DEPARTMENTAL - SPECIFIC DATA

Department: Linen

Bed Size Classification

 "A"

 "B"

 "C"

 "D"

 "E"

 "F"

 "G"

< 49 Licensed Beds

 50 - 99 Licensed Beds

 100 - 199 Licensed Beds

200 - 299 Licensed Beds

 300 - 399 Licensed Beds

400 - 499 Licensed Beds

500+ Licensed Beds

Inventory Amount

$4,002 

 $12,225

 $39,462

 $49,324

 $100,691

 $123,290

 $290,716

Typical Inventory Turns

Typically, Linen is closely watched & monitored by the Laundry or Housekeeping staff for Departmental-specific usage and inventory shrinkage (theft). Annual inventory turns for this area can be high; values of 12.6 - 18.8 are not uncommon. These turns translate to day's on-hand inventory of 19.4 - 29.0 (calculated as: 365 annual days divided by 12.6 or 18.8 inventory turns).

Many Hospitals have their laundry & linen picked up, cleaned & pressed, packaged and delivered by an outside service. These services are, typically, local and provide similar cleanings for other hospitals within a market service area. Still others belong to a profit-sharing co-op, with all institutions sharing the expenses and rewards of consolidated utilization.

Hospitals pay a per-pound processed fee (dry weight) for all of their cleaning needs. In most instances, the initial and replacement cost of the linen (sheets, towels, bed spreads, pillow cases, etc.) is "built into" the per-pound processing fee, making cost-effective comparisons with other contracted laundries quite difficult to determine.

Many Laundry managers prefer to remove some laundry items from the batch, preferring instead to pay for them on a per-piece basis. These select items can include: lab coats, bedspreads, blankets and any other heavyweight item which should be washed separately. The cost to clean & press these items is significantly higher than what the hospital pays for its flatwork & towels.

Alternate Uses For Linen

Laundry Managers are constantly balancing the daily need for clean linen with the demand for, and availability of, this linen.

In many hospitals, linen is horded by staff on the Nursing floors. There may be many reasons for this hording, but most identify that they ran out of their allotted supply and want to prevent that from happening again.

On the other side of utilization, MMC has witnessed linen being used for purposes for which it was not intended: Patient's towels used to wipe up blood spills, bath blankets used to insulate windows from cold drafts, etc.. Each of these incidents throws off a Nursing unit's utilization figures, wastes linen and costs the hospital money.

Unusually, many patients want to take a memento of their stay at the Hospital and will stuff their suitcases with towels, pillows, soap, etc.. As a result, a majority of hospitals have resorted to dispensing one admission kit to patients upon their arrival, regardless how long their length of stay is. While this may control some items "walking" out the front door, it does not address linen leaving the facility. The only methods used with success consist of proper staff education and use of strictly maintained par levels.

Scrubs - they walk out the doors of your Hospital faster than you realize. You see them everywhere outside your facility. In fact, some healthcare facilities have seen inventory shrinkage as high as 25% on scrub garments. A few years back, it was thought that imprinting the scrubs with the name of the hospital would ensure that they remain within the facility. In fact, the opposite reaction occurred; imprinted scrubs suddenly became "hot" property and those with a federal I.D. (i.e., "Property of the U.S. Navy", etc.) became prime targets for theft.

We have seen other attempts to control scrubs, with the most expensive control mechanisms succeeding on only a very limited level. One control mechanism used is a scrub dispenser made by Autovalet. To us, it seems like an expensive tool to control scrubs. You'd have to lose a lot of these garments to cost-justify a mechanism like that.

The one control mechanism which seems the least popular, yet most successful, is the "sign out" method. It consists of a small office, typically with a "dutch" door, within which an attendant is situated. This attendant takes down the surgeon / resident / staff member's name into a log and hands them a set of scrubs. The user's name is scratched off when the items are returned. It works because a face & name are identified with that set of garments.

We've even seen scrub garments sold in the hospital's gift shop at a discounted rate. Ask any O.R. tech or nurse - they'll tell you they're great to do housework in. They also make great pajamas.

Outsourced vs. In-House Laundry

As laundry equipment ages past its useful life, Finance Manager are beginning to question whether their laundry can be processed at a cheaper cost, than what the facility is spending currently. These same questions are being asked by Administrators who are planning to build a a new, or replacement, hospital.

MMC wants to make sure that all factors are considered as part of the "make vs. buy" equation:

If the Hospital does its own laundry, the following cost factors should be considered in determining the in-house cost per pound formula:

If the Hospital uses an outside contractor to do its laundry, the cost per pound that the Hospital pays should include the following:

Laundry processing: In-House vs. Outside Contracting

In-House Laundry & Linen Facility: Performance Measures (1993 & 1996)

Performance Measures

 25th Percentile 1993

 25th Percentile 1996

 50th Percentile 1993

 50th Percentile 1996

 75th Percentile 1993

 75th Percentile 1996
 100 Lbs. Clean Laundry Processed or Distributed

 18,575

 8,735

 27,490

 14,867

 43,786

 26,994
 Lbs. Processed / Adj. Patient Day

 15.5

 14.0

 18.5

 16.9

 20.9

 20.2
 Lbs. Processed / Adj. Discharge

 85

 75

 117

 92

 155

 112
 Labor Expense / 100 Lbs. Laundry Processed

 $14.90

 $15.50

 $18.20

 $19.20

 $22.80

 $21.80
 Non-Labor Expense / 100 Lbs. Laundry Processed

 $10.60

 $9.30

 $15.00

$12.60 

 $18.80

 $15.90
 Total Expense / 100 Lbs. Laundry Processed

$28.90 

$28.20 

$34.50 

$32.00 

$40.90 

  $36.30

Source: Materials Management In Health Care magazine; September, 1996.
Note: Survey sample sizes = 1993 (74 Hospitals) & 1996 (70 Hospitals).
 

The chart below displays figures for contracted (outside) laundry processing & distribution:

Outsourced / Contracted Laundry & Linen: Performance Measures (1993 & 1996)

 Performance Measures

25th Percentile 1993

 25th Percentile 1996

 50th Percentile 1993

50th Percentile 1996

75th Percentile 1993

 75th Percentile 1996
 100 lbs. Clean Laundry Processed or Distributed

 10,538

 7,997

 21,056

 13,801

 26,769

 24,681
 Lbs. Processed / Adj. Patient Day

 12.1

 11.9

 14.5

 13.7

 16.8

 16.2
 Lbs. Processed / Adj. Discharge

 82

 68

 101

 84

 114

 98
 Labor Expense / 100 Lbs. Laundry Processed

 $5.20

 $4.20

 $8.10

 $5.90

 $9.60

 $9.00
 Non-Labor Expense / 100 Lbs. Laundry Processed

 $33.60

 $38.90

 $43.10

$45.00 

 $52.60

 $50.10
 Total Expense / 100 Lbs. Laundry Processed

$42.80 

$46.20 

$49.80 

$51.80 

$60.00 

$58.00

Source: Materials Management In Health Care magazine; September, 1996.
Note: Survey sample sizes = 1993 (74 Hospitals) & 1996 (70 Hospitals).

The chart below compares in-house laundry vs. outside, contracted service processing costs using three indicators as the denominator, for the year 1996 only:

In-House vs. Outsourced Laundry & Linen: Performance Measures (1996 only)

 Performance Measures
In-House Laundry
25th Percentile

In-House Laundry
50th Percentile

In-House Laundry
75th Percentile

Outsourced Laundry
25th Percentile

Outsourced Laundry
50th Percentile

Outsourced Laundry
75th Percentile
 Labor Expenses / 100 Lbs. Laundry Processed

 $15.50

 $19.20

 $21.80

 $4.20

 $5.90

 $9.00
 Non-Labor Expenses / 100 Lbs. Laundry Processed

 $9.30

 $12.60

 $15.90

 $38.90

 $45.00

 $50.10
Total Expenses / 100 Lbs. Laundry Processed

 $28.20

$32.00

 $36.30

 $46.20

 $51.80

 $58.00
 Labor Expenses / 100 Adj. Pt. Days

 $275.00

 $368.00

 $450.00

 $60.00

 $86.00

 $111.00
 Non-Labor Expenses / 100 Adj. Pt. Days

 $151.00

 $235.00

 $338.00

$483.00 

 $629.00

 $762.00
 Total Expenses / 100 Adj. Pt. Days

$430.00 

$606.00 

$784.00 

$577.00 

$702.00 

 $836.00
 Labor Expenses / 100 Adj. Discharges

$1,473.00 

$2,054.00 

$2,520.00 

$344.00

$472.00

$740.00
 Non-Labor Expenses / 100 Adj. Discharges

$737.00 

$1,257.00 

 $1,916.00

$2,874.00

$3,766.00

$4,551.00
 Total Expenses / 100 Adj. Discharges

$2,387.00 

$3,149.00 

 $4,229.00

$3,227.00

$3,227.00

$5,143.00

Source: Materials Management In Health Care magazine; September, 1996.
Note: Survey sample sizes = 1996 (70 Hospitals).

Does your processed poundage vary significantly (more than 10%) from the figures represented above?

You may want to review where your laundry poundage is going. The following are factors which can increase your total laundry poundage:


Are your costs significantly higher than those identified above?

First, make sure you are including all factors in your cost calculation (hint: See the bulleted sections at the beginning of this section for items to include or exclude from your cost determinations);

Secondly, look at the depreciable life of your equipment (hint: Older equipment is inherently less efficient than replacements available today, requiring more natural gas per load, water, etc.);

Thirdly, review your utility costs and any recent taxes or cost increases levied on your facility;

Fourth, review your total staffing complement. Do you have the correct number of staff? Is there coverage for periods of holiday, sick & vacation (H,S & V)?

Fifth, review any excessive overtime the Department incurred and the reason for that overtime;

Sixth and finally, determine the appropriateness of your laundry & linen staff. Do you have the appropriate number of staff performing the correct functions? (Hint: Do you have staff hand-sorting or hand-folding bed sheets, blankets, etc. when these processes are easily automated?)


Click here to go back to the Main Department - Specific data page