TRSA - Tackling the Penny-Wise

Key: Hospitals Author 1: Stephenie Overman

Tackling The Penny-Wise, Pound-Foolish Trend Emphasize service expertise, branding, hygiene and flexibility to satisfy both hospital and outpatient customers

It’s no surprise that pinching pennies to save on pounds of laundry is the trend in the healthcare industry.

“We are looked at as a commodity. When we get a bid, it’s structured as ‘What’s the cheapest we can get?’ on linen,” says Liz Remillong, vice president of laundry services for Crothall Healthcare in Phoenix.

But that’s not the best way for healthcare executives to look at it, Remillong says. “Really, we are a service, we are not a product. You need to dig down to show them what really is important.”

A big reason for that attitude is that the people who are making the decisions are no longer the people who are involved in day-to-day operations, she says. These executives just want to get the best deal in laundry service; then move on to the next issue. It’s up to commercial laundry representatives to move the conversation past a focus on the lowest price to a recognition of the true value of the service, to convince them to avoid being penny-wise, pound-foolish. First, Remillong says, the healthcare executives need to define exactly what they’re looking for, so that everybody is bidding apples to apples. They need to have specific quality guidelines, fill rates and delivery requirements. Then, “It’s important that their service provider helps them use the product in a way that reduces cost. If they get 50 cents a pound, they’re happy. But it can be like driving 10 miles to find gasoline that’s cheaper. If they don’t know how to use the product right, the cost could be higher than paying 55 cents when there’s a great program in place,” she says. What’s more, the biggest value-added is to “use our expertise to show them how to use the product to keep cost down, yet maintain staff and patient satisfaction.” In recent months, Remillong says that she has begun to see pushback against going with the lowest bidder because of the reduction of service. “We have shared with healthcare administrators: You bid bronze and your hospital is used to dealing with gold.” VALUE-BASED SERVICE Josh Luke also preaches value-based service. Luke, who is a veteran hospital CEO and a ForbesBooks featured author, is slated to give a Nov. 20 keynote address at TRSA’s 8th Annual Healthcare Conference & Exchange in San Diego. Luke’s topic is “Selling to Hospitals in the Value- Based Care Era.” “The question of the hour this year is how to move back to value,” Luke says. “One of the ways is to bring solutions beyond what your product and services provide, it’s not necessarily to provide other types of services.” He also emphasizes that the buyer for laundry services today usually isn’t someone familiar with the day-to-day needs of the hospital. “In the past, the operating room director would make decisions, for example. Now it’s the CEO. It’s all done at the executive level and they’re probably going to go with the lowest-cost option. Now cost is No. 1.”

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