Premier helps NJ hospital take back food service with significant savings
A 229-bed acute-care community hospital, St. Joseph’s Wayne Hospital, a division of St. Joseph’s Regional Medical Center and member of the St. Joseph’s Healthcare System since 2001, provides medical and surgical care, emergency and diagnostic services to the residents of Wayne and communities in northern New Jersey. Sponsored by the Sisters of Charity, the hospital has more than 400 physicians on its medical staff. www.sjwh.org/
Challenge:
Not-for-profit hospital managers have traditionally kept a keen eye on expenses, but today’s reality, even before healthcare reform legislation became law, requires them to take expense reduction to a new level. Management of St. Joseph's Wayne Hospital's Department of Food & Nutrition Services was outsourced to Sodexho, but the main campus of the New Jersey healthcare system in Paterson was self operated, and its director was responsible for both sites.
Solution:
When it came time in 2009 to review the outsourced management contract, the director asked the experts of Premier Foodservice Operational Strategies (FOS) to help assess both the contract and other options. FOS experts reported the following:
- Under the existing contract, the hospital was losing money and the contract’s leverage was in the hands of the management company.
- Re-negotiate the current contract to a more transparent type contract that would put leverage on the side of the hospital, or
- Transition the hospital foodservice department from contract managed to self operated would generate considerable savings.
Administration accepted the director of food and nutrition services’ recommendation that management of food service be brought in house. The director then asked Premier to assist with the transition. Premier provided resources including templates and timelines, ongoing guidance and onsite assistance when the transition occurred.
Result:
- Converting from contract management to self-operated, the hospital expects to save approximately 12 percent of its $1.8 million operating budget, in addition to better quality food, lower costs, and management allegiance to the hospital and health system.
- Without spending much money, the cafeteria was given a facelift. Employee satisfaction skyrocketed.
- Through careful reading of the verbiage in the former outsourced contract, the director and Premier’s consultant discovered and recovered about $42,000 in working capital that was due to the hospital.
- Both system hospitals are now using the same menus, recipes and cycles, allowing greater aggregation.
"As I dug further into the contract, I wanted to brainstorm with someone
who had expertise in this area. That's when I reached out to Premier and Brian
Bachman. From onset, Brian was responsive and informative. He was a good
sounding board. Together, we weeded through the opaque and confusing verbiage of
the contract to discover many opportunities for St. Joseph's. We recognized that
we were receiving a percentage of cafeteria sales, but there was no way of
knowing what the sales truly were. In addition, there was no transparency in the
use of Premier contracts and Committed Manufacturers' Agreements with U.S.
Foodservice. Were they really maximizing on the benefits of CMA's? Where did the
rebates go? We never saw them. Discovering the working capital of $42,000 that
was owed to the hospital was a great way to off-set the transition costs."
Lara M. Zamajtuk, M.S., R.D., Director, Food & Nutrition Services, St. Joseph's
Healthcare System, Paterson, NJ