Could a water health check revitalise your finances?

Water is the life blood of all organisations, critical to daily operations, and yet when it comes time to deliver on efficiencies, drive down budgets and cut costs it is almost always neglected. But the utility is fighting its way up the business agenda to help health organisations make major financial savings.

‘If well managed, water consumption and associated overhead costs can be significantly reduced without any impact on patient service’

In 2008, Scotland’s water market opened to competition, creating a more customer-focused industry and helping businesses save more than £64.9m in costs through improved water efficiency and discounted services.

As a result of the success demonstrated in Scotland, and following a report by Defra in 2011, a draft bill is currently working its way through Parliament which outlines plans to introduce market competition in England − setting the scene for the country’s healthcare facilities to capitalise on major financial benefits beyond those already realised by their Scottish counterparts.

Monitor’s latest business review of England’s health sector indicates that 2013 will be more financially challenging than the past 12 months and, while recognising cost improvement plans are working, it warns it is becoming increasingly difficult for management teams to maintain the current level of cost cutting without impacting on patient care.

Understandably healthcare organisations represent one of the largest groups of high consumption water users − consider how much water is required each day just to perform basic activities such as flushing toilets, washing hands, food preparation and cleaning. Add to that the amount of water wasted through old, leaking infrastructure and inefficient devices and the cost per organisation can really mount up. However, if well managed, water consumption and associated overhead costs can be significantly reduced without any impact on patient service.

The ‘gainshare’ scheme

Working with healthcare organisations and public sector teams in Scotland, we realised that there was an opportunity to help them unlock substantial financial savings through improved water efficiency. One successful project is a new infrastructure-funding model developed in partnership with Glasgow City Council.

‘‘The financial savings realised in Scotland are likely just a fraction of what could be uncovered in England’’

This “gainshare” scheme means we fund investment in new water efficiency infrastructure, allowing clients to benefit from the associated consumption savings without the upfront capital expenditure. We also take a modest share in the savings to cover our role in the project.

The model has allowed the council, which has 720 sites across the city, including council offices and depots, leisure centres, sports facilities and schools, to establish sound water management practices in a way which complements its financial priorities. As a direct result, the council has forecast a £1.3m reduction in water and waste water costs.

Access to up to date information about water consumption levels is one of the most valuable tools in an organisation’s arsenal when trying to implement a robust water management system.

Automated meter readers, or “smart meters”, measure water consumption every 15 minutes and are one of the most effective means of regulating water use as they expose anomalies in water flow and allow them to be addressed quickly. Three thousand water smart meters in 18,000 buildings, including hospitals, schools and prisons, have been installed to improve water efficiency and generate financial savings.

Water pressure

An example of this is NHS Lothian, which achieved £130,000 year-on-year savings at one of its hospitals. Installing automated meter readers at its premises allowed the benchmarking of the hospital’s water use against other similar sized operators and it was found that the hospital’s consumption levels were unusually high, indicating a burst somewhere in the network.

Using manual inspections and the latest non-intrusive electronic checks, the burst was located, which, owing to its location, had gone undetected for some time; all the while silently inflating the organisation’s water costs.

In Scotland, full retail competition has encouraged suppliers to add value to customers by helping them save water and money − helping alleviate the financial pressures that each organisation currently faces. The financial savings realised in Scotland, while substantial, are likely to be just a fraction of what could be uncovered in England owing to the comparative scale of the market.

The pressure is on and demands for greater efficiency, improved service and lower costs continues to increase. Admittedly, water efficiency may seem like a mere drop in the ocean and far down the list of priorities. However, implementing good water management principles can bring about significant financial savings. Remembering it could help breathe new life into healthcare budgets, without affecting high-quality patient care.

Mark Powles is chief executive at Business Stream