Survey: Laundry Remains Most-Outsourced Hospital Department

CHICAGO — Laundry services held the top spot among hospital department contracts in 2007 for a second straight year, according to the 30th annual Outsourcing Survey produced by our sister publication, Modern Healthcare.

Laundry, housekeeping and food service were the top three departments outsourced last year. They accounted for a combined 13,974 healthcare clients in 2007, up approximately 4% from 13,412 reported for the previous year.

Laundry rose 3.2% to include 8,112 facilities, while housekeeping increased 6.9% to 3,316. Food service rose 4% to 2,546 facilities, surpassing clinical diagnostic equipment maintenance, which was third in last year’s survey.

Overall, the number of facilities in the list of top 20 departments grew approximately 6.5% to 23,773 in 2007 from 22,212 in 2006.

Modern Healthcare’s survey provides an “unscientific look at hospitals’ outsourcing practices based on self-reported information from vendors providing department-management services to healthcare providers,” writes reporter Shawn Rhea.

While no single trend emerged from this year’s survey, Rhea writes, follow-up conversations with hospitals, group purchasing organizations and vendors show outsourcing continues to be an important and evolving resource for hospitals.

Fifty-two companies responded this year, compared to 55 last year. Full survey results appeared in Modern Healthcare’s Oct. 6 issue.

CLEANING UP

The top laundry contractors in 2007, by total number of healthcare facilities, were:

• Angelica Corp., Alpharetta, Ga. — 4,680 contracts in 2007 from 4,640 contracts in 2006 for a 0.9% increase.
• Healthcare Services Group, Bensalem, Pa. — 2,301 contracts in 2007 from 2,210 contracts in 2006 for a 4.1% increase.
• Crothall Services Group, Wayne, Pa. — 749 contracts in 2007 from 713 contracts in 2006 for a 5% increase.
• Unitex Textile Rental Services, Mount Vernon, N.Y. — 254 contracts in 2007 from 232 contracts in 2006 for a 9.5% increase.
• Sodexo Health Care, Simsbury, Conn. — 99 contracts in 2007 from 47 contracts in 2006 for a 110.6% decrease.
• HHA Services, St. Clair Shores, Mich. — 20 contracts in 2007 from 17 contracts in 2006 for a 17.6% increase.
• Rite Way Service, Birmingham, Ala. — Nine contracts in 2007 from four contracts in 2006 for a 125% increase.

The top housekeeping contractors in 2007, by total number of healthcare facilities, were:

• Healthcare Services Group, Bensalem, Pa. — 2,310 contracts in 2007 from 2,215 contracts in 2006 for a 4.3% increase.
• Sodexo Health Care, Simsbury, Conn. — 541 contracts in 2007 from 530 contracts in 2006 for a 2.1% increase.
• Crothall Services Group, Wayne, Pa. — 284 contracts in 2007 from 231 contracts in 2006 for a 22.9% increase.
• HHA Services, St. Clair Shores, Mich. — 112 contracts in 2007 from 103 contracts in 2006 for an 8.7% increase.
• Rite Way Service, Birmingham, Ala. — 42 contracts in 2007 from eight contracts in 2006 for a 425% increase.
• ISS TMC Services, Livingston, N.J. — 27 contracts in 2007 from 15 contracts in 2006 for an 80% increase.

Use of contracted services increased in 16 of the top categories. Only three showed declines: rehabilitation departments, down 7.6% from 1,543 contracts to 1,426; parking garages, down 7% from 171 contracts to 159; and nursing staff, down 0.8% from 129 contracts to 128. The number of medical records contracts (272) was unchanged.

David Klumpe, executive vice president of enterprise accounts for the Dallas-based group purchasing organization Broadlane, told Modern Healthcare he isn’t surprised hospitals are moving to outsource a broader range of services.

“The business of running a hospital is incredibly complicated, and as specialty companies emerge that focus exclusively on a particular area of business, then hospitals are interested in using them to achieve best practices,” Klumpe said. “They are increasingly looking for any source of competitive advantage that they can find.”

“The strongest argument for outsourcing is when a hospital has made several attempts to manage a department and they can’t get their arms around it,” Dave Edwards, vice president of supplier relations for the GPO Premier, told the healthcare business news magazine. “Then they often say, ‘This is drawing our energies and not letting us focus on our core business, which is caring for patients.’”

To learn more about Modern Healthcare, visit www.modernhealthcare.com.