Hospital CFOs and operations leaders face the unenviable task of balancing the backlog of capital renewal obligations while funding strategic initiatives that drive net patient revenue and long-term growth. Whether it’s modernizing HVAC systems or upgrading lighting and controls, these projects compete for capital with more visible, mission-driven priorities such as expanding patient care services or investing in digital transformation. This dilemma—rooted in capital constraints and aging infrastructure—is increasingly being resolved not by simply putting more dollars through traditional capital planning methods, but through a financial model that turns capital expenditures into operating expense: Energy-as-a-Service (EaaS).
What Gets Upgraded and Why It Matters
The most common projects under EaaS contracts typically fall into categories with high potential for energy and operational efficiency gains. These include heating and cooling system overhauls, lighting retrofits, building automation and controls, and, increasingly, on-site renewable energy installations like solar and battery storage. These are foundational updates that enhance the reliability, resilience, and sustainability of hospital operations.
Importantly, these upgrades also directly support the broader mission of healthcare institutions. Improved air quality, better lighting, and more reliable mechanical systems contribute to safer, more comfortable environments for patients and staff. They also reduce downtime, maintenance costs, and energy volatility, which are factors that increasingly affect both operational and reputational performance.
Impacts on the Balance Sheet
One less visible but more powerful aspect of EaaS is its impact on financial statements. Because ENFRA funds the improvements and recovers its investment through a recurring monthly charge, these arrangements are typically treated as service contracts rather than debt. That distinction keeps the project off the institution’s balance sheet for debt purposes, preserving borrowing capacity and improving financial ratios—a key consideration for not-for-profits and public entities with debt ceilings or rating sensitivities.
EaaS also provides certainty by converting what would have been capital expenditures into predictable operating costs. Instead of one-time outflows, institutions face a steady, manageable service fee that’s offset by lower utility bills. This structure helps CFOs plan more confidently, buffer against energy price swings, and redirect capital to high-impact, revenue-generating initiatives.
A final benefit is the liquidity that ENFRA’s EaaS model offers to healthcare customers. Through the transaction, healthcare systems have the option to monetize energy infrastructure to generate significant unrestricted cash on Day 1 of the partnership. This liquidity can be used to deleverage the balance sheet, fund core mission pursuits, or bolster investments, lifting the system’s Days’ Cash on Hand and strengthening credit fundamentals.
Strategic Partnerships, Not Just Transactions
That said, entering an EaaS agreement isn’t as simple as flipping a switch. Hospital leaders need to treat these contracts as long-term partnerships, not short-term service engagements. Success depends on robust baseline assessments, ongoing measurement and verification, and clear operational governance. Institutions should ensure alignment on metrics, reporting cadence, and escalation processes to maintain trust and performance throughout the contract term.
It’s also essential that these projects integrate seamlessly with facilities operations and broader sustainability goals. A well-structured EaaS program should not only deliver immediate savings but support an institution’s long-term energy roadmap, whether that means achieving net-zero emissions, improving ESG reporting, or enhancing campus resilience.
A Strategic Lever for Institutional Growth
What makes EaaS compelling is its cost-effectiveness coupled with the strategic flexibility it unlocks. CFOs and operations leaders are increasingly recognizing that deferred maintenance isn’t a sunk cost; it’s an opportunity cost. Every dollar tied up in outdated infrastructure is a dollar that could have been used to improve care delivery, invest in talent, or expand access to underserved communities.
By converting infrastructure upgrades from CapEx burdens into performance-based service contracts, ENFRA’s EaaS model allows institutions to modernize their facilities while preserving—and even enhancing—their capacity to grow. In a landscape where mission and margin must coexist, that kind of financial innovation is essential.
For more information on how Energy-as-a-Service can benefit your healthcare system, contact David Krauss, Executive Vice President of Development at ENFRA at 973-985-2782 or dkrauss@enfrasolutions.com or visit www.enfrasolutions.com.
