Health System saves its energy with Enron Corp. agreement

Attempting to benefit from the rapidly deregulating Pennsylvania energy market, a coalition of area hospitals, including members of the Penn Health System, struck a deal with Enron Corp. last week, designed to provide them with energy savings of more than 20 percent. But the company won't actually provide the institutions with lower energy rates. Instead, Texas-based Enron will advise the 150 member hospitals of the Delaware Valley Healthcare Council on ways to save money within their current energy contracts, which the hospitals would then be free to accept or ignore. Under the deal, Enron -- one of several companies challenging Pennsylvania Energy Corp. (PECO) for control of Pennsylvania's energy market -- will suggest ways for the hospitals to reduce their energy consumption by utilizing new technology and procedures. The Hospital of the University of Pennsylvania and the Penn-affiliated Presbyterian Hospital will consider Enron's proposals, but have not finalized a decision on whether to switch their energy contract to the company, according to HUP Physical Plant Director Doug Aitkens. HUP and Presbyterian are currently bound to PECO under the company's five-year contract with the University. "We will negotiate our best deal," he said. "I don't want to get locked into anything too soon in the game." Enron spokesperson Gary Foster explained that the deal is designed to help hospitals save money in the wake of intense competition, decreasing insurance reimbursements and pressure from managed care companies to cut costs. DVHC President Andrew Wigglesworth said the agreement "ensures that there will be a competitive energy market and that hospitals will be able to select the provider that will best meet their individual needs." The council considered at least six companies during its search for an energy consulting firm and met with PECO representatives in June, but PECO did not show much interest in working with the body, Wigglesworth added. The council ultimately selected Enron because it offered the most "innovative range of services," he said. Area hospitals currently spend more than $500 million a year on energy-related expenses and equipment, and are constantly seeking ways to save money without having to cut staff, Wigglesworth said. He explained that the council recently examined energy use in 10 member hospitals and found that energy costs could be cut by more than 20 percent through improved technology and more efficient procedures. Enron is no stranger to the consulting business, having recently struck a similar deal with the California-based Kaiser Permanente managed care plan --Eone of the largest in the country. It is also currently negotiating with a health care council in the Boston area, Foster said. Although the search for lower energy costs is especially important to the health care field -- where energy and capital expenditures account for up to 10 percent of a hospital's budget -- Foster said the company hopes to make similar alliances with schools, convenience stores and fast food chains across the country. "The whole industry will probably move in this type of direction over the next decade," Foster said.

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