Financial Strategies Summary for the Sustainability Initiative Plan

Financial Strategies Summary for the Sustainability Initiative Plan

Summary of the Sustainability Initiative Proposal

The contribution of technology to modern-day processes cannot be underestimated. Over the years, the quality of services provided within healthcare centers has improved, and this will continue even into the future. The sustainability initiative proposal to optimize the local hospital lighting systems works in this line to enhance the benefits for all stakeholders. Notably, optimizing the lighting systems will improve the quality of life for the residents and enhance the working environment for all workers. Using sustainable lighting systems such as LED solar lighting has various benefits that all stakeholders stand to enjoy. For instance, the initiative will make lighting within the facility more reliable and comfort-giving, whereby patients and health workers supported by the light will feel safer. Additionally, the lighting systems will contribute to cost savings for the local hospital, with fewer blackouts being expected. The savings can then be reinvested or channeled to community service.

The lighting optimization initiative will improve the residents’ quality of life. They will enjoy better sleep cycles when receiving care at the local hospital because LED lighting has a blue spectrum, improving the quality of sleep. Further, the LED lighting used in the initiative leads to better physical and mental cognition well-being because of an enhanced sleep/wake cycle. According to Ongpeng et al. (2022), research indicated that a 24-hour LED lighting system enhances the quality of nighttime sleep in ADRD patients by 24%. Further, the research added that LED lighting optimization reduced behaviors like abusive outbursts, agitation, and nocturnal wandering. LED lighting optimization can be used to treat various depressive disorders because the closeness of the light to that of the sun reduces stress and enhances mood.

The intended initiative will require financial resources to support its implementation. Notably, this implies an expense to the organization associated with the initiative’s research and development, planning, implementation, and maintenance. However, it is worth noting that the initiative will save costs for the company. From the cost matrix, the initiative is expected to save the hospital an estimated cost of $10,000 per month. Essentially, this is a positive financial implication for the organization. The savings will occur through enhanced care and patient comfort, increasing customer retention and attracting new ones. Further, cost savings will occur through fewer bills related to lighting. The following is the cost structure for the initiative.

Financial Strategies to Fund the Implementation of the Lighting Initiative

The first financial strategy for the sustainability initiative will be reduced energy usage and tax credits. Therefore, there is a need to acquire funding from other activities within the local hospital, which will be returned in the long run through cost savings. The energy consumption levels within the facility will be reduced at the expense of improved patient and worker experience. Further, there will be a reduction in costs associated with maintaining the lighting system. According to the U.S. Energy Information Administration, over 70% of the electricity used in healthcare facilities goes toward cooling, lighting, and ventilation (Zielinska-Dabkowska & Bobkowska, 2022). Of that entire 70%, lighting alone uses more than 40%. Switching to LED lights or fixtures provides superior, almost maintenance-free illumination that is great for aged eyes. Notably, this solution offers attainable payback periods and long-term financial advantages when used with lighting controls, which may decrease energy consumption by up to 70% over fluorescent lighting.

Instead of stretching the deductions over several years, we can take a one-time deduction for the entire amount of this investment. The only drawback is that bonus depreciation will gradually be eliminated starting in 2023, which will impact the current maximum deductions. The following shows the tax credits/deductions that will apply to the project in the first four years.

The advantage of this technique is that ongoing financial benefits over a four-year period will be acquired as opposed to a big one-time discount. In the same way, that is also a drawback because money had to be taken from capital forecasts or other plant operating budgets to finish the project. Notably, this also poses a risk because those funds may be used earlier than expected or unavailable if unforeseen repairs or replacements are required. However, this strategy will save money that would otherwise be spent on resident expenses and, over time, provide the community with capital alternatives through our energy gains and tax credits.

The second financial strategy that the hospital will need to consider is energy efficiency rebates and grants. Grants for energy efficiency are available to businesses, helping to defray the expense of switching to LED lighting. Grants are non-repayable funds or merchandise if a company satisfies the criteria. We should think little when evaluating this, unlike the tax credit. Federal energy grants are frequently more competitive than state grant programs. Notably, these state-funded renewable energy grants may be simple to apply for, but their total value might also be less. Depending on the capital amount, some grants may additionally call for a firm match equivalent to the donor’s contribution, which could be both a strength and a disadvantage.

PECO is one instance of a state supplier that offers refunds. The refund, which depends on how efficient the fixtures are, can be up to $150 per fixture. Iron Stone Real Estate is one business that profited from this. Instead of the outdated 150W High-Pressure Sodium (HPS) fixtures, they chose to install 90W LED canopy lights. They reduced their energy consumption from 64.5 kW to 38.7 kW, saving significant energy. Notably, this transition to LEDs saves Iron Stone about 40% in monthly overhead. The project’s overall cost was $430, with a rebate for the improvement of $64,500 due to obtaining the maximum rebate (Paris et al., 2022). Iron Stone quickly recouped their first investment because the LED upgrade only cost $430 in total. After two months, they were thought to have saved more than $1,000 only via energy savings.

The benefit of this financial strategy is that there may be little to no cost for the project, and there are no repayment obligations, unlike when using a loan. Essentially, this enables a quicker and larger return on investment with practically immediate capital savings. The grant’s shortcoming is that there is no certainty that we will be accepted, and there is still a chance that we may have to pay out of pocket. The facility will have to spend the capital upfront for the refunds, and we will then get our money back in one to three months. Along with those advantages and disadvantages, there is also the possibility of not being eligible for grants or rebates, or as a whole. With grants, the hospital will also have to compete for financing, and considering its financial strength and base, it can qualify for a part due to the ability to meet a significant part of the lighting optimization costs.

Given the nature of the local hospital, this financial strategy is viable for consideration. Since the hospital will not use the lights for financial gain and the lighting idea goes far beyond sustainability, this designation will increase our chances of receiving grant money. The organization’s geographic location, along with the energy provider rebate and the energy savings, gives it the best chance of receiving the maximum refund, resulting in the project’s lowest capital cost.

The hospital’s last financial strategy for funding the lighting optimization initiative is the consideration of lighting as a service. Notably, this financial strategy is uncommon, but the benefits include no immediate usage of CapEx or other fixture/maintenance capital. Future Energy Solutions has coined this service, and through its Gold Initiative program, they have financed over $80 million in lighting upgrades. Future Energy’s Lighting-as-a-Service (LaaS) model creates a zero upfront capex lighting solution that allows business owners to enjoy instant energy savings from day one. FES will install and maintain a new high-efficiency lighting system at zero upfront cost to the customer. A portion of the monthly energy savings created from the upgrade is applied toward the Lighting-as-a-Service program.

Compared to the other two options, this strategy offers the best rewards, making it the hospital’s best choice. The hospital’s service operations staff may continue to execute their tasks in the work environment without incurring any upfront fees, thanks to a team of professionals who handle the bulk of the work. Additionally, the hospital will begin saving from day one, making it easier to account for tax credits and refunds. With this service arrangement, the organization will have a set monthly payment rate dependent on the savings made and will still be less than what it initially spent. With the credits described above, it almost becomes profitable for the local hospital to use electricity more sustainably.

Both parties gain from this relationship as they will be able to maintain and grow their great reputations, and the local hospital will be able to carry out its company’s objectives regarding this sustainability initiative with little to no cost. One drawback is that, while having worked with more than 55 businesses from the neighboring state of Pennsylvania, this would be the first endeavor in our state. Additionally, given that the local hospital can serve as a shining example of a community in the state, the vulnerability may present a chance for increased savings. However, considering that the initiative will be the state’s first project, this could pose a concern because it positions the local hospital for potential delays or hold-ups. By investing with FES, the local hospital will utilize their skilled contractors for maintenance and disposal over ten years, resulting in zero wastage.

Evaluation of How the Financial Strategies Impact the Sustainability Initiative

Tax Credits and Decreased Energy Use Financial Strategy

With this financing strategy, the local hospital will be free to pursue community partnerships. Community partnerships will only positively impact this financial strategy through their support in recommending the initiative’s implementation. Further, the initiative will offer a wide range of options, including architectural lighting setups, fixtures for the hospital’s memory support units, and a team of electricians to ensure that the task is skillfully done and successfully removes our waste. Thus, the proposed waste reduction efforts will be enhanced through the initiative. By partnering with other non-profits or groups with the best reputations, the organization will manage to exercise its freedom of choice and utilize its non-profit status to the maximum. Every one of them has a chance to lead to the hospital’s next financial choice, sponsorship from one of these businesses using Energy Efficiency Grants. The overall benefit will be improved patient care outcomes through better service delivery.

Energy Efficiency Grants and Rebates Financial Strategy

The proposed community partnerships will have less impact on the second financial strategy because they have little to do with energy efficiency grants and rebates. However, the proposed waste reduction efforts will positively impact the financial strategy. Notably, this is so because higher grants and rebates are offered when initiatives being undertaken contribute to waste reduction (Smith, 2022). The proposed improved patient care outcomes will positively contribute to the execution of the initiative because the overall target of the plan is to improve patient care and the work environment.

Lighting as a Financial Service Strategy

The three proposals regarding community partnerships, waste reduction efforts, and improved patient care outcomes will positively influence the financial strategy. Notably, this is so because they are the motivations behind soliciting funds to implement the sustainability initiative. Therefore, they should be given a center-stage position in financing the sustainability initiative.

Petition to the Leadership for the Financial Strategies Approval

It will take some research and time to fully understand the material. As such, we kindly ask that you seize this chance as soon as possible. As we exit COVID-related challenges, resource demand will increase, and the need for sustainability in our actions will be highlighted again. Since the medical advantages of these LED lights for our most vulnerable are growing every day, this straightforward change in our lighting not only allows us to save money that we can reinvest in the neighborhood and our people, but it also offers us the chance to do so. With the new lighting optimization initiative, the facility will also be able to make the residents happier, which will reduce turnover and help the staff have fewer stressful days.

References

Ongpeng, J. M. C., Rabe, B. I. B., Razon, L. F., Aviso, K. B., & Tan, R. R. (2022). A multi-criterion decision analysis framework for sustainable energy retrofit in buildings. Energy, 239, 122315.

Paris, B., Vandorou, F., Balafoutis, A. T., Vaiopoulos, K., Kyriakarakos, G., Manolakos, D., & Papadakis, G. (2022). Energy use in open-field agriculture in the EU: A critical review recommending adopting energy efficiency measures and renewable energy sources. Renewable and Sustainable Energy Reviews, 158, 112098.

Smith, J. A. (2022). Optimizing lighting systems for sustainable healthcare settings. Journal of Sustainable Healthcare, 7(3), 123-136.

Zielinska-Dabkowska, K. M., & Bobkowska, K. (2022). Rethinking sustainable cities at Night: Paradigm shifts in urban design and city lighting. Sustainability, 14(10), 6062.

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Your Financial Strategies Summary provides organization executives with reasons why they should approve financial strategies for your sustainability initiative plan. It demonstrates your ability to think through financial strategy development critically and present your financial petition to leadership for resources for implementation.

Financial Strategies Summary for the Sustainability Initiative Plan

Prepare the Financial Strategies Summary for your sustainability initiative plan in 6 to 8 pages.

Include the following in your plan:

A brief summary of your sustainability initiative proposal
A minimum of 3 financial strategies to fund the implementation of your initiative
An analysis of the strengths, weaknesses, opportunities, and threats of each of your financial strategies for implementation of your initiative
An evaluation of how each of the following impacts those financial strategies within your initiative:
Proposed community partnerships
Proposed waste reduction efforts
Proposed improved patient care outcomes
Petition to the leadership for approval of your financial strategies to enact the initiative
Cite 3 reputable references to support your assignment (e.g., trade or industry publications, government or agency websites, scholarly works, or other sources of similar quality).