7 Ways to Cut Medical Office Building (MOB) Operating Costs

1) Perform an Energy Audit

There are many willing firms to conduct energy audits of commercial facilities. Contract with one to benchmark your facility and determine if energy costs are in line with other buildings of the same product type. Findings from an audit could report that minor adjustments to the HVAC system, lighting, or building shell are having major impacts on the property’s bottom line. The most important component to a successful energy audit is evaluating and executing the energy savings recommendations. The energy savings from retrofitting older lighting in the parking lot or on the building interior, or an older inefficient piece of HVAC equipment will pay back the cost quicker than most would think.

2) Replace R-22 HVAC units

R-22 refrigerant is antiquated technology. In fact, it’s something we’ve been told for the better part of the last decade is going to be phased out of production in the United States. Replacing R-22 units now will cost far less in the long-run than paying the increasing costs of refrigerant. In the past few years, the cost of R-22 has more than doubled in some areas. That trend will continue.  Added benefits to replacing old R-22 units include updated technology and increased energy efficiency, both of which enhance the property’s market value.

3) Plan accordingly for Long Term Mechanical Replacements

Replacement or repair of a ‘mission critical’ piece of mechanical equipment is already an expensive endeavor. Poorly planned timing can also cause serious down time, adversely affecting tenant operations. Learning at the last moment that an equipment replacement also requires modifications to existing building infrastructure and that the building is not prepared for it, can cause the cost of the replacement to skyrocket. Be prepared for future replacements by working them into 5- and 10-year budgets so these improvements can be made on a predetermined schedule with minimal impact on tenants.

4) Enter into Preventative Maintenance Contracts

It’s no secret that the cost of maintenance is far less expensive than the cost of deferred maintenance or equipment failure. This is as true for a vehicle’s scheduled oil change as it is for a building’s HVAC maintenance. The goal of preventative maintenance is to address issues proactively, before they rear their ugly head, or potentially cost a small fortune in unforeseen and unbudgeted repairs. Preventative Maintenance won’t prevent 100% of repairs but it will mitigate the lion’s share of the cost.

5) Shop Energy Prices

If a building is located in a deregulated energy market, energy prices should be “shopped” at least once a year. Don’t get too comfortable with energy providers because they have been servicing a building for years, utility companies frequently increase prices. Deregulated markets create competition and competition is good for the consumer, so make sure to take advantage of the lowest cost energy available.

6) Update Restroom Fixtures

Here’s a quick and easy one. Replace all outdated restroom faucets with water-saving faucets. It’s inexpensive and easy to have them replaced. Consider installing hand dryers. The savings on paper towels and water alone is quite impressive.

7) Hire a Professional Management Firm

Regional Property Management Firms exist for a reason. With access to a broader group of vendors than independent property owners, property management firms typically have contracts in place with vendors for leveraged purchasing. Known within the industry as “economies of scale”, the concept is similar to buying in bulk. A Property Management firm can get almost any item or service, be it HVAC, landscaping, snow removal, trash or janitorial service, at a better rate than an independent property owner could negotiate. Professional Management firms are able to accomplish this because they are procuring these services for multiple locations. Utilize a professional Property Management firm’s relationships with vendors and observe the savings in operating expenses.