An Association for Linen Management (ALM) member recently asked how to determine the appropriate price for producing custom reusable surgical packs. As I tried to explain, I realized the pricing of surgical packs is a complicated process that requires a thorough understanding. The more we talked, the more I realized how little there is in print about this topic.
To accurately determine the cost of producing a surgical pack, it is important to understand the component costs that go into producing the end product. These include:
Surgical linen has a defined maximum life normally determined by the manufacturer. The Association for the Advancement of Medical Instrumentation (AAMI) standard, Liquid Barrier Performance and Classification of Protective Apparel and Drapes Intended for Use in Health Care Facilities (ANSI/AAMI PB70), dictates the acceptable performance level that each barrier piece of textile must meet over its lifetime.
Manufacturers, in response to these guidelines, have lowered their expected number of uses to ensure compliance. This predetermined life is based on careful test washings and is expressed by the quality-control grid attached to the linen item. The new barrier linen items normally have an expected life of about 60 washings.
The item is designed to be discarded, or downgraded for a secondary, noncritical purpose, after the recommended number of washings. One cannot, however, equate 60 washings with 60 uses. Often an item is discarded before it reaches the 60 uses because of abuse by the end-user or is damaged by laundry equipment. Some items need to be washed more than once before they are acceptably clean.
I normally use a conservative estimate of 50 uses when determining the cost per use of the new generation of wrappers, surgical gowns and surgical drapes. I estimate O.R. towels have 10 to 15 uses.
Once you have determined the expected number of uses, the cost per use of each linen item is determined by dividing the cost of the item by the expected number of uses.
SORTING, WASHING AND DRYING
Surgical linen should not be ironed because of the potential for lint generation, according to AORN. The traditional laundry processing cost for surgical linen is therefore restricted to the cost of sorting, washing and drying. It should be a fraction of what it would normally cost you to produce a pound of linen. If you charge 52 cents per pound for linen rental, you can start by backing out your profit margin, your linen replacement cost and 65-75% of your production labor cost. This should get you close to the cost of just sorting, washing and drying.
You can, of course, do a more detailed analysis to determine the actual cost per pound. The important factor to remember is that the cost should always be substantially lower than the normal cost per pound charged to your customers.
INSPECTION, DE-LINTING, MARKING AND FOLDING
The majority of the labor cost associated with surgical linen will be found in this area. Barrier linen items should be inspected on a light table, de-linted, the quality-control grid marked, and then folded. Wrappers should be inspected, marked and then laid out flat, ready for use in packs.
Conduct a time-and-motion study to determine the labor cost associated with each product. I recommend using a task sheet to initially gather the needed data. A task sheet is set up so the worker can record the item he or she is working on, how long it took to perform the task, and how many items were produced.
An example: Mary Jane inspected, de-linted and folded O.R. towels from 8 a.m. to 9 a.m. and produced 400 pieces. A reliable sample of data from several different employees will give you an idea of the current rate.
This data-collection procedure is also the first step in developing production standards for this oft-ignored portion of the laundry. To set these standards, it is important to develop a system that will track production by individual and by piece. Examples of tasks you need to track are:
Once you have determined the time per function, you can determine the cost by taking the average labor rate for the area (including fringe benefits) for the employees involved in the pack-making operation. If you are unsure of the fringe-benefits cost, I recommend adding 25-30% to the average hourly wage.
The average hourly salary times the hourly fraction it takes to make a pack (minutes per pack divided by 60) will equal the labor cost involved in this area.
ASSEMBLY, WRAPPING, LABELING AND PACKAGING
Each activity that goes into producing a pack needs to have an established labor standard. Once the component parts have been inspected, marked and folded, it is time to assemble packs and wrap them. This may be as simple as placing a folded surgical gown, a folded surgical towel and a sterile indicator together before wrapping them into a pack.
Activities that need to be tracked in this area are:
Again, after determining the time per function, you can determine the cost by multiplying the average hourly salary by the hourly fraction it takes to produce a pack.
The supply cost per pack includes autoclaving tape, sterile indicators, and any other supplies that are required to make a particular pack.
You can determine the cost of autoclave tape by dividing the amount of tape in inches used per pack by the number of inches per roll times the cost per roll.