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New CleanCare Plant: Wringing Out Inefficiencies, High Costs for Hospital Linen Cares
(PITTSBURGH, PA) May 17,1999...Ten months ago, Woody Ostrow presented five local hospitals with an offer they couldn't resist. He offered to help them cut material and labor costs, to make linen usage and tracking easier and more efficient, to eliminate equipment maintenance problems and to provide them with an influx of capital to boot. Ostrow, who is president of CleanCare, a family-owned and operated laundry that was founded in Pittsburgh by his grandfather in 1933, offered to purchase the hospitals' North Side-based co-operative plant. CleanCare assumed ownership of the facility in June of 1998, shifted the work to another CleanCare facility and immediately began total renovations to the plant. Ten months later, the glistening new plant has opened on the North Side, promising great improvements in efficiency due to its new technology.
"By purchasing this plant from the five hospitals, we were able to save them upwards of 25% of their laundry and linen budget. In addition, the renovations have increased capacity of the plant six-fold," said Ostrow. "The new North Side CleanCare facility is a win-win situation for everyone involved."
As a result of the purchase, the former owners of the co-operative plant- Allegheny General, St. Francis Medical Center, UPMC Passavant, Mercy Providence and Suburban General hospitals- are now free from the operating and administrative challenges of running a laundry. CleanCare, Ostrow said, could do all their laundry more efficiently and for less money, and relieve them of the costs and inconveniences associated with running their own linen facility.
Reducing Costs by Improving Technology
There were two significant reasons for the high costs of operating the
co-op plant: the layout of the plant was poorly designed and the overhead costs associated with maintaining the plant were significant.
"The co-op plant was not fully automated and the layout of the equipment was inefficient," said Linda Burgman, General Manager of CleanCare. "The hospitals were doing the best that they could given the resources they had to work with, but the results can't compare with what we can achieve with our state-of-the-art equipment and industry know-how."
Understandably, the hospitals, charged with the responsibility for reducing costs, didn't want to expend their resources upgrading the old plant, nor was it profitable for them to continue their in-house co-operative laundry operation. The purchase of the plant eliminated the problem instantly. The laundry loads were taken in at CleanCare's Point Breeze facility while renovations at the North Side plant were in progress.
According to Peter Clakeley, Vice President of Operations, for Allegheny General Hospital, the cooperative plant needed substantial capital improvements.
"We were looking at all areas of hospital operations for ways to improve efficiencies and improve productivity. Without those capital improvements, we wouldn't have been competitive, so we decided to investigate selling the plant and purchasing linen services," said Clakeley. "Ultimately, we selected CleanCare because they were local, offered very competitive pricing and had a long history of providing quality linens to hospitals at very competitive prices. We've been working with them since June of 1998 and we are very satisfied with the results."
Clakeley also commented on the improved working conditions at the plant: "When Woody rebuilt the plant, he really built the most state-of-the-art facility possible by taking his employees needs for safety and good working conditions seriously. It's clean, wide-open, well-lit and spacious. There's even an outdoor deck with a view of the city skyline for the employees," said Peter Clakeley.
Banking on Experience
Due to the overhead costs associated with maintaining in-house linen services, the benefits of turning to an outside vendor for services are significant for hospitals.
"Hospital laundry overhead costs include workers' compensation costs, capital expenditures on equipment, equipment maintenance, power and water utilities, costs of soap and linens and even storage space," Ostrow said. "By outsourcing laundry and linen service to us, hospitals eliminate these burdens and can allocate their resources toward what they do best: taking care of patients."
Ostrow knows a lot about laundry and running a business. CleanCare has been in the hospital linen business for more than fifty years and is the largest hospital laundry plant in the area. Ostrow has been working in the family business for more than 25 years and took over as president of the company in 1987. He received his MBA from the University of Pittsburgh in 1983. He's also currently the president of the Jewish Community Center in Squirrel Hill, a trustee of the Carnegie Library and on the Board of the United Way's western Pennsylvania chapter. Ostrow is an expert in maximizing efficiencies in the laundry industry. He is the former chair of the Production and Engineering Committee of the Textile Rental Services Association, is active in HOSLIN, a strategic management association, and has written articles for linen trade publications on production and quality issues.
He's also an intense hands-on manager who is always looking for ways to streamline processes and increase productivity. If all goes according to plan, CleanCare's operating capacity will double within the next five years. The state-of-the-art equipment and the design of the new plant, along with CleanCare's linen usage training program, have made this expansion possible.
Benefits of Automation
The new North Side plant is among the most automated in the country, bringing efficiency, speed and great capacity to CleanCare and the hospitals it serves. In the hospitals' old plant many of the laundry processes were labor intensive and time consuming.
The new CleanCare plant utilizes an 18-chambered "tunnel" where linens are pre-rinsed, washed, sanitized and dried and then mechanically fed through ironing and folding machines at a rate of 200 wet pounds per minute. The new process starts as each load of linen is dropped at the dock. After an initial sort of linen, laundry isn't touched again until it is positioned at finishing equipment for automatic ironing and folding. This "hands-off" approach not only streamlines the laundering process, but eliminates human error, such as the use of too much or too little detergent, thus improving the end product for the customer and reducing utility costs for CleanCare.
Don't Forget Training and Tracking
According to CleanCare's Linda Burgman, the most significant aspect of linen costs in health care settings is training hospital staff to use linens efficiently. In an effort to help hospitals and health care providers reduce their linen costs, Linda, Woody and the CleanCare training team meet with hospital staff and administrators to establish linen usage training programs and tracking systems.
"Our computerized tracking systems allow us to track a hospital department's linen usage down to the single item. We can show the purchasing manager exactly how much it costs them every time someone uses an excess towel or blanket," said Burgman, "and then we multiply that cost out to show how much those extra towels and blankets cost them over a month or a year. That bottom line shows the value of training staff in proper linen usage."
The Western Pennsylvania Hospital has utilized CleanCare's tracking services since 1992, and saw their linen usage decrease by 22%.
"Accountability is an important factor in monitoring hospital resources such as linen. Through the computerized tracking system, user departments at West Penn are now aware of their utilization," said Matt Bukovan, Manager of West Penn's Transport Services, Linen and the Mail Center departments.
As for Woody Ostrow, the new North Side plant is just the beginning. Renovations are on the horizon for CleanCare's Point Breeze and Lawrenceville facilities, offering further efficiencies and economies of scale for CleanCare's health care and hospitality clients.
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