Linen and things can tuck away real savings

by Curt Werner

Leave it to modern day materials managers and those department heads with responsibility for changes of hospital bed sheets and pillowcases to find a way to save money in these mundane, usually unrecognized daily chores. But save they do, and those savings don’t necessarily come from negotiating penny-by-penny price cuts from manufacturers. The real savings, as they are in most product categories, are earned by the less glamorous method of trimming product utilization. Use less, pay less. Linens are certainly no exception to that rule.

An unscientific examination regarding the question of where hospitals wash, dry and fold their linen reveals that despite the possible economic advantages that may be derived from outsourcing the tasks to commercial laundries, the vast majority of U.S. hospitals continue to reprocess linen within the confines of in-house laundry facilities. With the possible exception of uniforms used in environmental services and food services, buying and owning textiles appears to be the linen strategy of choice today. For a variety of reasons, including a hospital’s location and the strength of local labor unions, most hospitals own laundries. In much the same way as a rural institution may experience difficulty in finding a med-surg distributor willing to handle its account on a stockless, multiple delivery basis, a hospital in the pastoral Oklahoma countryside, for example, may not have the option of finding a suitable textile rental vendor or commercial laundry operation based close enough to make the deal work. 

Although the approach is far from common, hospitals that compete in some mostly urban areas have united to form laundry consortia. One example of such cooperation can be found in Seattle, where the Hospital Central Services Association, a coalition of six hospitals that serves itself and seven others, has been quietly washing, drying, folding and saving for more than a quarter century. The HCSA processes approximately 2.6 million pounds of linen per year for one of its primary owners, Virginia Mason Medical Center. Gowns and isolation material are handled along with many other items for Virginia Mason, a 20 percent owner in HCSA (Seattle’s Swedish Hospital is another major owner). What’s more, a four-person team from HCSA delivers linen to 94 areas throughout Virginia Mason and maintains par and exchange carts. The consortium, which sells services to nonowners like affiliated clinics throughout the Seattle region, has not leveled a price increased since 1996. “HCSA is a very good example of cooperation between competing hospitals,” says Allen Caudel, Virginia Mason’s director of materials management.

The HCSA management staff, which numbers representatives of each owner, meets monthly for an informational exchange of ideas and concerns. Following Sept. 11, this same group developed a Linen Disaster Plan designed to support the linen needs of some 19 local hospitals in the face of catastrophic events. Two other laundry services have signed on to form unified laundry coverage in case of a disaster and that program is now part of the Regional Linen Disaster Plan for the Northwest. The arrangement calls for just-in-time linen service.

Comfort = marketing edge

Memorial Healthcare System is a four-hospital, 1,200-bed IDN based in South Broward County in the Miami area. A fifth hospital is under construction for a system that Andrew Simon, Memorial Healthcare’s director of inventory and supply services, describes as “nonprofit, tax assisted and making money.”

When Simon looks at linen, he says he’s not simply thinking about savings, but also as an opportunity to position the network ahead of its competition. “We have phenomenal patient satisfaction,” he says. “We use better quality sheets and nicer bedspreads, and we use them for a reason.”

That reason is marketing.

Simon has met with clinicians (and marketing people too) to determine whether, for example, an emergency room patient might need a high-quality sheet in a department that carries a high potential for loss. That ER patient might not get the top of the line linen product. But comfort counts, too. Simon has crafted a business model for linen use that takes into account linen weight and the life cycle of sheets, plus looks at quality/comfort factors too. “Heavier, better quality sheets cost 40 cents a pound to launder versus about 32 cents for standard sheets,” says Simon. A better quality flat sheet will stand up to as many as 100 washings, he says, and a better quality bedspread might handle 50 washings.

With an eye toward preventing loss, Simon says that Memorial Healthcare experimented with stitching its name onto towels. That didn’t seem to work very well. “A hotel chain took their name off their towels and pilferage actually increased,” he says. “Same goes for our hospitals.”

Another issue that Memorial Healthcare has tackled head-on is home laundering of scrubs, a point of contention in many hospitals. The Association of periOperative Registered Nurses is on record as opposing home scrub laundering, a stance that has essentially stymied further expansion of that practice. Simon says that although OR nurses are issued sterile cover-ups to wear on top of their scrubs, there is no home laundering at Memorial Healthcare.

Memorial Healthcare spent about $150,000 replacing scrubs last year and there have been double-digit increases each year, says Simon. He calls the matter “an organizational/cultural issue with a P.R. flavor.” Yet, Simon feels the losses do not amount to a battle worth fighting, particularly in view of a mounting nursing shortage that gives leverage to RNs. Some hospitals approach home scrub laundering as a union issue and nurses by and large dislike a “Maytag mandate.” In general, though Simon feels that while by its nature, home laundering edicts amount to a double standard that unfairly singles out ER and OR nurses and increases their personal costs, Memorial Healthcare would buy scrubs for everyone if they laundered them at home.

Through an ambitious program of buy-in from staff, Simon has succeeded in sharply reducing the system’s linen expenses. In fiscal 2000, for example, the linen budget stood at approximately $4 million. Just two years later, fiscal 2002 costs were just over $3 million even with a few more beds and similar occupancy. Utilization and management has been the key, he says. “It was a slow, hard process, but we benchmarked ICU to ICU to ICU at our three main campuses,” says Simon. He arranged focus groups, led linen committees and held “Linen Awareness Days” at the hospital. “I mostly told people what actions can help cut costs and which ones hurt our linen program,” he says. For instance, nurses had been tossing soiled linen in red bags for disposal rather than into yellow bags for washing, and linen used by isolation patients was being thrown away and not red-bagged.

“We received nurse input and put together bed-making procedures,” he says. Standards were set for each unit. For example, if a patient was in the hospital between 24 and 48 hours, no changes were required. Beds were changed every two days for patients hospitalized for between 48 and 72 hours. Some, but significantly not all beds were still changed daily. “We tried to make each unit accountable for their linen use,” says Simon. “It’s kind of like food. You can eat and eat, but if there is no food left, you can’t eat anymore.”

Standardization and the rental option

At Kaiser North in Oakland, materials head Patrick Wirfel has launched a methodical attack on loss while building a best practices program to save money for the big system. Kaiser North includes three hospitals and 22 clinics and performs approximately 31,000 general surgeries each year to the tune of a $1.25 billion operating budget. “We looked at the indicators like the average cost of rental versus using a customer-owned garment and also pay attention to process and replacement costs,” says Wirfel. That focus appears to have paid off: Kaiser’s replacement costs of between 7 cents and 9 cents per pound, he says, compare quite favorably with an “industry standard” of between 13 cents and 14 cents per pound.

Wirfel has also worked to determine the cost of linen per patient day and per patient per operating unit. For example, one intensive care unit uses five pillowcases each day, while other departments use just two pillowcases per day. This led him to find a best practice, and to ask questions such as what causes a unit to use more? Are nurses using pillows as positioning devices? Is there a standard bed-making policy? What is done when a patient enters a room? How often must linens be changed?

Kaiser has set up a Linen Standardization Committee that includes not just materials management, but also infection control and patient care to explore these issues.

Wirfel has also looked into rental programs, a viable option under the proper circumstances, he says. According to Wirfel, a rental company’s 38 cents per pound offer would be “very attractive.” Still, replacement costs are critical, he says. “Replacement cost is the wild card,” says Wirfel. “Everyone wins if we control loss and share the benefits. It’s up to the customer to be vigilant because the linen company doesn’t care if you aren’t. Waste and loss drive up the cost of linen and utilization and shrinkage are the drivers.”

Kaiser does have in place a rental agreement, he says, that recognizes excess linen loss. The deal is with a vendor that Wirfel says cooperates with the hospital to identify and limit loss. “Sometimes the vendor loses the linen item,” he says. “If that’s the case, the vendor will pay for the loss if the item is covered by our contract.” However, Wirfel says that such shared risk clauses are uncommon in linen rental agreements, leaving hospitals both to remain alert to loss and to fend for themselves.

HPN

March