During my time as a laundry consultant, I had the pleasure of working with a major hospital on reducing its linen costs. The immediate goal was to lower the annual expenditure on linens, which the hospital had been trying to accomplish for several years without success. It was making the same mistakes I continue to see many hospitals make. It was looking for a quick and easy solution to miraculously solve its problems. I’m going on record right now: There’s no such quick fix.
It’s interesting and educational, however, to review the efforts of this hospital to fix its problems and then compare them with its solutions. To save money on the purchase of replacement textiles, this hospital started an aggressive purchasing program designed to:
• Limit the amount of new linen stored at the hospital.
• Obtain the lowest cost per item based on purchase price.
• Reduce the number of linen items in circulation.
• Educate the linen users on the cost of linen service.
Goal No. 1: Reduce stored supplies
The first goal was to reduce the stores of new linen at the hospital. This can be done simply by not ordering more linen until the current stock has been put into circulation. The trick then becomes having new linen available when it’s needed. This requires an understanding of the hospital’s linen system and its seasonal fluctuations, including knowledge beyond that of purchasing agents.
This particular hospital made the mistake of linking with a textile vendor that promised one-week delivery on all linen items. The vendor was able to meet most of the orders for the first couple of months, but then delivery times began to stretch out until two or three weeks became the rule.
The vendor did a good job on what I call the “A” items in the linen inventory: the sheets, towels and pillowcases that represent 30% of the linen items but 70% of the dollars spent. Problems arose in the area of what I call “B” items: the other linen items that represent 70% of the linen items but only 30% of the dollars spent.
The hospital was ill-prepared to cope with the difference between the two types of items, especially when it had been promised one-week delivery. The natural result was periodic linen shortages on some items that made staff and patients unhappy. These problems caused administration to return to its former policy of stocking linen items in the warehouse in an effort to ensure an ample supply of linen at all times.
Goal No. 2: Reduce per-item costs
The second goal was to obtain the lowest price per item based on purchase price. The hospital adopted the philosophy of buying on purchase price instead of cost per use.
Based on this philosophy, the hospital began to purchase muslin (T128) sheets instead of percale (T180). The textile vendor assured the purchasing agent that the staff and the patients would never know the difference. The hospital entered into a period of buying lower-quality items that were “just as good, only less expensive” than what it had been purchasing. There were some short-range savings by doing this, but the test of any good purchasing program is the test of time. Problems related to this product choice began to develop in the hospital within the first year.
• The gowns that had so nicely covered the patients no longer performed in the same manner. There was less material per gown, so it was more difficult to handle patient IVs. Staff cut open more gowns at the sleeve. And because the gowns were smaller, ambulatory patients began to wear two gowns – one on the front, one on the back. This practice almost doubled the usage. The net result was a cost increase on this linen item.
• The muslin sheets that seemed to be such a good buy began to wear out at a faster rate than the percale had. The greatest concern was with the speed at which the cotton disappeared from the 50/50 blend. The majority of the cotton was worn out of the linen within a year, leaving a coarse, 100-thread-count polyester sheet. Nurses found these sheets unacceptable and took it upon themselves to rag out these sheets via the trash system.
The muslin sheets weighed more than the percale sheets and therefore cost more to process. The net result of the economizing effort on this linen item was to increase the monthly input of sheets, to increase poundage in the laundry and to decrease user satisfaction.
• Another linen item affected by the attempt to lower costs was the washcloth. This certainly seemed like a prime target for a lesser-quality product, especially because of the high replacement cost.
The hospital began to purchase a lighter-weight washcloth but still stayed with the usual 12x12 size. It wasn’t long before complaints began to come in from the nursing floors. The new, lighter-weight washcloth was shrinking a lot more than the others. After three or four washings, the washcloth became closer to an 8x8 size.
The net result of this change was an increase in utilization: nurses used twice as many to clean up a patient than before. Respect for the product dropped, and abuse increased. The replacement rate climbed until it was more than twice what it had been.
This list could go on as we look at attempts by the purchasing department to save money by altering the product quality. I’ve often heard purchasing agents say they would like to purchase higher-quality linen but couldn’t afford to because of the high loss rate.
Goal No. 3: Reduce total inventory
The third goal was to reduce the total number of linen items in the system. This process requires a high degree of communication between all parties involved with the linen system, and it requires that people responsible for the linen system have a high level of credibility. Because of all the problems created in trying to achieve the first two goals, all credibility was lost and no real attempt was made at standardization. It was felt that the other problems were more important and should be tackled first before concentrating on linen standardization.
Goal No. 4: Educate end users
User education sessions often degenerated into shouting matches. The laundry manager hadn’t conducted user focus groups to determine and address users’ concerns before he attempted to develop an educational program. He was only prepared to demonstrate to the users the problems they were creating for the laundry. He wasn’t willing to listen to and understand the problems that the laundry was creating for the users. Without two-way communication, much was said and done in the name of education but little was accomplished.
If this situation sounds familiar, it’s because of the universal nature of the problem. The solution to this hospital’s problem began with rethinking its basic desire to control linen replacement costs. The institution then reviewed its goals and decided that what it really wanted was to reduce the linen cost in the system. With this new focus in mind, the hospital began at square one to reimplement the program.
The “Missing” Goal: Loss control
The first step was to carefully select a prime linen vendor, one that could really help the hospital begin to develop the database necessary to properly manage its linen system.
The prime linen vendor needed to have a proven track record in the area of linen system development and consistent product availability. The staff of the linen vendor was carefully reviewed to ensure that the backup knowledge was available to make the system work.
The hospital began to view the linen vendor as a major part of its linen management system. To meet its new goal, the hospital decided that it wanted a high level of service from its linen vendor.
Another important decision was necessary before the final selection of a textile vendor was made, and that concerned the hospital’s buying philosophy.
I approached the hospital with the idea of buying higher-quality linen as a part of an overall cost-reduction program. I pointed out that the higher-priced merchandise should last longer and that the cost per use would be less. Administration was skeptical at first, but it had already tried the other way without success.
It was decided to upgrade the linen quality and, at the same time, incorporate a milled applied-marking system with the name of the hospital boldly applied to each sheet in the three-line SMI system. Terry products were converted to name woven goods.
Based on the desire for a high- quality linen product and an equally high level of service, a prime linen vendor was chosen. The hospital realized that it might end up paying for the services it wanted as part of the purchase price but fully expected to save it in reduced linen purchases.
Almost immediately upon selecting a prime vendor, plans were established to accumulate data for the database and vendor-assisted, semiannual linen inventories.
As the new linen items began to find their way into the linen system, user satisfaction increased. At the same time, the laundry manager, with my help, began to really communicate with the linen users. The effort at this time was to establish the lines of communication that would be so important later on in limiting loss.
The laundry manager found it easy to communicate with the linen users about the upcoming product changes. In doing so, he also learned the importance of listening and was able to solve a number of problems for the nursing units that had been going on for years.
I realize that most of this sounds too good to be true. But the results after two years speak for themselves. The hospital was able to reduce purchases of sheets by 66%, pillowcases by 50%, bath towels by 50%, patient gowns by 46% and washcloths by 75%.
Quality textiles an important base
The hospital I’ve described found that quality textiles are an important part of an overall cost-containment program. The hospital found that by starting out in the right manner the second time, it was able to develop a system to greatly reduce the new-linen stores at the hospital. This was not attempted, however, until the hospital database was developed to a point that enabled the institution to accurately project its needs.
The hospital also found that the linen users were more willing to help the laundry control costs through linen standardization when it appeared that the laundry was truly interested in meeting their linen needs.
Through the use of a linen management committee comprised of various linen users, the hospital was able to eliminate the use of bath blankets, draw sheets, X-ray gowns and bedspreads.
The greatest accomplishment, however, was the educational process set up by the laundry manager.
The educational system was designed to show the true cost of linen service. It detailed the role of linen loss and abuse in the total cost of providing linen service. The net result was to take linen service out of the realm of a free service and into the realm of a cost that must be managed. Linen utilization dropped and linen loss was reduced to help achieve the results shown earlier.
Can an approach like this be tailored to work in your institution? The answer is yes, provided that there is strong administrative support for the program. It’s important to note that the success of this program was based on communication, solid planning and accurate information. Any program can succeed if it is based on these principles.