A Laundry List of Reasons to Outsource

Laundry and linen processing services are being outsourced at an increasing pace. Hospitals are getting out of the laundry business and focusing on what they do best—caring for patients. This is part of a continuing trend as healthcare providers focus on their core competencies and leave the rest to outside experts.

According to the results of Modern Healthcare's 2007 Outsourcing Survey, the number of healthcare facilities outsourcing for linen and laundry services has increased by 12% and these services are now the most outsourced in healthcare. There are several reasons for this trend, from cost reduction to quality improvement.

Rising Costs

Hospitals still operating a laundry understand the many costs involved in the operation, the largest related to labor. Laundry production payroll and benefits represent the greatest portion of the operating budget. The addition of technology can help reduce the dependence on manual labor, but this may require steep capital investments.

The cost of utilities is at an all time high, as much as 10 cents in some parts of the country. The largest portion of utility costs is natural gas, making up approximately 60%, with water and electricity contributing the balance. As these costs continue to rise, increased pressure will be placed on laundry operations.

As the population ages and healthcare census increases, laundry facilities must be able to keep up with the growth in demand and still find ways to contain or reduce operating costs. This can be very difficult for hospitals. For example, a tunnel washer system delivers substantial cost savings, but it requires a capital investment of approximately $1.2 million. Hospitals operating with tight budgets can find this capital expenditure hard to swallow, even though it will save money in the long run.

Capital Infusion Required

For many years, hospitals believed they could save money by processing linen in-house. Large hospital systems built off-site laundries to process their high volume of linen. To overcome the large overhead required to operate such a facility, they began to generate revenue by obtaining outside laundry business. But as cost pressures squeezed operating margins, a large investment of new capital was inevitable to ensure the future operations of the laundry facility. These expenditures must be weighed against the other capital needs of the hospital, and it is often hard for administrators to justify steering dollars away from clinical equipment.

Many hospitals have made the strategic decision to divest of their laundry processing assets to avoid the large investment in replacement or upgrades. Crothall Laundry Services is uniquely positioned to assist hospitals with this transition, and can invest in not only the purchase of the facility itself, but also the large upgrades to ensure ongoing operations.

When Baptist Memorial Health Care's laundry processing site in Memphis needed over $1 million in upgrades, the decision was made to sell, even though Baptist enjoyed high levels of service and quality. After a thorough review of all viable options, Baptist selected Crothall Laundry Services to take over responsibility for its laundry and linen services. Crothall was able to purchase the facility, making the necessary immediate capital investments and ensuring continued levels of quality and service. David Alexander, Director of Contract Support & Logistics, comments, "Crothall has taken a great weight off my shoulders."

Mind Your Business

Crothall Laundry Services is focused on operating laundry facilities and delivering clean, sanitized linen to our hospital clients. We specialize in designing innovative and creative solutions to meet the unique needs of the over 700 healthcare customers we serve. In addition to acquiring laundry facilities, we also provide laundry management and consulting services.

We understand much of the opportunity in laundry and linen lies in utilization. As such, the company has designed numerous user-friendly programs and policies that help our customers better directly manage their laundry and linen costs.

It may be the best strategy for healthcare facilities to leave soiled linen to outside experts. Crothall Laundry Services has the resources to assume these responsibilities from your hospital and deliver expertise, quality, and savings in return.