Healthy Business

Hospitals and other health-care facilities are a niche market offering electrical distributors special sales opportunities for some very good reasons: the continuing expansion and construction of these facilities; the specialized electrical equipment they require; the tremendous amount of data cabling and other high-grade signaling systems installed in these buildings; and the demographic fact that as the U.S. as a whole ages, more of these facilities will be necessary.

Several thousand hospitals and of other medical buildings, outpatient care centers, doctor's offices, clinics and other facilities exist in the U.S. Although several indicators measuring the construction of health-care facilities are forecasting little growth during 1998, it's still a market on the move for the reasons outlined above. The 1997 National Estimates Dodge Construction Potentials, developed by F.W. Dodge of McGraw-Hill, Inc., New York, N.Y., pegged the construction activity of health-care facilities for 1998 at 74 million sq ft, a 3% drop from the 1997 level. F.W. Dodge also estimated the contract value for this construction at $10.7 billion, a 1% increase over last year. The 1998 Construction Outlook published by FMI, Raleigh, N.C., forecasts a 1% decrease in the construction of privately owned hospitals and nursing homes, but sees some growth in the publicly-owned sector.

Market movers: While the order that a contractor or facilities manager brings to an electrical distributor for a hospital job may not look much different from the list of materials they buy for other commercial jobs, some important differences exist in the types of equipment required for the health-care market. Tight National Electrical Code (NEC)regulations on installations in these facilities and some key trends influence the electrical products purchased. Let's take a closer look at these important factors in the health-care market:

Cost consciousness. With all the consolidation in the hospital market and the changes in health-care coverage, hospital administrators, purchasing managers, engineering supervisors and other key buying influences in this market are always looking for ways to slash their operating costs. Like many of your customers, hospitals have trimmed maintenance staffs and are lookingfor products that require less maintenance, last longer and cost less to install.

This presents electrical distributors with a great opportunity to sell energy-efficient electrical products in this market, because much of a hospital operates 24-hours-a-day, seven-days-a-week, driving up energy costs. In the cost-conscious health-care market, you can easily prove to customers that an energy-efficient retrofit can save tens of thousands of dollars in the facilities' electrical bills and pay for itself from these savings in two to three years.

Not only are large medical facilities ripe for energy upgrades, smaller doctors' buildings, nursing homes and other buildings of less than 100,000 sq ft of space are prime targets, too.

Before making your pitch, make sure you see an upgrade through a customer's eyes. While lighting equipment, motors and other electrical loads can account for over 30% of a building's energy usage, the customer may also be thinking about non-electrical upgrades to improve the building's energy efficiency, such as replacing inefficient air-conditioning units, windows and adding new insulation. Unless electrical distributors work with energy-services companies (ESCOs), which are very active in this market, they only offer part of the total solution that the customer needs. If you want to get a feel for the dollar-saving potential that an efficient electrical system can offer a health-care facility, check out "Saving lives and dollars" on page 44.

Group purchasing. An offshoot of the trend toward increasing cost-consciousness is the growth of group purchasing consortiums. Operating in some ways similar to the buying/marketing groups in the electrical market, these purchasing groups allow hospitals to pool their purchases of medical supplies, office equipment and maintenance supplies to get volume discounts. The largest groups are VHA, Irving, Texas; Premier, San Diego, Calif.; and AmeriNet, St. Louis, Mo. Some electrical distributors have already established relationships with these group purchasers. For instance, AmeriNet's Web site lists Cardello Electric Supply Co., Pittsburgh. Pa.; Graybar Electric Co., St. Louis, Mo.; WESCO Distribution, Inc., Pittsburgh, Pa.; and W.W. Grainger, Inc., Lincolnshire, Ill., as suppliers.

Code consciousness. One of the best ways to learn about the types of products that your customers may purchase for installation in hospitals and other health-care facilities is to peruse the NEC's Article 517-Health-care facilities. After a few paragraphs, you will soon realize the NEC has such stringent requirements on electrical installations in health-care because these systems power equipment that's used in critical-care areas, such as operating rooms, intensive-care units or other areas where an electrical-system malfunction can affect the health of the patient. Here are the products that the NEC regulations affect most:

Hospital-grade and tamper-proof receptacles. A familiar Code requirement in health-care facilities is the use of hospital-grade plugs and receptacles. Marked with a green dot, these receptacles are designed to take a lot of punishment so they do not malfunction in what could be life-or-death situations. Before launching a new hospital-grade receptacle two years ago, Pass & Seymour/Legrand, Syracuse, N.Y., did extensive market research on how hospitals buy wiring devices. From this research, the company estimated the average hospital purchases 50 to 75 hospital-grade wiring devices a month, or about 900 per year. The company also found that because of the extensive modernization and renovation of hospitals, the average hospital wing is reworked every five to eight years and that 2,500 devices may be purchased and installed each time.

The NEC requires these wiring devices for the entire wiring systems of hospitals and for the patient-care areas of other medical facilities such as clinics, dentists' offices, outpatient facilities and the examining rooms of doctors' offices. An additional requirement for specialized wiring devices exists for pediatric and psychiatric locations, where receptacles must be tamperproof to prevent patients from inserting pins, pieces of wire and other objects into the outlet.

GFCI equipment. Many areas of a hospital and other types of health-care treatment centers are exposed to wet or damp conditions, so GFCI circuits are a must. Some of the applications for GFCI equipment in these facilities include standard bathroom applications, dialysis facilities, laboratories, treatment areas involving whirlpools or other types of hydrotherapy, laundries, kitchens and boiler rooms.

Back-up generators. Hospitals have extensive backup systems for a very good reason: patients' lives depend on the equipment to function at all times. All hospitals must have emergency generators ready to provide power to critical-care areas very quickly if the primary power system is disabled or shuts down for any reason.

EC&M magazine, Electrical Wholesaling's sister publication, ran an article, "The Case of a Hospital's Emergency Power Failure," in its July 1998 issue that illustrates this point. According to this article, an electrical contractor who installed the emergency-power system for the wing of a new hospital in California forgot to connect the backup system to the automatic transfer switch, which detects a downed circuit and switches to emergency power within seconds. The problem was discovered when a lightning strike knocked out power to the grid servicing the hospital. Fortunately, no patients at the hospital were hurt when the emergency power did not kick in.

Data-handling systems. Hospitals require monstrous amounts of data on patients, billing, supplies, scheduling and other applications unique to the health-care market. If your company is into datacom, you are that much more valuable to customers in this market.

Other low-voltage wiring. Few industrial or commercial applications use as much low-voltage wiring as medical facilities. Nurse-call systems, intercoms, fire alarms and smoke detectors are just a few of the low-voltage wiring systems they rely upon.

Future sales opportunities. Industry observers expect hospitals and other health-care facilities to continue adding onto their computer and communications systems to improve access to patient data and treatment options, cut down on paperwork and make it easier to respond to emergency situations.

For instance, in some intensive-care units, computerized "infusion pumps" administer medicine to patients. A computer monitors the amount of medicine that these pumps administer. Computers are also replacing the manual collection of patient records and treatment charts. This cuts down on the errors that can occur with manual transcriptions of this information.

Communications systems also promise future sales opportunities. Nurse-call systems, intercoms, medical-alert devices, security monitors and other communications systems are all being refined so signals can be monitored from a central point, such as a nursing station. All of these trends translate into sales opportunities for electrical distributors in datacom products and low-voltage wiring and components for signaling systems, and give them yet another reason to get involved with this growing market segment.

These installations are saving major bucks because of energy retrofits. Several of these jobs won awards from the Environmental Protection Agency's Green Lights program for their ingenuity and cost-saving benefits. Over 850 health-care facilities participate in the EPA's Green Lights program, from the largest hospitals in the U.S. to some relatively small medical facilities. To learn more about this program, check out the Green Lights' Web site at It's interesting to note that in several of the examples, energy-services companies either did the initial facility audit or handled the entire job.

Ashe Memorial Hospital, Jefferson, N.C.:

The job: Installing an energy-management system and new air-conditioning motors to improve HVAC operation; replacing incandescent lamps with more than 100 fluorescent fixtures; and upgrading T12 lamps and magnetic ballasts with T8 lamps and electronic ballasts. Size: 73,750 sq ft

Cost: Lighting upgrade cost approximately $42,000, not including a $4,000 energy audit that a government grant partially paid for. The new motors cost $20,000.

Annual savings: The energy management system saves $35,000; the lighting upgrade saves $5,500; and the motors save $3,000.

Payback: 2.5 years

Cottage Hospital, Woodsville, N.H.:

The job: A performance contract with the Manchester, N.H., location of Johnson Controls guaranteed $25,000 in annual savings through the relamping and reballasting of 500 fixtures from standard 40W T12 fluorescents with magnetic ballasts to 32W T8s with electronic ballasts; the replacement of standard incandescents with compact fluorescents, and incandescent exit signs with LED exit signs; and the installation of an emergency management system. Along with the lighting retrofit, Johnson Controls also installed variable-speed drives on the motors and fans of the air-conditioning system.

Size: 37,300 sq ft

Annual savings: $30,724-nearly $6,000 more annually than the savings guaranteed in the original performance contract.

Payback: 3 years

American Academy of Otolaryngology-Head and Neck Surgery Foundation, Alexandria, Va.:

The job: Replaced the existing system's 40W T12 lamps and magnetic ballasts with 183 fixtures, each with two 32W T8 lamps and electronics ballasts; reflectors; and 13 incandescent exit signs with more efficient LED exit signs.

Size: 22,000 sq ft

Annual savings: $7,680

Payback: 2.5 years to 3 years

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