Rae Woods (00:02):
From Advisory Board, we are bringing you a Radio Advisory, your weekly download on how to untangle healthcare's most pressing challenges. My name is Rachel Woods. You can call me Rae.

Miles Cottier (00:14):
And I'm Miles Cottier. You can call me Miles.

Rae Woods (00:18):
Yeah. The we are bringing you a radio advisory is accurate today. Our listeners probably remember you Miles from previous conversations on things like sustainability and climate action. And that's because you spend a lot of your time at Advisory Board examining how health systems balance the financial reality of today with environmental sustainability. And this is really tricky because more and more organizations are feeling very real pressure to take on major projects to reduce their carbon footprint while also operating under tight, non-existent, often negative margins. And I think it's easy to think about the kinds of organizations that are succeeding here as the biggest, or the most successful, or the financially sound organizations, listeners are probably thinking of a handful of names. But Miles, you actually wanted to come on Radio Advisory to tell a different story.

Miles Cottier (01:16):
Exactly. One of my favorite stories about using cost savings as a way to improve environmental sustainability comes from Boston Medical Center, which many of our listeners will know is a large nonprofit AMC and safety net hospital in Boston. What I'm about to do, Rae, feels very against my British nature, but I'm going to steal the mic just for the rest of the show. I promise I'll give it back. For this week's radio advisory, I wanted to bring on Bob Biggio, who serves as BMCs Senior Vice President of Facilities and Support Services. Now over the past few years, Bob has overseen a major redesign of BMCs campus and he found pretty creative solutions to generate long-term cost savings while improving efficiency and reducing BMC's environmental footprint in the process.

Rae Woods (02:12):
More than happy to give you the mic, Miles. I do want to warn our listeners as we get into this conversation, it's clear that Bob is recording this from the hospital. There are a couple moments where you might be able to hear some background noise, particularly some construction that's going on on the campus, which makes sense given that we're having a conversation about facility redesign. Take it away, Miles.

Miles Cottier (02:34):
Thanks Rae. Bob, welcome to Radio Advisory.

Bob Biggio (02:38):
Hi Miles.

Miles Cottier (02:39):
So I have to start with this one because I'm British and this is all we have a talk about. But you are currently in New England. I am currently sat near London in, let's call it Old England. Please, please tell me the weather is better there than it is here. The bars low, I'll say that.

Bob Biggio (02:56):
The weather's nice here today. It's a nice sunny day in the seventies, so beautiful day.

Miles Cottier (03:02):
Wow. Okay. Well, to say I'm jealous is an understatement. As always. As I mentioned on the last podcast I was on, the weather here very much reflects our mood in the UK. So gray all the time, always gray. So Bob, as this is your first time on the podcast, I want to talk about firstly what brought you to this moment, right? You joined BMC in 2011. What led you to start working at BMC in the first place?

Bob Biggio (03:31):
Well, at the time Boston Medical Center was on a brink of receivership. They had been through a number of difficult financial years, and so Boston Medical Center's the largest safety net hospital in New England. And for me, given that Massachusetts was at the forefront of healthcare reform and the financial situation in the organization, it felt like a really good place to do proof of concept for trying to reduce the overhead costs and expense of a hospital facilities to drive more financial resources directly to the mission and patient care.

Miles Cottier (04:07):
And those financial challenges, I think certainly aren't unique for health systems, right? Costs are high right now. Margins are thin or non-existent in some cases, I think it feels like we're trapped in somewhat of a cycle. What was your process for identifying facilities, projects that could generate cost savings for BMC?

Bob Biggio (04:27):
Well, the first thing I did here at BM C was really to do an assessment of our full real estate portfolio to determine how much square footage we should have for the volume of patients that we were seeing. And so that was for me, step one is just being sure that we had the right amount of rationalizing the correct amount of square footage, and then targeting a plan as to how we would reduce the square footage to get rid of any excess. And then from there, focus on really, energy efficiency, trying to identify projects. I really started low on the tree, if you will, and just worked my way up. And so I tried, at first I looked for projects with a three-year return on investment. And then by the end we were looking at about eight-year return on investment.

Miles Cottier (05:21):
So looking more specifically at that campus redesign, we'll call it. So you looked at BMC's facility footprint, you rationalized it. What barriers did you come up against initially?

Bob Biggio (05:32):
I think that the biggest barrier was really the financial situation of the organization, having been on the brink of receivership at the time, and the estimated investment that would be required to reduce the square footage by consolidating our campus was $300 to $400 million. The reduced 300,000 to 400,000 square feet. And so to convince the board and the senior management of the organization to make that kind of investment given the financial situation of the organization was the biggest hurdle.

Miles Cottier (06:03):
So how did you work out how much money you would need to spend to generate long-term savings for this project? You said that you have an upfront figure that you came to the board with. Where did those costs come from?

Bob Biggio (06:17):
So at the time we had essentially two full inpatient buildings. It BMC is a product of a merger, and so there were essentially two hospitals separated by one city block. And so what I did is I looked at what it would require for us to build the infrastructure in a single footprint that would accommodate all of the inpatient beds, the operating rooms, and other patient care equipment that would be required into a single footprint, and use that plan essentially to develop a high level capital estimate for the project.

Miles Cottier (06:52):
Sure. And you are talking about clinical space?

Bob Biggio (06:55):
Yes.

Miles Cottier (06:56):
And I think it's important for any hospital not to sacrifice volumes, or throughput, or anything like that, especially for a safety net hospital like BMC. How did you ensure you were maintaining patient volumes while you were undergoing this rationalization consolidation of BMC's footprint?

Bob Biggio (07:17):
Well, for BMC, we essentially had to fully renovate an operating hospital. So it was about 47 phases of construction. In order to accomplish the project, it had to be phased into small pockets of construction. And so it was about a four-year project to get it all done.

Miles Cottier (07:39):
And coming back to the kind of question of why we are here and especially why I'm here, I think, the redesign ended up having some pretty significant environmental benefits as well. Like we've said, BMC is a safety net hospital, so you are providing care to everyone regardless of their insurance status or their ability to pay. And I think many people probably wouldn't necessarily expect an organization like BMC to make such significant progress, such huge leaps toward environmental sustainability. Why did BMC make this such a priority when there were and still are plenty of excuses not to do so?

Bob Biggio (08:22):
I guess the first thing I would say is because we're a safety net hospital, I think we felt the financial pressures of healthcare reform here in the US earlier than other hospitals. For me, I think both environmental sustainability and financial sustainability go hand in hand. So reducing the energy costs and the overhead expense of our facilities both reduces the environmental impact as well as improves the financials of the organization. And so that's the lens that we looked at it from. The other lens that made it rise to the top from an importance perspective is that if you think about what healthcare reform is asking of the US healthcare system, it's to go upstream and keep our community healthier and prevent them from needing our hospital facilities. And so what better place to start then with the environment if you're trying to keep your community healthy?

Miles Cottier (09:13):
I'm glad that lots of people believed in the safety net aspect of things. And again, this is something that's slowly trickling into other parts of the health system, but I can't imagine there was no pushback at all. Right? Did you receive pushback from your leadership at BMC?

Bob Biggio (09:30):
I think there was significant hesitancy. I don't know if I'd call it pushback, but there was hesitancy. And I can still recall a conversation I had with our CEO Kate Walsh at the time, where she asked whether we could really afford to do this as an organization. And my reply to her was that "I don't think we could afford not to do it." That as the financial pressures of healthcare reform continued to bear down on the organization, the inefficiency created by the split campus that we had at the time, it was going to get heavier and heavier and it was going to feel like we were dragging an anchor, in the end that that configuration was costing us about $25 to $35 million a year.

Miles Cottier (10:17):
Wow.

Bob Biggio (10:17):
In excess overhead expense that if we consolidated, I estimated we could eliminate.

Miles Cottier (10:22):
$25 to $30 million every single year.

Bob Biggio (10:24):
Yes.

Miles Cottier (10:25):
That's quite a figure.

(11:33):
Well, Bob, as part of this project and as part of the series of projects you did, restructuring BMC, you were also the first hospital in the US to issue a green bond. For those listeners who aren't aware of what green bonds are because they're relatively new to the market, they're similar to normal corporate bonds, but the capital generated from issuance has to be invested in specific green projects that have measurable, reportable environmental benefits. What made you decide that a green bond was something you wanted to pursue at BMC?

Bob Biggio (12:07):
Well, when we were preparing to do the bond offering, the organization that was helping to facilitate that for us came with the idea of a green bond, whether we would be open to issuing it as a green bond. And given that so much of the work we were doing was kind of foundational to do with sustainability, it just felt like the right thing to do. It really wasn't a difficult decision for us. It aligned with all the work we had been doing and we're planning to do. And so it was a pretty easy decision for us.

Miles Cottier (12:46):
Did it feel in any way risky since no other hospital in the US had gone down that route before?

Bob Biggio (12:54):
I don't think we perceived it as risky. I think we believed that it would open up the likelihood of broader investor group, broaden the amount of folks that would be willing to make the investments into BMC, which was particularly important to us given the financial challenges we were in at the time. And so again, I think it was pretty easy decision for us.

Miles Cottier (13:16):
Are you noticing any more facilities across your footprint or across the US more generally using green financing mechanisms like green bonds or green loans at all?

Bob Biggio (13:26):
So we actually just did our second bond offering, which is a sustainability bond. We were the first hospital in the US to do that as well. So, I don't think enough organizations are following, but I would strongly encourage them to do it. We, in both bond offerings, they were significantly oversubscribed. In fact, on the second one we had to go pull it back and go back out to the market with a reduced rate. It definitely resulted in improved rates and a savings for us over the long term.

Miles Cottier (14:01):
Well, like we said, they're relatively new mechanisms to them, to the market at large, let alone for healthcare. So I think that's probably why many systems are slow to adopt these kind of mechanisms. But let's pull up a level. If you had to go back to 2011 or 2012 and do the entire facility redesign again, what would you do differently and why?

Bob Biggio (14:25):
What would I do differently? I have to tell you, I don't think there's a lot we would do different. I think overall we've been really pleased as an organization with the way the entire project and the results of the process that we put in place have worked out for us. And in fact, during the recent pandemic, Kate Walsh, our CEO at the time, said that she doesn't think we would've been able to do nearly as well through the pandemic had we not done the work we had done as our campus redesign and consolidation.

Miles Cottier (15:03):
Wow. Now, at this point, I think many, many leaders listening to the episode are probably in somewhat of a similar financial situation now to what BMC was in 10 years ago, let's say. Add in also that layer of growing social and regulatory pressures around things like ESG, right? And around things like environmental sustainability. What advice would you have for other health systems trying to balance sustainability with efficiency and cost savings?

Bob Biggio (15:36):
A lot of places that talk about how they need to hire sustainability people to work on this initiative, and what I tell people is this isn't an add-on service that you create a new department for. It really needs to be embedded into the work you already do. And so I would really encourage people to think about the resources they already have on their campuses in their organizations and how they really embed this into the work that they do.

(16:05):
The second piece of advice I would give folks is I hear lots of people say that they don't want to be bleeding edge, but if you look at the speed at which our world is changing today, I would argue that if you're not cutting edge in the things that you're doing, you're probably not doing enough. The reality is the world is just changing too fast for people to sit back and just wait for things to be tried and true, and proven. You have to step out in front and lead.

Miles Cottier (16:36):
And I think referring to your first point, it's similar to the way we're starting to talk about things like health equity, embedding health equity into every single thing that we do as an organization, and likewise, embedding environmental sustainability or environmental consciousness, into everything we do as an organization as well. And I think, in my mind anyway, these kinds of stories certainly give me hope that the future of the health system doesn't have to be bleak all the time. I know I said I'm from the UK and everything's bleak, but not everything has to be bleak, especially in a financial or an environmental sense. And I think what you've shown us is that there are different levers that health systems can pull to reduce costs and generate environmental and social benefit too.

Bob Biggio (17:26):
Yeah, absolutely. I mean, if you look at the savings that we've generated, so for BMC, that one project saved $25 million a year, and about $10 million of that is just in energy costs. The Environmental Protection Agency has put out statistics where they say that every dollar of savings is worth $20 in healthcare revenue. So if you do the math over the next 20 years, the savings we've generated is equivalent to over $1.5 billion dollars in healthcare revenue. And so the way I look at it is that's revenue that we literally do not have to charge our community. It's care that we can provide to folks who are in need here in our Boston community.

Miles Cottier (18:15):
Wow. That's incredibly powerful, Bob. Thank you for that answer. And I think a very fitting way to end the podcast as well. Usually these conversations end in a very sour note, especially from an environmental perspective. So thank you for actually giving us something positive to take home. So thank you, Bob, for coming on Radio Advisory today and for sharing your story.

Bob Biggio (18:35):
Thank you, Miles. Really a pleasure. I'm happy to do it.

Rae Woods (18:37):
Hey, Miles, how did that feel?

Miles Cottier (18:49):
Well, I'm hotter than I was before I started the podcast. That's for certain.

Rae Woods (18:53):
I promise, you did a great job. I think our listeners are going to want to hear that, the sound of your voice and your lovely accent every week and say, "We're done with Rae."

Miles Cottier (19:04):
I'd highly doubt that. I highly doubt that.

Rae Woods (19:06):
Well, before I let you go, I have to ask, what is your favorite part of this story? Or what's the thing that Boston Medical Center did that you want to make sure that our listeners take away and take action on?

Miles Cottier (19:19):
As always, I think it always comes back to opening up conversations between leaders about sustainability, and finding out where we as a health system are right now in terms of our environmental impact. The social pressures around climate change, they're just going to continue to grow ahead of any sorts of regulations that may come our way, and we really don't have a lot of time here. What Bob showed us, there are a lot of ways that you can get ahead, you can reduce your footprint. And those actions can help you move toward your other objectives, whether that's cost management or something else much faster as well.

Rae Woods (19:58):
Well, Miles, thank you for hosting Radio Advisory.

Miles Cottier (20:02):
Thank you for allowing me to host Rae.

Rae Woods (20:08):
Make sure to check out our show notes to find more advisory board resources that can help leaders like you lead your organizations towards more carbon-neutral futures. If you like Radio Advisory, please share it with your networks, subscribe wherever you get your podcast, and leave a rating, and a review. Radio Advisory is a production of Advisory Board. This episode was produced by me, Rae Woods, as well as Miles Cottier, Katy Anderson, Kristin Myers, and Atticus Raasch. The episode was edited by Joe Shrum with technical support by Chris Phelps and Dan Tayag. Additional support was provided by Carson Sisk and Leanne Elston.

(20:47):
Thanks for listening.