Kentucky Thoroughbred—
How Vision, Competition Closed an OPL
A fast-growing hospital’s goal of world-class care didn’t include a laundry
By Jack Morgan
Howard Harrison, executive director of facilities management for King’s Daughters Medical Center, a 1.1 million-square-foot healthcare complex in Ashland, KY, cites two fundamental reasons for his hospital’s recent move to shutter its on-premise laundry (OPL): vision and competition.
Harrison, a 15-year veteran of King’s Daughters, laid out his views on the hospital’s move to outsourcing during a one-hour presentation in August at TRSA’s Joint Committee/Annual Meeting in Chicago. Below are highlights of his address to the Healthcare Committee.
Hospital challenges and opportunities
King’s Daughters Medical Center is located in Ashland, a town of roughly 23,000 people on the Ohio River in northeastern Kentucky near the borders of West Virginia and Ohio. Founded in 1899, King’s Daughters began as three rooms above a pharmacy. The next century heralded a period of meteoric growth. The hospital opened its first operating room in 1904. A new 50-bed facility at the hospital’s current location was completed in 1918. Major additions were added in 1925, 1953 and 1970.
Today’s King’s Daughters is the second-largest admitting hospital in the state and the third-largest hospital of any kind in Kentucky. The hospital employs nearly 3,500 people on a 22-acre campus. Currently licensed for 385 beds, the hospital is seeking approval for another 120 beds. Harrison credited the recent growth to the development of patient-driven services such as cardiac care, which was launched in 1991. Last year, the cardiovascular surgery department completed 800 open-heart procedures. “We’re all about doing hearts,” said Harrison, noting that this program allows people to get critical care closer to home, rather than having to go to a major city such as Louisville, KY.
Harrison said the cardiovascular program, plus other innovations ranging from free valet parking to hotel-like interiors and a guest house for family members of patients of modest means, flow from the hospital’s mission, “To Care. To Serve. To Heal.”
While King’s Daughters has experienced dramatic growth, like any other healthcare provider, it too faces challenges. Primary among these is the increasingly competitive nature of hospital care in the United States. “Thirty years ago, you went to the doctor and the doctor said ‘Oh you need to go to the hospital, and he sent you to the hospital that he wanted you to go to and you did what he told you to do,” Harrison said. “That’s not healthcare in the United States today. Healthcare in the United States is ‘Have you got a second opinion? Now what hospital do you want to be admitted at?’ Healthcare has changed today, and it’s very competitive. Our vision is world-class care in our community.”
Winning the competitive wars takes outstanding customer service, said Harrison, noting that King’s Daughters has two major hospitals within a 30-minute drive as well as several smaller hospitals nearby. Until about three years ago, the hospital’s services included an OPL for processing linens. This department posed a number of challenges that led King’s Daughters to rethink that aspect of its operations.
Growing pains—laundry blues
As King’s Daughters continued its expansion, the need for a larger laundry to handle its growing demand for clean linens led the hospital to purchase and equip a 10,000-square-foot OPL several years ago. A consultant was hired to recommend equipment for the OPL. Purchases included:
one 9-module, 55 lb. Lavatec tunnel washer
one 200-lb. Pellerin Milnor washer/extractor
three 120 Pellerin Milnor dryers
one American Hypro II 4-roll ironer
one Chicago Skyline folder
two Cleaver Brooks 100 hp boilers
A staff of 28 people used this equipment to process roughly 2.7 million lbs. of linen annually. They worked two Monday-Friday shifts and one weekend shift with regular overtime to keep up with demand. The cost? Including linen replacement ($400,000), wages/benefits ($682,770) and utilities ($165,272), the yearly charges for the OPL totaled more than $1.58 million. That comes out to about 59 cents per lb. in processing costs. What’s more, to keep up with the growth, Harrison said the hospital would need another $500,000 in new equipment. Perhaps hospital management could justify this investment if they felt the OPL was supporting their vision of “world-class care in our communities.” But Harrison said it was falling far short of that goal. Beyond its high operating costs, the OPL was a source of headaches including:
High absenteeism, low morale: Employees regularly would miss shifts, which hurt productivity. There were numerous complaints about working conditions, including a demand that the hospital install air-conditioning in the laundry. “If you have 12–13 people that are on a day-turn shift and two or three of them don’t show up, you’ve got a problem,” Harrison said. “We had a lot of those things that neither I nor the linen people could control.”
Poor wash quality: Because the hospital places such a strong emphasis on quality, Harrison was frustrated by linens that came out spotty or discolored. “We weren’t producing the quality laundry that we should,” Harrison said. “We’re wanting people to come to our hospital. We’re treating them, we’re parking their cars for free, we’re doing everything that we can. And at times, we’re giving them poor laundry; stuff that they probably wouldn’t have accepted at home. I’m sure they wouldn’t.”
Lax linen control: While the hospital has won numerous quality awards, Harrison said the OPL consistently underperformed in a number of areas. For example, linen and uniform abuse—pilfering and hoarding were common. “We were trying to manage customer satisfaction, but when it came to our laundry, it was managing us,” said Harrison. “We were chasing it. Nursing would call and say ‘We don’t have enough linen. We don’t have enough scrubs. We don’t have enough this.’ It would be increased the next day. And four days later the same calls were being made. The systems weren’t in place to manage it. We had systems, but having systems and utilizing them are two different things. We were doing a poor job in the laundry business. It’s just that simple.”
On to outsourcing
Harrison said the combination of upgrade costs, the need for added capacity (adjusted patient days are up 9% this year alone) and hospital management’s general dissatisfaction with its OPL led to the decision to outsource the work. Bids were taken from four companies. Two were local laundries with no healthcare expertise. “I’m sure they’re good at what they do, but they had no clue what healthcare was all about,” Harrison said. “So as we looked and analyzed that, we didn’t really think we were going to get anything better than what we had in the first place. Except, we were losing all control by going to either of those laundries.”
What King’s Daughters wanted was not only healthcare laundry expertise, but someone that shared their vision of world-class care. “We were looking for a vendor that wanted the same thing that we wanted,” Harrison said. “It’s not always about the dollar. At King’s Daughters Medical Center, we don’t always go with the low bid. We go with who we think the right person is for our medical center, for our customer, for our community. We’re for doing the right thing.”
The linen supplier King’s Daughters selected made significant changes that advanced the goal of world-class care, Harrison said. For starters, he guaranteed cost savings of $200,000 for the first year. The OPL equipment was purchased at a fair price and removed. Most important, however, was the application of improved linen controls. “He came to the table with programs,” Harrison said, “with policies and procedures, computerized programs and cart makeup. I’m an administrator. I don’t get real involved in the day-to-day operations of laundry services, but over the past few years I’ve learned that the laundry is no different than any of the other departments within a hospital. It takes multiple programs and professionals who know the programs to implement and manage them.”
The improvements in linen supply were crucial not only to ensuring quality, cost-effective patient care, but also in upgrading relations with a key constituency—nurses. “Nursing is my customer,” Harrison said. “Now the patient is my customer too, but my whole division provides service. And we service the nurses. The nurses take care of the patients. We take care of the nurses. If we do a poor job of that, they relay that right on to our customers.
“Our (laundry) partner came in and started training our nurses. Prior to getting into this relationship, the phone was ringing and they would say, ‘We need this and we want it right now.’ That’s not the case today because we have the program to manage that—a computerized linen-tracking system that our partner has.”
Other improvements include training hospital staff in linen management and installing a locker system to reduce pilfering of scrubs. These, and other changes, have reduced the hospital’s pounds per patient day from 13.3 to 12.62. That’s still too high, Harrison said, but it’s moving in the right direction. More importantly, outsourcing has led to a shift in staff attitudes about linen. “We’ve made a major change in our culture, Harrison said. “We’ve made a major change in the thinking of our nurses. We’ve been meeting with nursing for the last year. Nursing never has had any accountability in the linen process—besides using it and fussing about what they didn’t have. They weren’t accountable for the budget. It wasn’t anything to them. In our next budget cycle, nursing will be responsible for their own linen budget.”
Another benefit of outsourcing is that 18 staff positions were eliminated. All but one of these people took other jobs in the hospital. No one was laid off, though one employee chose early retirement, Harrison said. The hospital’s unionized workforce resisted the OPL shutdown at first, but offering people alternate assignments cleared the way for the hospital to close a laundry service that wasn’t advancing its vision of providing world-class care. What’s more, King’s Daughters now has removed an obstacle to future expansion because its laundry vendor has adequate capacity to keep up with the hospital’s growth, Harrison said.
Seeking a ‘win-win’ partnership
When the outsourcing process began, Harrison said he was wary of any vendor that would lowball a bid and then not follow through with reliable, quality service. The vendor King’s Daughters chose for its laundry service avoided this gimmick, he said. What’s more, they showed the flexibility necessary to meet changing needs. For example, the launderer was happy to add linen service to meet the growing needs of the hospital’s guest-house program for patient family members at no cost, Harrison said. King’s Daughters’ strategy in outsourcing its laundry was always focused on service—not just price. “That’s not what hospitals are looking for today,” Harrison said. “They’re looking for win-win situations. We know you have to make money. Most importantly, we want our customers to be happy because it’s a competitive environment.”
For King’s Daughters, the move to outsource laundry services grew out of a drive to maximize competitiveness in the most strategically sound manner possible. Since laundry services fell outside the hospital’s vision and mission, outsourcing made sense as long as linen quality and processing efficiency improved.
The resulting decision to outsource is a win-win for both the hospital and its textile service company partner. Like a Kentucky thoroughbred, King’s Daughters is now better prepared to win its race for dominance of the regional healthcare market by expanding its world-class services to the community. At the same time, its textile services provider has delivered value to its customer through professionalism and expertise in linen processing and management. Bottom line? Outsourcing isn’t a zero-sum game. When it’s done right, as in this case, everyone comes out ahead. TR
Jack Morgan is editor of Textile Rental. Contact him at 877/770-9274 or e-mail jmorgan@trsa.org.
|
