time.

    • A framework used by organizations to define organizational strategy and report performance to stakeholders.
    • Recognizes that sustainability goes beyond environmental issues.
    • The measure of how destructive a climate pollutant is. The GWP of a gas refers to the total contribution to global warming resulting from the emission of one unit of that gas relative to one unit of the reference gas, CO2, which is assigned a value of 1.
    • A widely accepted metric for accounting and reporting emissions. The protocol classifies emissions as scope 1, 2 or 3:
      • Scope 1: Direct emissions. Emissions emanating directly from health care facilities and health care-owned vehicles.
      • Scope 2: Indirect emissions. Indirect emissions from purchased energy sources such as electricity, steam, cooling and heating.
      • Scope 3: The lion’s share of emissions derived from the health care supply chain through the production, transport and disposal of goods and services, such as pharmaceuticals and other chemicals, food and agricultural products, medical devices, hospital equipment and instruments.
    • The difference between the installed cost of a higher-efficiency equipment option and the installed cost of a comparable like-for-like replacement that would otherwise be required to maintain existing functionality. This value represents the additional capital investment associated with achieving energy savings beyond a standard replacement.

    Example: If a standard replacement chiller costs $500,000 and a high-efficiency chiller costs $575,000: Like-for-like replacement cost $500,000 Energy-efficient replacement cost $575,000 Incremental Cost = $75,000

    • The annual rate of return at which an investment's Net Present Value (NPV) equals zero. It is used to evaluate whether a project is financially attractive based on the cash it is expected to generate or save.

    Example: A boiler replacement has an IRR of 14%. If cost of capital is 8%, the project is financially attractive.

    • The total cost of owning and operating an asset over its entire useful life, including acquisition, installation, operation, maintenance, repairs, utilities, training, and disposal. Life Cycle Cost helps organizations select the most cost-effective asset over the long term rather than simply the lowest purchase price.

    Example: A hospital compares two sterilizers. Sterilizer A costs $120,000 but has lower energy consumption, fewer repairs, and lower maintenance costs. Sterilizer B costs $100,000 but requires additional maintenance of $20,000 and consumes $10,000 more in utilities. Although Sterilizer A costs more initially, its total 15-year life cycle cost is lower ($120,000 vs $130,000), making it the better investment.

    • The system has enough capacity to meet the full required load (N) plus one additional independent component (+1) that can take over if a component fails or is taken out of service for maintenance.

    Example: Assume a hospital requires 2 chillers operating to provide sufficient cooling. Required capacity (N) = 2 chillers Redundancy (+1) = 1 additional chiller

    • The value today of all expected future project cash flows, minus the initial investment, after accounting for the time value of money using a discount rate. A positive NPV generally indicates that the project is financially worthwhile under the assumptions used.

    Example: A chiller upgrade costs $200,000 and provides $240,000 in present value savings → NPV = +$40,000 (good investment)

    • A state achieved when an entity achieves balance between emissions produced and removed from the atmosphere.
    • When describing a building, it means the building generates as much energy as it uses.
    • Not the same as “carbon neutral.”
    • The greenhouse gas emissions associated with daily operations.
    • Includes direct and indirect emissions. For example:
      • Building energy consumption.
      • Anesthetic gases.
      • Refrigerants on-site.
      • Staff commuting.
      • Business travel.
    • The capacity of a system to maintain function in the face of complex hazards that challenge accepted baseline assumptions for infrastructure capabilities, redundancies and disaster preparedness and response.
    • The amount of time required for the financial benefits of an investment to recover its initial cost. It is calculated by dividing the initial investment by the annual savings or cost reduction.

    Example: A hospital invests $50,000 in LED lighting and occupancy controls. The project reduces annual energy and maintenance costs by $10,000. Simple Payback = $50,000 / $10,000 = 5 years.

    • In health care, refers to the integration of environmental stewardship, social equity and fiduciary responsibility in health care organizations to support healthy, equitable and resilient environments and communities maintained over time.
    • Based on a simple principle: Everything that humans need for their survival and well-being depends, either directly or indirectly, on the natural environment.
    • To pursue sustainability is to create and maintain the conditions under which humans and nature can exist in productive harmony to support present and future generations.