Sample Linen Management

LinenManagement

PracticesBridges to Operational Management

ONE KNOLLCREST DRIVE • CINCINNATI, OHIO 45237 • (513) 761-9255 • (513) 761-0467 FAX

http://www.standardtextile.com

Linen Management Practices - Bridges to Operational Management © Copyright 1998, Standard Textile Co., Inc. All rights reserved. No part of this book may be reproduced in any manner whatsoever without written permission, except in the case of brief quotations embodied in critical articles and reviews.

Printed in the U.S.A.

Published by Standard Textile Co., Inc., One Knollcrest Drive, Cincinnati, Ohio 45237Phone: (513) 761-9255, Fax: (513) 761-0467

ControlTex® is a registered trademark of Standard Textile Co., Inc.Tex Tyler™ is a trademark of Standard Textile Co., Inc.

TEXknowlogySM is a service mark of Standard Textile Co., Inc.

Library of Congress Catalog Card Number: 98-60557

Second Edition, November 2004First Printing, October 1998

Composed in AGaramond and ITC Offi cina Serif, Adobe Systems Incorporated.

Edited by Judy Kehoe, Frank Kerley, and Jim Gilbert.Cover design and publication design by Amy M. Clark.

Cover photography by Rick Dieringer Photography.

ISBN 0-9663708-1-3

vi

Linen Management Practices

Contents

Forward .................................................................................x

Introduction..........................................................................xiA Multi-Billion Dollar Industry ...................................................................................xiA Unique Commodity ...............................................................................................xiiSupplier Relationships.................................................................................................xii

Chapter One–The Basics..........................................................1Common Linen Terms..................................................................................................2Traditional Linen Model ...............................................................................................5Tex Quiz: Can you answer these questions? ......................................................................5Linen Flow Model ........................................................................................................6Policy Development ......................................................................................................7Policy Components.......................................................................................................7Tex Tip: Before developing a policy, ask the following questions .........................................8Basic Cost Elements......................................................................................................9Measurements .............................................................................................................10Tex Tip: Writing Analysis Reports .................................................................................11

Chapter Two–Distribution.....................................................13Distribution Guidelines ..............................................................................................13Developing a Distribution Plan...................................................................................14

Step 1 - Create a Product Profi le List .....................................................................................14

Tex Tip: ControlTex® Linen Management Software........................................................14Step 2 - Create a Distribution Location Profi le ......................................................................15Step 3 - Establish a Delivery Schedule ...................................................................................16Step 4 - Establish Consistent Delivery Review Practices ........................................................18

Monitoring High Volume Consumers.........................................................................19Sample Calculations....................................................................................................21

Labor Cost Calculations ........................................................................................................21

vii

Table of Contents

Chapter Three–Consumption.................................................23Utilization Measurements ...........................................................................................24Tex Tip: Sharing Costs with Consumers.........................................................................24Calculating Utilization................................................................................................25Clinical Practices for Consumption.............................................................................26Financial Responsibility ..............................................................................................26Sample Policies ...........................................................................................................27Sample Calculations....................................................................................................30

Departmental Linen Utilization Costs...................................................................................30Par Level Stocking Levels.......................................................................................................31

Patient Transfer Linen Consumption ..........................................................................32Utilization Policy Change ...........................................................................................33

Chapter Four–Retrieval.........................................................35Retrieval Guidelines ....................................................................................................35Measurements .............................................................................................................35Tex Tip: Soil Factors ....................................................................................................36Retrieval and Procurement ..........................................................................................36Soil Factors .................................................................................................................36Sample Calculation .....................................................................................................38

Soiled vs. Clean Weight.........................................................................................................38

Chapter Five–Processing ......................................................39Tex Tip: The American Laundry and Linen College.......................................................39Basic Elements ............................................................................................................40Measurements .............................................................................................................41Sample Policy..............................................................................................................42Sample Calculations....................................................................................................43

Linen Costs per Pound..........................................................................................................43Productivity Measures ...........................................................................................................45Overhead Costs .....................................................................................................................46Equipment Costs ..................................................................................................................47

viii


Chapter Six–Procurement .....................................................49Why Buy? ...................................................................................................................50Procurement Considerations .......................................................................................50Procurement Elements ................................................................................................52Item Specifi c Replacement Procurement .....................................................................54Tex Tip: The Domino Effect .........................................................................................55Sample Policy..............................................................................................................56Tex Tip: Before analyzing linen related costs, answer these questions ................................57Replacement Purchase.................................................................................................58Start Up Inventory Purchases ......................................................................................59Purchase Costs ............................................................................................................60Cost Per Use–Single Item............................................................................................61Cost Per Use Comparison of Multiple Items ...............................................................62Annual Apparel Costs .................................................................................................63Disposable Product Costs............................................................................................64Comparison of Reusable and Disposable Prod uct Costs Per Use .................................65Product Standardization..............................................................................................66Internal Labor vs. Supplier Service Charge ..................................................................68Measuring New Products & Services Costs .................................................................71

Chapter Seven–Physical Inventory ........................................73Physical Inventory Count Guidelines .........................................................................74Tex Tip: Inventory Tracking..........................................................................................75Alternative Physical Inventory Practices ......................................................................76Mysterious Disappearance Costs .................................................................................77

Chapter Eight–Action Plans .................................................79

Chapter Nine–Compliance....................................................83Monitoring .................................................................................................................84Tex Tip: JCAHO .........................................................................................................84

Index ...................................................................................87

ix


ForwardForwardStandard Textile has always focused on working with our clients to reduce total delivered cost over a healthcare textile product’s useful life. To accomplish this we have committed to 3 basic business philosophies:

1. Develop professionals with the appropriate level of expertise to assist our clients.

2. Develop products that will maximize the efforts of our partnership.

3. Invest in technological tools to make it easier for all the participants in the value chain to achieve positive results.

Our focus has made possible this book of knowledge. This fi rst edition is a compilation of key success factors and business practices to help linen management professionals at all levels become more effective at their job. We recognize this to be a continuous work in process. As we collect data of improved business practices from the fi eld, the hardcopy of this book will be reprinted. Between printings we will continue to lead the industry by featuring the most up-to-date edition electronically through our TEXknowlogySM

On-line Information Service website.

Our clients have made countless contributions to this volume, either in the form of ideas, evaluation or direction. Healthcare textile management is a fi eld enriched by the experiences and learning of others and we have attempted to bring that knowledge to your desktop.

The book is divided into nine chapters and follows the linen products through the recirculating linen trail. Throughout you will fi nd we have used a few basic conventions to demonstrate the concepts we are reviewing. “Tex” tips are presented by Standard Textile Co., Inc.’s “virtual assistant” Tex Tyler™. Tex is an animated character that functions in all of our software applications to help guide the way. The tips he presents in the written format are designed to call out special points of emphasis for an industry newcomer. The other tools we have used to convey more advanced concepts include charts, tables and example policies. These have all been created for illustration purposes and have often been provide by other clients. Because every situation is unique, please carefully review and evaluate any material in light of your local requirements before implementing.

It is our sincere hope that this book, its corresponding website support and the examples within expand our ability to help you achieve the desired results within your linen system. This tool is designed to further advance the commitment Standard Textile Co., Inc., has made to its clients through maximizing the effectiveness of our professionals, products and technology.

To our clients who have contributed to this book through the learning we experienced together, thank you. To everyone reading this book today, we look forward to creating our next edition with your involvement.

- Standard Textile Co., Inc.

xi

Table of Contents

IntroductionIntroduction

A Multi-Billion Dollar IndustryAs the Health Care industry copes with dramatic changes in managed care, cost reductions, and re-engineering, facilities struggle to provide patients and staff with a simple commodity: linen.

Why are sheets, blankets, surgical scrubs and a host of other items so diffi cult to manage? Consider these 1994 statistics1:

• 33 million patients were admitted to hospitals• 96 million patients visited Emergency Rooms• 24 million patients underwent surgery

The majority of these patients require linen during their medical visit. The estimated cost of laun der ing sheets, blankets, and other items necessary to support this patient volume is over $4.1 billion dollars$4.1 billion dollarsannually. It is estimated that another $550 million - $1.1 billion or more is required to replace linen that was lost or worn out during the year.

In aggregate, these statistics sound impressive; however, an individual facility’s linen budget may only account for less than 1% of the facility’s total budget. Therefore, more effort and resources may be focused upon patient care, medical equipment and facilities expenses.

Limited fi nancial recognition can impact all aspects of linen management including procurement, distribution, end user consumption and other critical functions. This impact can be seen in the following examples.

• Nursing and administrative staff searching for linen when inventory stocking levels are inadequate.• Linen stored in inaccessible locations, reducing the quantity available to end users.• Scrub apparel in inappropriate sizes for doctors and other staff members.• Removal of linen and supplies by parents of each newborn infant.• Linen thrown into a trash dumpsters instead of soiled linen containers.• Destruction of new linen for maintenance activities (i.e. painting, construction).

1American Hospital Association, “Hospital Stat, Emerging Trends in Hospitals” (1995-96 edition), as published in Health Care State Rankings 1996Rankings 1996, Morgan, Morgan, & Quitno, Editors, Fourth Edition.

xii


These incidents are not unusual, but can be prevented using Standard Textile Co., Inc.’s proven management practices. Over 50 years of experience with our healthcare textile customers has shown us that linen is an asset worth protecting. Reaching that goal requires implementing basic policies that support consumers and control linen related costs.

A Unique Commodity Although linen is a basic commodity, it has unique qualities which make it complex to manage. Unlike a single use item, linen is a reusable product which requires the coordination of people, materials, and processes to maintain the asset for multiple uses. Specifi cally, it requires:

• 24 hour accessibility; inaccessibility can cause crises for staff and patients• Coordination within the supply chain (procurement, distribution, consumption and retrieval) for

everyevery useevery useevery• Timely processing by laundries to maintain inventory levelsTimely processing by laundries to maintain inventory levelsTimely processing• High standards of cleanliness, requiring separation from other supplies during distribution or

retrieval.• Availability for more expensive, revenue generating services to be performed (surgery, patient care, Availability for more expensive, revenue generating services to be performed (surgery, patient care, Availability

examinations, etc.)

In addition to controlling a circulating commodity, managers also face the challenge of less time, new responsibilities, limited linen knowledge, and cost reductions while still providing quality patient care. Supervisory responsibility is being delegated to managers with no previous linen experience. This can result in less time devoted to linen management when managers are responsible for more products and services than ever before.

Supplier RelationshipsLinen management requires the coordination of suppliers, distribution staff, consumers, and man age ment to control costs and provide quality products. Health care facilities continue to consolidate their operations in response to market pressures. Responsibility for negotiating goods and services has cen tral ized to the corporate level, resulting in fewer but much larger contracts with linen suppliers. These re la tion ships encourage individual facilities to work cooperatively, not competitively, with a limited number of suppliers. There is also an increasing need to form supplier alliances where all parties share responsibility for cost reductions, especially in a guaranteed cost and performance agreements.

The combination of a unique product in a changing environment creates the need for all participants in the linen supply chain to create and monitor processes that result in a mutual, cost effective relationship for all parties.

LinenManagement

PracticesBridges to Operational Management

1

Chapter One - The Basics

Chapter One

The BasicsThe Basics

GoalsDespite the changing internal environments and new relationships with suppliers, a linen manager must continually balance fi ve goals to have an effective linen management program:

• Provide clean, usable, quality products;• in ample supply;• on a timely basis;• in a convenient location;• to support patient care or staff linen needs;• at a managable replacement and processing cost.

Balancing these goals is impacted by three variables:

1. Constantly fl uctuating patient volume which impacts inventory needs and delivery timing;2. Cost cutting initiatives which reduce labor, affecting the ability to delivery correct quantities at the

right time; and3. Budget restrictions which may offset the quantity and timing of new linen purchases.

It is still possible to meet linen management goals and control costs. The fi rst step requires understanding basic terminology and the physical fl ow of linen. Once we know the basics, we can defi ne the processes, policies and measurements necessary to properly manage linen.

2


Common Linen TermsAlthough there are regional differences in terminology, there are basic terms and concepts that are used throughout the linen and laundry industry. A summary list is presented below and will be referred to throughout this book:

Term DescriptionDescription

Circulating InventoryBecause of linen’s recyclable nature, circulating inventory can be at one of four stages - processing, consumption, retrieval, and distribution - at any one point in time. These quantities are actively circulating throughout the linen cycle, as opposed to being stored in boxes, waiting to be injected into the cycle.

ComplianceFederal, state, and local government regulations which insure quality processes are in place and routinely followed. These regulations typically address safe and proper linen handling, employee training, and awareness of facilitys’ mission, patients, and products.

Consumers (End Users)Individuals who are the direct users (consumers) of textile products, including patients, and medical facility staff. Consumers are the primary driver of linen processing and replacement costs, but may not be fi nancially responsible for their usage.

ConsumptionConsumers determine how, when, and where linen is used. Consumption (utilization) patterns are the primary driver of linen costs. If linen is thrown out, new items must be purchased. If clean linen is placed into a soiled linen hamper, it must be re-processed. Therefore, controlling linen utilization is one of the most benefi cial, yet often neglected, methods of cost control.

Customer Owned Goods (COG) Linen system where the facility using the linen also owns the products. Also referred to as NOG (Not Our Goods), a term used by commercial laundries to indicate that the customer owns the product.

CustomersEntity or persons fi nancially responsible for the payment of linen processing and purchases. These may include retail customers of a commercial laundry, facility members of a cooperative laundry, or consumers charged for using products.

DiscardsLinen products intentionally removed from circulating inventory due to wear, stain, or other reasons which make it unsuitable for use.

3


DistributionMoving linen within a facility, typically from a linen staging area to consumer departments. An effective linen distribution program provides the right product at the right time and in the right quantity.

EquipmentThere are two basic types of equipment: Machinery (Washers, dryers, conveyors, extractors, folders) and Utility (laundry bags, bulk carts, and bins). This equipment will vary based on the type and volume of linen processed.

Information SystemsInformation systems serve to turn data into information and ultimately into knowledge. Utilization, inventory, distribution, productivity and staffi ng data is crucial to analyzing current operations and identifying opportunities for improvements. Determining how to manage and store linen and laundry data is critical since volumes of information are created daily.

InjectNew linen intentionally added to circulating inventory to increase the quantity available for use.

LaborThe cost of a person’s time to perform any functions necessary to make an item ready for a consumer. It may include managerial or hourly labor as well as the cost of their benefi t programs.

LinenA generic term for reusable textile products. Linen products are:1. Purchased by a customer (laundry or patient care facility)2. Processed by a laundry3. Used by ConsumersTypically, a customer purchases linen according to specifi cations which usually include weight, size, fabric content, price, country of origin and intended product use.

MixingTerm used when 2 or more distinct groups of goods are combined, often for processing. This situation typically occurs when there are 2 separate groups of linen owned by 2 different customers.

Mysterious DisappearanceItems removed from the linen cycle via unauthorized means. These items may mysteriously disappear via theft from staff, patients, or visitors, inappropriate disposal (throwing linen into trash receptacles), or inaccessible inventory stashes.

OverheadCosts other than purchases, processing, or labor that are necessary to run a business or department. These costs include utilities, depreciation, supplies, and other expenses.

4


ParA par is the quantity of a linen item used in one 24 hour period. For instance, 800 fl at sheets may be 2 par if a facility uses 400 sheets per day.

Par Levels (Standards)Par Levels are the specifi c quantities required for each item for a specifi c distribution point. For example, 100 sheets, 120 bath towels, etc. may be the par levels (daily requirements) for a specifi c distribution point.

ProcessingIndustry term for laundering or cleaning linen. It includes the equipment, wash formulas, and chemicals used during the cleaning process. Linen is subjected to higher water temperatures, multiple chemicals, and complex wash cycles to produce hygienic products that are ready to reuse. It also includes the methods used to make clean, dry linen ready to use (folding, stacking, binding, etc.).

Procurement New linen must be continually purchased to “feed” the circulating linen inventory. Replacing lost or worn linen or the “startup” of a new department or facility are the two most common reasons for purchasing new linen.

RentalLinen system where the processor, not the using facility, owns the products.

RetrievalCollection of soiled linen from chutes, utility rooms and other areas is a crucial element of linen circulation. If soiled linen is not collected on a timely basis, inventory is unavailable for processing and cannot be redistributed to users.

Stock Keeping Unit (SKU)A Stock Keeping Unit (SKU) is a unique item which is often a combination of a type, size, and color of a product. For instance a facility may have many scrub SKUs, with 1 SKU being a small, unisex, jade scrub shirt.

SuppliersCompanies, other than the linen using facility, who sell products or services. This may include the linen business partner or commercial laundry that processes linen.

TransportationTransportation is the activity, equipment and cost necessary to transport linen from one facility to another. Transportation costs can be signifi cant, especially if the travel distance is extensive. It is essential that transportation is carefully planned to balance costs and customer service. The processor, especially if they are in a different location than their customers, must consider the service area, customer requirements, daily linen volume and truck capacity.

5


Traditional Linen ModelHistorically, linen management was thought to be quite simple: wash, use, and return. However, this approach does not allow us to understand the critical success factors of a quality linen process. The traditional model represents the overall physical movement of linen (illustration 1.1). It shows that physical movement of linen (illustration 1.1). It shows that physical linen circulation is a “closed” process - one where linen does not have an opportunity to leave the system. It does not explain how linen leaves the system or how linen leaves the system or how where the potential for incurring costs lies.where the potential for incurring costs lies.where

The Traditional Linen Model was particularly applicable to facilities which had a onsite laundry since all linen literally remained within the facility. Today, many facilities have contracted with commercial laundries to process their linen. These laundries may be located 10 to 100 miles away, increasing the potential for linen to leave the system, so the traditional model does not accurately describe how linen circulates.

Traditional Linen Model Steps

• Wash - Processing linen to make ready for use by end users.

• Use - Using linen for intended (or unintended) purposes.

• Return - Collecting soiled linen to be processed.

Can you answer these ques tions?

1. How many clean pounds are processed for your facility each month? Each year?

2. If you use a commercial laundry, how often does your processor deliver to your facility? Do they deliver on holidays?

3. Do you know how many linen distribution points are in your facility?4. Who are your highest volume consumers? How much linen do they consume

during the year?5. How frequently is soiled linen collected in your facility?

Tex Quiz: Can you answer these questions?

6


Linen Flow ModelOver 25 years of experience in linen process improvement has helped Standard Textile to create a new version of the traditional model. The Linen Flow Model demonstrates that Linen Flow Model demonstrates that Linen Flow Model linen circulation is an “open” system - one that is susceptible to increased costs when linen fl ows out of the cycle. Each time items leave the fl ow because of loss, wear, or inaccessibility, a cost is incurred and new linen must be procured. Unnecessary processing costs result when linen fl ows through the cycle, but is not used. Finally, unnecessary events deplete or slow down the fl ow of linen. However, defi ning and measuring each of the fi ve processes results in focused and continuous improvement efforts.

Linen Flow Model Processes

• Procurement - Purchasing new linen and injecting into the cycleProcurement - Purchasing new linen and injecting into the cycleProcurement• Distribution - Transporting linen from the linen/laundry area to

consumers• Consumption - Using linen for patient care for staff needs.• Retrieval - Retrieving soiled linen from consumer areas to collection

points • Processing - Cleaning Processing - Cleaning Processing soiled linen and preparing it for customers

7


Policy DevelopmentThe Linen Flow Model shows that fi ve primary processes must occur to keep linen circulating and Linen Flow Model shows that fi ve primary processes must occur to keep linen circulating and Linen Flow Modelinventory supplies consistent. Each process must be defi ned and have a formal policy to insure that activities occur in a timely, controlled manner.

The linen cycle is dependent upon the coordination of dozens of consumers and multiple suppliers, so policies must address a wide variety of people and needs. Without policies in place to control linen fl ow and use, additional labor, processing, and replacement costs will be incurred. Below are situations which may occur if policies are not documented or followed.

• Customer service issues arise from inadequate delivery times and Customer service issues arise from inadequate delivery times and Customer service issues inventory quantities, resulting in poor use of managerial time.

• The number of individual inventory items, or stock keeping units, expands in response to specifi c expands in response to specifi c expandsuser requests.

• Labor costs increase when user’s Labor costs increase when user’s Labor costs increase inventory needs are unknown; multiple orders, phone calls and deliveries are required to satisfy user requests.

• New linen replacement costs increase to compensate for linen that was used improperly, stored in an replacement costs increase to compensate for linen that was used improperly, stored in an replacement costs increaseinaccessible area, or removed from circulation.

Policy ComponentsPolicies must address specifi cspecifi c linen using activities and focus on each of the fi ve primary processes shown in the Linen Flow Model. Policies serve to structure these processes by providing a framework for Linen Flow Model. Policies serve to structure these processes by providing a framework for Linen Flow Modelconsistency. Each policy includes fi ve components and must be approved by the appropriate staff members who can continually enforce defi ned procedures.

1. Defi nition –What is the goal of this policy? what actions are required for this process to be implemented and enforced?

2. Who–Who is involved in the execution of this policy?3. Equipment and Supplies–Are equipment or supplies required for this practice?4. Information–What data is required to monitor this policy? 5. Security–Are there steps required to maintain the Security–Are there steps required to maintain the Security security of linen assets?6. Communication–Where, who, and how will this policy be communicated to affected parties?

How often will the policy be reviewed?

Standard Textile Co., Inc., has helped numerous institutions establish effective policies that coordinate linen products, users, and practices to support an effective linen management program. Each chapter includes sample policies that can be customized to fi t your facility’s linen management program.

8


Before developing a policy, ask the following questions:

Procurement What rules should be in place to guide the relationship with a supplier? Are there guidelines to insure the most cost effective products and services are procured? What specifi c products are required to meet the facility’s needs? When, where, what, and how much linen must be injected to insure adequate circulating inventory supplies?

Processing What procedures are in effect to comply with governing agency guidelines and insure clean, quality linen? What pick up, delivery, and processing schedules are required to meet all customers’ needs?

Distribution When, where, how, and who distributes linen to users? Who prepares the linen so it is ready for users? Are there established inventory stocking levels and delivery schedules? Are delivered and consumed quantities tracked for trends?

Consumption What guidelines are in effect to insure the proper products and quantities are used for quality patient care? Are policies in effect to control the amount of linen used?

Retrieval What procedures are in effect to collect soiled linen on a timely basis and insure safety for staff members?

Tex Tip: Before developing a policy, as the following questions

9


Basic Cost ElementsPolicy guidelines direct how an activity is performed, but costs measure how effective the policy is. In costs measure how effective the policy is. In costs measure how effectiverecent years, there has been increasing need to measure the detailed costs of products or services. Linen is no exception. Traditionally, managers measured the effectiveness of linen in pounds or pieces, and in annual budget performance. New methods of measuring linen costs are evolving which include not only processing and new linen replacement costs, but also labor, overhead and all other associated expenses. The cost elements listed below are typical measurements associated with most activities. There may be additional measurements that meet individual facility reporting requirements.

Cost Elements

• Replacement/Purchase—Replacement is the cost to purchase new linen that will replace old or missing linen. Other purchase costs are incurred for “start up” inventory (i.e. for a newly opened department or facility).

• Processing—The combined cost to sort, clean, iron, and fold linen so that it is ready to distribute to users. For customers of a commercial laundry, this is usually expressed as a cost per pound or piece.

• Utilities—Water, sewer, electric and other utility costs associated with Utilities—Water, sewer, electric and other utility costs associated with Utilities— processing.• Overhead—The fi xed costs associated with running the department or facility. This may include

depreciation, lease costs, or rent.• Labor—The cost of hourly and managerial staff, including hourly wages, salary, and benefi ts.• Equipment—There are typically two types of equipment costs - machinery (washers, dryers,

ironers, folders) and utility (storage or exchange carts). These costs may be expensed directly as equipment or have their depreciation included in Overhead costs listed above.

• Miscellaneous—Additional costs such as offi ce supplies, association dues, etc.Miscellaneous—Additional costs such as offi ce supplies, association dues, etc.Miscellaneous—

These cost elements are typically used for three different types of analysis:

• Product—Evaluation of a product’s purchase or replacement cost. The product may be linen or equipment necessary to process or deliver linen.

• Suppliers—Evaluation of products and/or services offered by one or more suppliers• Policies—Evaluation of the cost impact of a linen using policy, service or practice

10


MeasurementsUsing cost elements in an analysis allows you to turn data into data into data information that motivates the report reader to take action. There are a variety of measurements that can be used, but they must be meaningful to the developer and the user of the report. The result of a study should be 1) a cost that is understood by the user and 2) can be comparedcompared to another cost or point in time. These measurements are usually stated two ways:

1. In Total —The grand total cost. For instance, spending $125,000 annually for replacement linen is a total cost.total cost.total

2. Cost per Unit of Activity—This is a popular and useful cost measurement since it shows the total Cost per Unit of Activity—This is a popular and useful cost measurement since it shows the total Cost per Unit of Activitycost divided by multiple units, people, or time. Examples include:divided by multiple units, people, or time. Examples include:divided by • Cost per Adjusted Patient Day: (linen processing and/or replacement cost) / (adjusted patient

days)• Cost per Discharge: (linen processing and/or replacement cost) / (discharges)• Cost per Each: (product cost) / (items per case or pack)• Cost per Pound: (linen Cost per Pound: (linen Cost per Pound processing and/or replacement cost) / (pounds)• Labor Cost per Activity: (labor cost per minute) X (minutes per activity)

Examples of these types of analyses are shown at the end of chapters 2 - 7.

11


Whoa!!!

Once you’ve gathered all those process or product related costs, you have to tell someone what all those numbers mean. Consider the following points prior to writing any reports.

Writing Analysis Reports• Be considerate of your audience’s time and familiarity with the Be considerate of your audience’s time and familiarity with the

subject.subject. Include explanations or background data if necessary.• Provide the most meaningful data in the most concise formatProvide the most meaningful data in the most concise format. Use

visuals and concise text to describe problems and recommendations.• Shifting costs from one budget (Materials Management) to Shifting costs from one budget (Materials Management) to

another budget (Nursing) is not a cost savings.another budget (Nursing) is not a cost savings. This is a shift of responsibility that requires user’s cooperation and knowledge to achieve reductions in total cost.

• Provide comparative dataProvide comparative data. This allows the reader to relate information to historical or industry data and understand the magnitude of a cost, problem, or recommendation.

• Consider the importance of non-fi nancial factorsConsider the importance of non-fi nancial factors. Non fi nancial factors including internal politics, public relations, history, and relationships must also be considered with fi nancial information.

Tex Tip: Writing Analysis Reports

13

Chapter Two - Distribution

Chapter Two

DistributionDistribution

GoalsAn effective linen distribution program provides the right product at the right product at the right product time in the right time in the right time quantity, at the right place. Balancing these four goals is a challenge for the most experienced linen manager as well as for the novice.

To achieve these goals, there must be cooperation and communication between the department which supplies the products and consumers. Keeping an open line of communication is increasingly important since fl uctuating patient volume and associated linen requirements can change dramatically within just a few hours. More importantly, there needs to be a common set of practices and expectations to guide that communication. Sample policies and measurements are included in this chapter to support these goals.

Distribution Guidelines1. Distribution schedules must support consumers work routines and patient acuity. In today’s

healthcare environment, patients have a higher acuity level than in the past. Patients typically stay fewer days, but may need more linen during their stay. It is more important than ever that linen is accessible 7 days a week, 24 hours per day. Therefore, deliveries need to be scheduled to support increased patient acuity and work routines (patient baths, bed changes, etc.).

2. Each distribution location must have a defi ned set of products and par levels. The distribution department must also periodically review the product selection with consumers to insure they receive appropriate products, in the correct quantities, for their changing needs.

3. Track usage data, by product, for each location. This data will be used to monitor and measure each location’s consumption patterns and can also be used to determine linen related costs for each consumer.

4. Identify high volume users and periodically review utilization. A relatively small number of distribution points may account for a high percentage of a facility’s total linen utilization. These areas should be reviewed continuously, using credible data to maintain controls and identify opportunities for improvement.

5. Monitor locations of low volume consumers. As the number of clinics and outpatient services grow, the number of linen stocking locations can increase dramatically. Examination rooms, cabinets and offsite storage locations should be periodically inspected to avoid build up of non-circulating linen.

14


Developing a Distribution PlanA distribution plan that outlines clean linen delivery timing, frequency, labor, and product requirements is essential for meeting linen management goals. A profi le for each distribution location as well as a master plan for delivery to all departments, must be created to meet and balance these goals. If a distribution schedule currently exists, it should be periodically updated to refl ect departments that have expanded, closed, or moved. The general steps necessary to create this plan are shown on the following pages.

Step 1 - Create a Product Profi le List

A database listing each product’s identifying number, description, weight, and processing costs must be created to accurately track utilization and total costs. A sample profi le is shown below:

Sample Product Profi le

Vendor Item

Number

Item Description

Cost per Each

Weight per Each

Processing Cost/Lb.

Processing Cost/Each

15114633 Flat Sheet $ 5.75 $ 1.50 $ 0.25 $ - 15114933 Pillowcase $ 1.65 $ 0.25 $ 0.25 $ - 80032310 Bath Blanket $ 4.97 $ 1.30 $ 0.25 $ - 45322433 Bath Towel $ 1.57 $ 0.40 $ 0.25 $ - AP9093 Lab Coat $ 8.05 $ - $ - $ 1.00

Standard Textile Co., Inc., offers ControlTex® linen management software which captures detailed usage data and produces reports about each location. This software is part of STC’s comprehensive linen management program that has proven to be effective for over 25 years.

Tex Tip: ControlTex® Linen Management Software

15


Step 2 - Create a Distribution Location Profi le

A Distribution Location Profi le lists all the descriptive information including the name, delivery system (exchange cart or closet), delivery frequency, products used, and par levels. To create this information:

1. Assign a number and descriptive data to each distribution location (example: Area 100 - Emergency Department) and department type (ie. inpatient or ancillary).

2. Add the unit’s accounting/fi nancial code.3. Assign the delivery type and delivery frequency.4. List which products are delivered to each location.5. Determine the quantity of each product delivered to each location based on consumer

requirements. These requirements may fl uctuate in accordance with patient volume.

The resulting profi le distribution location profi le is shown below:

Distribution Location Profi le

Distribution Profi le: ...........................#100 Emergency Department

Type of Department: .........................Ancillary/Outpatient

Accounting Cost Center: ...................52-6534

Delivery Type: ...................................Exchange Carts

Deliveries Frequency:..........................Sun, Mon, Tues, Wed, Thurs, Fri, Sat

Number of Deliveries/Day: ................2 exchange carts per day

Par Levels: .........................................Shown Below:

Item # Item Description

Cart #1 Standard

Cart #2 Standard

001 Flat Sheet 100 75002 Pillowcase 150 100003 Bath Blanket 75 50004 Bath Towel 125 100

16


Step 3 - Establish a Delivery Schedule

A delivery schedule is dependent upon consumer requirements, labor, equipment and product availability. Establishing distribution priorities will provide guidance to creating or revising distribution schedules. There are fi ve general guidelines which should be considered when creating a delivery schedule.

1. Solicit input from high volume consumers. Delivering linen at 9 a.m. to a department which performs 7:30 a.m. bed care can result in low inventory levels when users need linen the most. Information regarding patient volume and patient care routines from the highest linen using departments will result in fewer complaints and more effi ciencies for consumers and distribution staff.

2. Prioritize deliveries according to consumer’s time requirements and consumption patterns. Typically, an Operating Room has fi rst priority since they require scrub apparel to perform early morning surgical cases. High volume patient linen consumers should also have a high priority because of the large quantity they require on a daily basis. Establishing distribution priorities will guide linen staff and consumer expectations for delivery. For instance, a typical priority list is:

Priority Departments

1st Operating room Linen; Scrub Apparel2nd High Volume Consumers (inpatient units, Emergency

Departments, Radiology, Physical erapy)3rd Low Volume End Users (Outpatient Clinics)4th Lab Coat Deliveries

17


3. After considering consumer priorities, establish delivery routes based on departments that are close to one another. Delivering to the 1st fl oor, 3rd fl oor, and 1st fl oor again can create an unnecessary trip that results in wasted labor. After reviewing distribution points, a delivery time schedule can be developed as shown below.

Delivery Time

Weekdays 6 am - 2:30 pm Shift

Weekdays 10 am - 6:30 pm Shift

Weekends 6 am - 2:30 pm Shift

6-7 am OR Scrubs & Linen OR Scrubs & Linen7-8 am Inpatient Areas Inpatient Areas8-9 am Inpatient Areas Inpatient Areas9-10 am ER & Radiology Linen ER & Radiology Linen10-11 am Inpatient Areas Low Volume Clinic Deliveries Inpatient Areas11-12 noon Prepare exchange cards for

next dayLow Volume Clinic Deliveries Prepare exchange cards for

next day12-1 pm Lunch Low Volume Clinic Deliveries Lunch1-2 pm Prepare exchange cards for

next dayER & Radiology Linen - 2nd

DeliveryPrepare exchange cards for

next day2-3 pm Break3-4 pm Inpatient Areas - 2nd Delivery4-5 pm Inpatient Areas - 2nd Delivery5-6 pm Inpatient Areas - 2nd Delivery6 pm to6 am

Security Dept. Access Security Dept. Access Security Dept. Access

4. Look for opportunities to consolidate delivery times, especially to low volume users. If the linen department currently delivers fi ve days per week to low volume clinic users, review opportunities to consolidate deliveries to two or three days per week.

5. Examine equipment being used for linen deliveries. If utility equipment is too small or in disrepair, the facility will incur additional labor costs to compensate for inadequate equipment. Distribution equipment should hold enough product to properly supply consumers for their hours of operation during a 24-hour period and reduce the potential for multiple trips between the linen department and distribution locations. Exchange carts typically supply one distribution location while utility carts should supply enough to restock two or more distribution locations. Elevator availability and storage places should also be evaluated. Finally, delivery and storage equipment must provide a cover for all clean linen to protect against cross contamination.

18


Step 4 - Establish Consistent Delivery Review Practices

Consumer needs change over time. Patient volume may fl uctuate continually and care routines vary in reaction to new policies or procedures. In addition, many facilities add or move departmental locations on a continual basis. Finally, changes to the linen product mix occur over time and consumers may not be aware of the products available to them.

These changes present the need for regular review of distribution schedules to meet the primary goals of delivering the right product at the right product at the right right time to the right time to the right right location. There are several guidelines to follow to right location. There are several guidelines to follow to righteffectively review your distribution system.

1. Establish a pre-determined review period. Create a standard review schedule which allows review of high volume distribution points within a 6-12 month period. This may be a rotating schedule as shown below.

January 1st, 2nd, 3rd Floors July 1st, 2nd, 3rd FloorsFebruary 4th, 5th Floors August 4th, 5th FloorsMarch ER Physical erapy, Radiology September ER Physical erapy, RadiologyApril OR, Recovery, Sterile Processing October OR, Recovery, Sterile ProcessingMay Outpatient Clinics November Outpatient ClinicsJune Surgical Apparel Distribution Pts. December Surgical Apparel Distribution Pts.

2. Review utilization with input from consumers. If utilization reports are available, review them with responsible parties at each distribution point. Focus on items which appear to have above average (or below average) utilization. There may be opportunities to identify clinical practice changes which would drive linen utilization to appropriate levels.

3. Review product list with consumers and make alterations if appropriate. Based on utilization reports and clinical practices, there may be items which would be more cost effective for consumers to use. In addition, there may be items that consumers currently receive, but rarely use. Both situations present opportunities for changes to the current delivery schedule.

4. Examine current par levels. After reviewing utilization history and receiving customer input, there may be opportunities to increase or decrease the current quantity of goods delivered. Patient care practices and changes in patient volume continually create the need for adjustments to par levels, especially of high volume, basic items (i.e. sheets, towels, etc.).

5. Review existing delivery times. Linen deliveries should support patient care routines and staff requirements. When timing changes affect patient or staff consumption practices, linen delivery times may also require adjustment.

19


20% Return Rule

Par levels usually include 20% extra stock to allow for changes in customer’s needs. If the percent of goods returned on exchange carts routinely varies from this number by more than 50%, you should review routinely varies from this number by more than 50%, you should review routinely varies from this number by more than 50%, you should review routinely varies from this number by more than 50%, you should review the par level quantities you’ve established.

Monitoring High Volume ConsumersHigh volume consumers can have a dramatic impact upon delivery routines and product requirements. In some instances, 5-10 distribution points may consume 70% of total pounds consumed. Focusing on these few areas can help control costs and improve customer service.

Once these high volume distribution points are identifi ed, they should be reviewed on a regular, disciplined basis to insure their requirements are current and to see if any changes can be made to improve service or utilization. The format below can be used to monitor these consumers.

Distribution Point

Average Monthly Pounds

Average % Total Facility Usage (100,000 lbs)

Par Level Review Date Responsibility

4 West Medical 10,000 10.0% 12/5/97 Linen Mgr4 East Surgical 8,000 8.0% 12/5/97 Linen Mgr3 West L&D 7,500 7.5% 12/5/97 Linen MgrEmergency Dept 7,400 7.4% 12/8/97 Linen Mgr

Tex Tip: 20% Return Rule

20


Memorial Medical Center - Linen Distribution Policy

Policy Defi nitionPolicy Defi nition

In order to support our patients and staff, Memorial Medical Center (MMC) Material Management Department will deliver linen between the hours of 6:00 a.m. to 4:00 p.m., 7 days per week. Materials Management is responsible for the preparation and delivery of:

1. Patient linen for inpatient and clinic unit. 2. Surgical apparel to the Operating Room, Recovery Room, and Sterile Processing3. Delivery of lab coats to clinic areas

Facility PersonnelFacility Personnel

1. Materials Management staff has the primary responsibility for linen preparation and delivery to inpatient and clinic departments.

2. Users located in off-campus locations will be responsible for picking up their linen at the Linen Room between the hours of 7:00 - 4:00 p.m., Monday - Friday only.

3. MMC staff who wear scrubs but do not work in OR, RR, or Sterile Processing must report to the Linen Room to receive scrubs.

4. Any end user issues regarding linen distribution times or quantities should call the Assistant Materials Manager.

Equipment and SuppliesEquipment and Supplies

1. Materials Management is authorized to use linen exchange carts for delivery to inpatient units.2. Linen for clinics will be transported via covered utility cart.3. Requests for new equipment must be approved by the Assistant Materials Manager.

Information

1. Inventory par levels for each unit will be reviewed by the Assistant Materials Manager every 6 months. These par levels are used as a guideline for daily linen distribution.

2. Any changes to par levels must be approved by the unit's charge nurse.3. Delivered quantities will be recorded on a daily basis using ControlTex® linen management software.4. Supplier issues will be recorded in a phone log and reported to the Assistant Materials Manager on a regular basis.5. Between the hours of 4:00 p.m. - 7:00 a.m., users must contact the Security Department to enter the Linen Room and must

record what quantities were taken.

SecuritySecurity

1. The Linen Room will be locked between the hours of 4:00 p.m. - 7:00 a.m., and when no staff members are present in the room.

2. Between the hours of 4:00 p.m. - 7:00 a.m., the Security Department has the only access to the room and must accompany any users requesting linen.

Distribution List

Materials Management Linen Staff Nursing Administration Security Department

Signature of Materials Management Date

21


Sample CalculationsLabor Cost Calculations

PurposePurpose

• To calculate a cost that fairly represents the amount of time associated with a product, service, or policy. Benefi t percentages are included to estimate the true value cost of the labor required.

Costs to Include

1. Hourly Wage - the gross cost per hour earned by the employee (before taxes). 2. Salary - the annual gross salary earnedSalary - the annual gross salary earnedSalary3. Benefi ts - benefi ts provided to employee (vacation, health insurance, etc.) expressed as a percentage

of their hourly wage or salary. This information can usually be obtained from the facility's personnel department. Common percentages are 20% - 35%, depending upon the position and benefi t plans.

Calculation DescriptionsCalculation Descriptions HourlyHourly SalarySalary

Base Rate $10.00 / hour $25,000 / yearX Benefi t Percentage 25% 25% = Benefi t Cost $2.50 / hour $6,250 / year

Rate with Benefi ts $12.50 / hour $31,250 / year

Annual Hours (40 hrs/week x 52 weeks) 2,080 N/A

Annual Cost $26,000 / year $31,250 / year

Cost per Month (divide Annual Cost by 12) $2,166 / month $2,604 / month

Cost per Week (divide Annual Cost by 52) $500 / week $601 / week

Cost per Hour (divide Annual Cost by 2080) $12.50 / hour $15.02 / hour

Cost per Minute (divide Cost per Hour by 60) $0.21 / minute $0.25 / minute

23

Chapter Three - Consumption

Chapter Three

ConsumptionConsumption

GoalsLinen consumption–how, when, and where linen is used - is the primary driver of linen costs - and must be controlled to satisfy fi nancial, distribution, and consumer requirements. For instance, acquisition costs increase when linen is thrown away since new items must be purchased. If clean linen is placed into a soiled linen hamper, it must be re-processed, resulting in additional processing costs. There are many situations in each facility where misuse and inappropriate utilization result in unnecessary costs.

Controlling linen consumption is one of the most benefi cial, yet often neglected, methods of cost control. A cost effective, controlled linen management program includes:

1. Activities for which linen is (and is not) used2. Suggested products for each activity3. Measurements used to monitor effectiveness4. Cooperation of consumers to implement programs and contain costs

Below are several examples of inappropriate use that result in unnecessary linen costs.

Utilization Problem Resolution

Cutting patient gowns sleeves to insert IV

Ü Provide IV gowns to units for IV patients

Use of disposable incontinent products and draw sheet.

Ü Implement reusable incontinent pads for absorbency and lifting

Above average thermal blanket usage Ü Implement policy to change blankets every other day or as needed.

Unauthorized staff members wearing scrub shirts & pants, but not returning them

Ü Provide uniforms or alternative clothing; restrict access to scrub supply

Excess clean linen left in room after patient is discharged

Ü Establish standardized bed making practices; educate consumers.

ermal blankets used in ancillary areas Ü Replace thermal blankets with bath blankets it needed for patient warmth.

24


Utilization MeasurementsMeasuring a linen using activity identifi es if products are being used properly and are cost effective. The following indicators show how much linen is used:

1. Pounds–the total weight of an item(s)2. Pieces - number of pieces used3. Costs–the costs associated with using an item(s). These costs may include:

· Processing–cost to process (launder) the item· Replacement–cost to purchase a new linen item· Labor–cost to prepare or distribute linen

Patient volume is another important measurement. The terminology can vary, but a few examples are listed below:

1. Census/Inpatient Days–the number of adult patients, at one point in time, in a specifi c department

2. Adjusted Patient Days–a portrayal of both inpatient and outpatient volume3. Discharges–the number of inpatients discharged each day. Adjusted Discharges include both

inpatient and outpatient discharge activity4. Procedures–the number procedures performed in a given day. Usually applies to an outpatient

department such as Operating Room cases or outpatient surgeries etc.5. Offi ce Visits–the number of patients seen in a given day; usually applies to a clinic

Sharing Costs with Consumers

A recent case study from a 400 bed facility in the Midwest showed that a combination of consumer awareness and recharging linen costs to fl oors or patients resulted in a 20% decrease in facility wide linen costs.

Consult your Accounting or Finance department about the methods necessary for your department to recharge fl oors or patients.

25


Calculating UtilizationOnce a linen consuming activity is defi ned, it can be measured. This measurement will create a “benchmark” that can be compared over time or to industry standards. Once these measurements are created, it is essential that they are reviewed periodically to identify problem areas where excessive usage may create additional costs.

1. Start with sample data. If you’ve never tracked utilization, start tracking it on a trial basis by focusing on 5–10 departments that use a large volume of linen. These departments can account for over 50% of your facility’s total usage.

2. Use a computer database to record your data. Standard Textile Co., Inc.’s ControlTex® linen management software is available from Standard Textile Co., Inc., to record these entries. Software programs specifi cally designed to track linen consumption allow you to enter data and easily create reports that summarize usage by pieces, pounds and dollars. These reports can be distributed to consumers and be used as the basis of fi nancial accountability.

3. Identify high volume consumers. Using the utilization data, determine the consumers which use the most linen and focus on them fi rst for process improvement opportunities. Typically, 30%–35% of the distribution points can consume over 70% of the total facility’s annual pounds processed.

4. Review data with consumers. After tracking usage for 60-90 days, review the data to make sure it is complete, consistent, and accurate. Once you have accurate utilization information, it should be reviewed with the linen using departments to identify areas for improvement.

5. Develop an Action Plan. After identifying opportunities for improvement, a “plan of attack” can be developed with the cooperation of consumers. An Action Plan (as discussed in Chapter 7) provides a list of specifi c tasks and responsibilities necessary to reach a goal and have proven to be effective at guiding process improvement.

6. Expand your analysis. After having experience with this sample analysis, expand your analysis to include more–if not all–linen using departments (if appropriate).

26


Clinical Practices for ConsumptionConsumption practice guidelines are developed by defi ning a specifi c activity and what products should be used for that activity. These guidelines can be general, yet still provide enough material to inform users and control costs. Guidelines are also used as a basis for formal policy development or as an informal method to communicate recommended practices. These guidelines should address:

· For what patient care activity is linen being used?patient care activity is linen being used?patient care activity· When does the activity happen?· What is the recommended practice for using linen in this situation?recommended practice for using linen in this situation?recommended practice· Where should this product be used?Where should this product be used?Where· Which staff members are involved in using the product?Which staff members are involved in using the product?Which staff members· How should the product be disposed of?

Sample practice guidelines, developed in cooperation with Standard Textile Co., Inc., clients, are included in this chapter. These guidelines can serve as a starting point for developing policies in your facility.

Financial ResponsibilityIdeally, consumers should share costs and assist in developing policies that control linen utilization. However, developing shared cost responsibility is typically a 4 step process.

1. Develop a credible data source. Tracking daily linen usage is typically the fi rst step in defi ning the products, quantity, weight, and costs applicable to each department. If data has never been tracked, it may take 6-8 weeks to develop a reliable database of usage and costs.

2. Increase awareness through information. Distributing linen usage reports and sponsoring events that inform users of linen related costs are a good fi rst step in raising linen awareness.

3. Include consumers in decision making. Linen utilization committees are an excellent method to receive input and address concerns regarding suppliers, products, services and policies.

4. Implement an Implement an accounting mechanism to make patients or units fi nancially responsible for accounting mechanism to make patients or units fi nancially responsible for linen utilization. Consulting your facility’s accounting or fi nancial department will clarify the exact requirements for transferring budgets and charging departments.

27


Sample PoliciesGeneral Guidelines

Daily CareDaily Care

1. Nursing staff is primarily responsible for routine bed changes.

2. Beds will be changed daily or when soiled.

3. Thermal Blankets will be changed every other day or when soiled.every other day or when soiled.every other day4. Only linen that is required to make the bed that day should be taken into the patient room. Additional linen

supplies are to remain on the linen exchange cart.

5. Only reusable incontinence pads will be used for patients. Disposable incontinence pads will be kept on hand for emergencies.

6. Beds will not be changed if a patient will be discharged that day.

Discharge BedsDischarge Beds

1. Environmental Services staff will change all linen upon discharge of patients.

2. Each discharge bed will be made up with the following items:

· 1 fi tted sheet

· 1 fl at sheet

· 1 pillowcase

· 1 pillow

· 1 thermal blanket

Substandard Linen

1. Substandard linen is any linen that is unacceptable for use due to stains, holes, or inadequate size.

2. Any facility staff members fi nding substandard linen should place these items in the hamper marked “Reject Linen”.

3. Do not throw out any linenDo not throw out any linen4. Materials Management staff will collect Reject Linen from each unit on a weekly basis.

5. Materials Management staff is responsible for the disposition of Reject Linen. All items will be counted before disposing of or returning items to the laundry for credit.

Incontinence Care

· Incontinent patients will be cared for in accordance with skin care and infection control policies.

· Incontinence pads are suggested for patients who are likely to be incontinent or have post procedural/surgical drainage.

· An incontinence pad should be used for lifting as well as for fl uid absorbency and does not require a drawsheet below it.

28


Sample Policies: Memorial Medical Center Linen Utilization: Discharge Bed Change Policy


In order to conserve linen, the following guidelines will be followed when making up beds after a patient has been discharged.

1. Environmental Services staff will change all linen and wipe down mattress and pillow.

2. Any clean linen that was left on chairs, window sills, or other exposed areas should be placed into soiled linen.

3. Each discharge bed will be made up with the following items:

· 1 fi tted sheet

· 1 fl at sheet

· 1 pillowcase

· 1 pillow

· 1 thermal blanket


1. Environmental Services staff is responsible for cleaning and making up discharge beds.Environmental Services staff is responsible for cleaning and making up discharge beds.Environmental Services staff

2. Materials Management linen staffMaterials Management linen staff is responsible for having linen available in each department to be used for Materials Management linen staff is responsible for having linen available in each department to be used for Materials Management linen staffmaking up discharge beds.


1. Clean linen will be available in the linen storage area of each department.

2. Soiled linen bags will be supplied through Environmental Services.

Information

1. Environmental Services will be notifi ed by the Admissions Department of patients discharged and beds to be changed.

SecuritySecurity

1. Clean linen for discharge beds will be kept in primary linen storage areas, not Environmental Service carts or closets.

Distribution List

Materials Management Linen Staff Nursing Administration Security DepartmentEnvironmental Services


29


Sample Policies: Memorial Medical Center–Par Level Stocking Policy


It is MMC’s intention to provide consumers with the proper products and quantities for patient care and staff apparel requirements. Linen is an asset; therefore access will be restricted to authorized staff to protect MMC’s linen investment. The inventory guidelines listed below should be followed by all MMC staff.

Patient Linen

· Basic patient linen (sheets, towels, etc.) will be stocked in each department’s primary storage area (exchange cart primary storage area (exchange cart primary storage areaor closet) on a regular basis.

· Excess patient linen is not to be kept in patient rooms. This excess clean linen is reprocessed at the end of the patient’s stay, resulting in increased costs to MMC.

· Newly purchased, boxed linen will be stored in a secured area in the linen department and injected into circulating inventory as needed. These items must be laundered prior to distribution to consumers.

Staff ApparelStaff Apparel

· Scrub apparel items will be restocked daily in the men’s and women’s locker rooms in the Operating Room and Labor and Delivery departments only.

· Lab coats are available for pickup in the linen room.


1. Materials Management linen staffMaterials Management linen staff is responsible for stocking linen in Materials Management linen staff is responsible for stocking linen in Materials Management linen staff primary storage areas (exchange carts or primary storage areas (exchange carts or primary storage areasclosets) on a regular basis.

2. End users are responsible for stocking linen in secondary storage areas (examination rooms, auxiliary closets).secondary storage areas (examination rooms, auxiliary closets).secondary storage areas3. End users are responsible for picking up lab coats in the linen room. No lab coats will be delivered to individual

offi ces.4. OR, RR, and OR, RR, and Labor and Delivery doctors and nursesLabor and Delivery doctors and nurses are the only authorized scrub users.


1. Exchange carts, linen closets, and locker room shelves are the primary storage areas outside of the linen room.

Information

1. Requests for new lab coats or additional scrub apparel should be forwarded to the Linen Supervisor.2. Requests for changes to inventory stocking times or locations should be forwarded to the Assistant Materials

Manager.

SecuritySecurity

1. Stocking locations are intended to balance staff accessibility and reduce opportunity for loss. We ask all MMC staff members to remember this when storing linen in secondary stocking areas.

2. Unauthorized scrub apparel users will be questioned by Security Department staff.

Distribution List

Materials Management Linen Staff Materials Management Linen Staff Materials Management Linen Staff Nursing Administration Security Department


30


Sample CalculationsDepartmental Linen Utilization Costs

PurposePurpose

To calculate linen utilization costs by department, including grand total and patient volume related costs. This information can be used to increase user awareness or as a tool to recharge linen expenses to individual linen using departments. This information can also be produced using Standard Textile Co., Inc.’s ControlTex® linen management software.

This type of information can be produced for inpatient or outpatient linen users. The “Patient Activity” referred to below represents the measurement that is most relevant to the linen using department. Census, discharges, procedures, or offi ce visits are all types of patient activity measurements that can be used.

Calculations

Distribution Point: 4th Floor Medical/Surgical Unit

formula Flat Sheet Patient Gown

Total

a Total Monthly Usage (pieces) 1,050 685 1,735b Weight Per Each 1.25 0.6

c = a X b Total Monthly Pounds 1,313 411 1,724d Cost Per Pound $ 0.30 $ 0.30 $ 0.30

e = c X d Total Monthly Cost $ 393.75 $ 123.30 $ 517.05 f Total Monthly Activity (patient volume) 965 965 965

g = a / f Average Daily Pieces per Activity 1.09 0.71 1.80h = c / f Average Daily Pounds per Activity 1.36 0.43 1.79i = e / f Average Daily Cost per Activity $ 0.41 $ 0.13 $ 0.54

31


Facility Summary of Linen Costs

formula Department DescriptionAccount Number Linen Expense

a 4th Floor Medical/Surgical Unit 10-14-989 $ 2,553.68 b 3rd Floor Women’s Clinic 10-14-222 $ 517.05 c 2nd Floor Opthamology 10-14-220 $ 253.05 d 5th Floor ICU 10-14-990 $ 2,719.56 e Emergency Department 10-14-550 $ 2,205.93 f Operating Room 10-14-804 $ 4,705.94

g = a+b+c+d+e+f Total Costs $ 12,955.21

Par Level Stocking Levels

Purpose Purpose

To determine the quantity of linen, by item, to support one day's usage. These calculations can be performed for a single department or an entire facility. In addition, Standard Textile Co., Inc.'s ControlTex® linen management software can automatically calculate these levels and provide revisions as usage changes.

Calculations

Distribution Point: 4th Floor Medical/Surgical Unit

formula Flat Sheet

Pillow Case

ermal Blanket

Patient Gown

Incontinent Pad

a Total Monthly Usage (pieces) 2,120 2,275 875 1,035 1,225b = a / 30 days Average Daily Usage 71 76 59 35 41c = b x 10% Safety Stock (10% of daily usage) 7 8 3 3 4

d = b + c Suggested Daily Stocking Level 78 84 62 38 45

32


Patient Transfer Linen ConsumptionPurpose Purpose

To examine the cost of linen used to support patient transfers out of a facility. Even though an ambulance may leave the linen they brought with them in a soil hamper, it may not be of the quality or type that the facility uses. Patient transfers to nursing homes or other care centers also results in a loss to the facility. Therefore, linen may have to be replaced and will result in a potential loss to the facility.

Calculations

The calculations include assumptions about the type and number of items taken during each instance. Several values are calculated to provide a range of potential losses that could be incurred.

Average Number of Patients Transferred:

formula Frequency Total

a - per day 3b = a X 7 - per week 21c = a X 30 - per month 90d = a x 365 - per year 1,095

Average Number of Items used during Patient Transfer:

formula Flat Sheet

Pillow Case

Bath Blanket

Patient Gown

Pillow Total

a Quantity Used Per Transfer 2 1 1 1 1

b Cost per Each $ 5.50 $ 5.50 $ 1.75 $ 1.75 $ 5.75 $ 5.75 $ 5.95 $ 5.95 $ 5.75 $ 5.75

c = a X b Cost per Transfer $ 11.00 $ 1.75 $ 5.75 $ 5.95 $ 5.75 $ 30.20

d Annual Number of Transfers 1,095

c = c X d Total Cost $ 33,069.00

33


Utilization Policy ChangePurpose Purpose

To calculate the cost of a proposed change in utilization policy. Typically, replacement and processing costs can be affected by a change in policy, so they should be reviewed prior to policy implementation. The example below outlines the cost savings resulting from an item substitution.

Calculations

Policy Change Proposal: Single Item Substitution: Replace Thermal Blankets with Bath Blankets

formula Description Current Proposed Diff erence

ermal Blankets

BathBlankets

a Average Daily Usage 50.00 74.00 24.00b Weight Per Each 2.75 1.50 -1.25

c = a X b Average Daily Blanket Weight 137.50 112.50 -25.00d Processing Cost Per Pound $ 0.30 * $0.30 * $ 0.30

e = c X d Average Daily Blanket Processing Cost $ 41.25 $ 33.75 -7.50f Days Per Year 365 365 365

g = e X f Annual Cost $ 15,056.00 $ 12,319.00 -$2,737.00

*Pertains to Healthcare facility utilizing commercial laundry for processing service.

34


Policy Change Proposal: Multiple Item Substitution Standardization of Discharge Bed Making Policy

Weight/ Each

Current Proposed DifferenceProposed - Current

Qty Weight Qty Weight Qty Weight

formula a b c = a X b d e = a X d f g = a X f

h Flat Sheet 1.25 2 2.50 2 2.50 0 0.00

I Draw Sheet 0.75 1 0.75 0 0.00 1 -0.75

j Pillowcase 0.25 2 0.50 1 0.25 1 -0.25

k Thermal Blanket 2.75 1 2.75 1 2.75 0 0.00

l Patient Gown 0.65 1 0.65 1 0.65 0 0.00

m Incontnent Pad 1.5 1 1.50 0 0.00 1 -1.50

n = h + i + j + k + l + m Total Weight per Bed 8.65 6.15 -2.50

o Processing Cost per Pound $ 0.30 $ 0.30 $ 0.30

p = n X o Processing Cost per Bed $ 2.60 $ 1.85 -$0.75

q Annual Discharge Bed Changes 14,600 14,600 14,600

r = p X q Annual Cost $37,887.00 $ 26,937.00 -$10,950.00

35

Chapter Four - Retrieval

Chapter Four

RetrievalRetrieval

GoalsRetrieving soiled linen is a crucial element of linen circulation. If soiled linen is not collected on a timely basis, inventory is unavailable for processing and cannot be re-distributed to consumers. Delays in processing increase the potential for linen to be permanently stained and unusable.

Retrieval GuidelinesTypically, soiled linen is collected in a reusable barrier type linen bag or plastic bag. If the correct soiled linen bag is used, all types of soiled linen may be placed into the same bag. Bagged, soiled linen may be collected via laundry chutes or laundry carts on a daily basis to insure that all linen continues to circulate. Inpatient areas, Emergency Departments, and other linen using departments may require more than 1 collection per day to keep rooms and hallways clear.

To avoid cross contamination, we recommend that soiled linen must be covered during transport. Upon arrival at the laundry, all soiled linen is handled, sorted, and processed as though it were infectious. Protective garments, appropriate wash temperatures, and chemical formulas are mandated to insure that all linen is hygienically clean and ready for reuse.

MeasurementsThe timing, frequency, and quantity of soiled linen should be monitored to insure the process is effective. There are several simple measurements that can be reviewed regularly (daily, weekly, monthly) to check these activities.

• Soiled linen Weight–The total weight of all carts collected in a 24 hour period.Soiled linen Weight–The total weight of all carts collected in a 24 hour period.Soiled linen Weight• Soiled linen Carts–Quantity of carts collected• Collection Times–Written log of when, who, and how much linen was retrieved• Soil Weight vs. Clean Weight–Comparison of the facility's total soiled weight vs. clean weight Clean Weight–Comparison of the facility's total soiled weight vs. clean weight Clean Weight

returned. This should be compared over several weeks (2-4) to identify potential losses and average percent of soiled weight.

36


Soil FactorsThe amount of waste within soiled linen will vary depending upon patient acuity, products, and utilization factors. Industry benchmarks indicate an average factor of 7%–10% weight difference between soiled and clean linen.

Retrieval and ProcurementSoiled linen is the link between consumption and processing. This activity provides inventory for the next cycle of processing, distribution, and consumption. The chart below provides an example of where linen supplies are located at any one point in time, using a 1 par level (day's supply) as a measurement.

Primary Process 1st Par Location 2nd Par Location Extra Location

Total Par in System

Distribution Linen Room 1Consumption On Beds In cards & rooms 2Retrieval In Retrieval Area In Retrieval Area 2Processing Laundry In Transit 2

Total Par Level 7

When soiled linen is not collected on a timely basis, it accumulates in retrieval areas (chute room, patient fl oors, clinic areas, cart staging area). In the example above, one extra par level of linen is required to support an ineffi cient retrieval activity. In this example, not only are additional quantities necessary to support a higher par level, but replacement purchases are also higher, as shown in the example below.

formula Description 1 Par 5 Par 6 Par 7 Para Daily Requirements 1,000 5,000 6,000 7,000

b = a X 10% 10% Safety Stock (10%) 100 500 600 700c = a + b Circulating Requirement 1,100 5,500 6,600 7,700

d = actual inventory On Hand Inventory (estimated 4 Par) 4,000 4,000 4,000e = c - d Inventory Requirements 1,500 2,600 3,700

f = existing order On Order (receive within 2 weeks) 1,4401,440 1,4401,440 1,4401,440g = e - f Purchase Requirements 60 1,160 2,260

h = Supplier cost Cost per Each $ 6.00 $ 6.00 $ 6.00 $ 6.00 $ 6.00 $ 6.00 i = g X h Total Purchase Cost $ 360.00 $ 6,960.00 $ 13,560.00

j Dollar Value Increase in Par $ 6,600.00 $ 6,600.00

In this example, we show that there is a substantial investment required to maintain an extra par in circulating inventory. In this example, an additional purchase of $6,600 is required–for one product–to support an additional par level. This cost can be avoided by maintaining a regular collection schedule that supports a constant fl ow of goods through the linen cycle.

Tex Tip: Soil Factors

37

Chapter Four - Retrieval

Memorial Medical Center - Linen Retrieval Policy

Policy Defi nitionolicy Defi nition

Soiled linen will be collected on a daily basis in order to maintain the circulation of linen. Soiled linen in inpatient areas, ER, Physical Therapy, and Radiology will be collected twice per day (minimum). Other patient care areas will be collected once per day; off site clinics and other low volume consumers will be collected as needed. All soiled linen items will be processed by MMC’s commercial laundry supplier.


1. Environmental Services is responsible for collecting soiled linen from the patient care areas and transporting it to the Receiving Dock for pick up by the laundry supplier. They are also responsible for having soiled linen bags available to linen using departments.


1. Soiled linen will be collected in carts supplied by the laundry. These carts are to be used for soiled linen collection only and not for the collection of trash or other non linen items.

Measurements

1. Environmental Services will review the number of soiled carts collected on a daily basis. The number of soiled carts per day should range between 12-15, depending upon patient volume.

2. Environmental Services will review the soil pick up log on a regular basis to determine if soiled linen is retrieved on a timely basis.

3. Environmental Services will contact the laundry if an insuffi cient number of carts are available for soiled linen collection.

4. Materials Management will review the total soiled weight retrieved vs. Clean weight processed on a regular basis to identify any discrepancies.

SecuritySecurity

1. Soiled linen will be placed in the caged area on the Receiving Dock to prevent access to unauthorized personnel.

Distribution List

Materials Management Linen Staff Materials Management Linen Staff Materials Management Linen Staff Nursing AdministrationSecurity Department Environmental ServicesABC Laundry Services


38


Sample CalculationSoiled vs. Clean Weight

PurposePurpose

To calculate the number of soiled pounds retrieved and its relationship (as a percentage) to clean pounds delivered. This number can be compared to an industry or historical benchmark to determine if the quantity of linen retrieved is similar to the quantity of linen delivered. The benchmark shown below is an average for hospital facilities. The patient and product mix will directly infl uence the appropriate benchmark for your facility.

formula January February March YTD Total

a Soiled Linen Pounds Received 117,343 126,730 125,792 369,865b Clean Linen Pounds Processed 105,898 113,311 114,370 333,579

c = a - b Diff erence 11,445 13,419 11,422 36,286

d = c / d Soil as percentage of Clean Weight 10.81% 11.84% 9.99% 10.88%

e = benchmark Soil Percentage Target 10.00% 10.00% 10.00% 10.00%

f = d - e Potential Loss - Percentage 0.81% 1.84% -0.01% 0.88%

g = f x b Potential Loss - Pounds 855 2,088 -15 2,928

39

Chapter Five–Processing

Tex Tip: The

Amer i can Laundry

Tex Tip: The

Amer i can Laundry

Chapter Five

Processing Processing

GoalsThe primary goal of processing is to make linen clean and ready for consumers. The basic activities necessary to achieve this goal include:

• Sorting–Pre-sorting entails separating Sorting–Pre-sorting entails separating Sorting soiled linen into categories of similar items. Post-sorting also categorizes linen but after the products are clean. Categories may include, but are not limited to: fl at goods (sheets, pillowcases), blankets (thermals, bath blankets, spreads), OR linen (OR wrappers, gowns, and towels), and OR apparel (scrubs and warm up jackets).

• Processing–The combination of formulas and Processing–The combination of formulas and Processing equipment (washers and dryers) necessary to make linen hygienically clean.

• Production–Equipment (ironers, folders, etc) and processes necessary to fold, count and prepare linen for distribution.

These detailed processes, procedures, equipment, chemistry, and productivity issues make it worthy of expert attention. National and local trade associations like NAILM (National Association of Institutional Linen Managers) and TRSA (Textile Rental Services Association) provide training in a number of specialized disciplines. Publications such as Laundry Digest, Laundry Digest, Laundry Digest Laundry News, and Materials Management Magazine also provide information on industry trends and accomplishments. Keeping abreast of changes Magazine also provide information on industry trends and accomplishments. Keeping abreast of changes Magazinein industry practices is a valuable method of maintaining and improving processing related skills.

The Association for the Advancement of Medical Instrumentation is currently in the process of competing the following draft document: AAMI Recommended Practice: Processing of Reusable Surgical Textiles for Use in Healthcare Facilities. It is anticipated that the document will be available by the Fall of 1999.

Standard Textile Co, Inc., Linen Management Consultants frequently share their expertise when teaching at the American Laundry and Linen College, sponsored by NAILM, at Eastern Kentucky University. STC instructors share their budgeting, consumption, and product knowledge with linen and laundry managers from across the country. To fi nd out more about these classes, contact Standard Textile Co, Inc., at 1-800-999-0400.

40


Basic ElementsThe heart of laundry operations is comprised of the physical space, procedures, equipment and timing required to process soiled and prepare clean linen. Capacity is the quantity of linen that can be processed within a 24 hour period. Processing includes the equipment, wash formulas, and chemicals used during the cleaning process. Production includes the methods used to make clean, dry linen ready to use (folding, stacking, binding, etc.). The basic elements which support these activities include:

• Equipment–There are two basic types of equipment: Machinery (Washers, dryers, ironers, Equipment–There are two basic types of equipment: Machinery (Washers, dryers, ironers, Equipmentconveyors, extractors) and Utility (laundry bags, bulk carts, and bins). This equipment will vary based on the type of linen processed. Because of frequent use, equipment must be well maintained, clean and in adequate supply.

• Labor–People are a primary component of laundry operations. Although there is a minimum Labor–People are a primary component of laundry operations. Although there is a minimum Labornumber of staff required for daily operations, additional labor may increase a laundry's production capabilities. Regular overtime will address infrequent problems such as machinery breakdowns or changes in volume. Extra shifts may be needed for permanent capacity expansion should additional customers or other factors create the need for expansion.

• Activities–Folding, sorting, inspection, counting, and cart loading activities vary by facility. These activities directly affect labor requirements and will impact the customer if performed incorrectly. For instance, some laundries are not allowed to presort soiled linen; therefore staff requirements are higher for clean linen production staff. Laundries that perform minimal quality inspections will shift quality control responsibility to their customers.

Standardized policies and procedures and education will streamline basic activities. However, these tasks should be reviewed periodically to identify opportunities to improve quality and improve effectiveness. Typically, opportunities exist to reduce double handling, standardize exchange cart building, or improve quality control.

41


MeasurementsEach of the activities listed can be measured to determine if they are effective. There are two basic types of measurements, but the elements and names used for the measurement will vary between companies and industries. As previously mentioned, national trade associations and publications can be used as an excellent reference.

The two basic types of measurements are based on:

• Productivity–how much Productivity–how much Productivity labor (or hours) is used to complete a task. This may vary based on the type of labor included–hourly, salary, or managerial. Typical productivity measurements include:1. Pounds per Operator Hour (POH)–the number of pounds processed divided by the number of

hours used to complete a process.2. Pieces per Operator Hour–the number of pieces processed divided by the number of hours used Pieces per Operator Hour–the number of pieces processed divided by the number of hours used Pieces per Operator Hour

to complete a process.

• Cost–The total or unit cost for an activity. This may be expressed as a total cost or cost per activity. Typical measurements include:1. Cost per Pound–The total cost (Cost per Pound–The total cost (Cost per Pound labor, linen purchases, utilities, chemicals, or other costs)

divided by the number of pounds processed. A specifi c cost per pound (linen replacement, laundry processing, etc.) can also be used to measure an individual cost over time.

2. Total Cost–The sum of all actual costs necessary to process linen vs. a budgeted or targeted Total Cost–The sum of all actual costs necessary to process linen vs. a budgeted or targeted Total Costcost.

Sample calculations which detail how these measurements are determined are included at the end of this chapter.

42


Sample Policy

Memorial Medical Center–Linen Processing Policy


It is MMC’s intention to provide quality, clean linen to their patients and staff. To meet this need, we have contracted with ABC Laundry Services to be our linen processing supplier. Soiled linen received by ABC from MMC will be handled in such a way to produce minimal agitation and cross contamination. Universal/Standard Precautions will be followed in processing, handling, and preparing linen for distribution to MMC. Finally, all clean linen will be transported in clean, covered containers to insure quality clean linen.

Any MMC staff member having concerns about linen cleanliness should discuss these concerns with the Materials Manager, who will forward these concerns to ABC. Any sharps found by ABC will be documented and forwarded to MMC’s Infection Control department. Equipment, patient possessions, and other non linen items found in MMC’s linen by ABC will be returned on a regular basis or as requested by MMC.


1. The Materials Management Linen SupervisorLinen Supervisor will report patient, linen staff or end user concerns to the Assistant Materials Manager in a timely manner for follow up.

2. Infection Control will receive and review sharps incident reports in a timely manner.3. The Assistant Materials ManagerAssistant Materials Manager will communicate with ABC Laundry on timely basis regarding MMC

concerns.


1. Carts containing clean linen are the property of the supplier and should not be used for any purposes other than the distribution of clean linen or collection of soiled linen.

2. Incident report and other forms are available from the Materials Management offi ce.

Information

1. Incident reports are kept on fi le in the Materials Management offi ce2. The ABC Laundry procedure manuals which details the laundry’s processes and procedures, are available

through Materials Management.

SecuritySecurity

None Required

Distribution List

Materials Management Linen Staff Materials Management Linen Staff Materials Management Linen Staff Nursing Administration Infection Control


43


Sample CalculationsLinen Costs per Pound

PurposePurpose

• To calculate the total costs charged by an external laundry to process linen and provide any additional services or products requested by linen using facility.

Costs to Include

1. Routine Processing CostsRoutine Processing Costs–regular costs charged by the supplier to clean and transport linen from the laundry to the facility. There may be one or more rates charged by the supplier depending upon the type of linen processed.

2. Supplier Supplier Labor Costs–costs that refl ect the supplier’s time required to provide mending, repair, or other services to the facility.

3. Miscellaneous ChargesMiscellaneous Charges–miscellaneous charges for supplies or services provided by the supplier that are not refl ected in routine processing for supplier labor charges.

Linen Cost Per Pound: Calculation of all costsMonthly Processing Charges

Total Pounds 127,155

Processing Cost per Pound $ 0.280 $ 0.280

Total Processing Cost $ 35,603.40

Miscellaneous Charges

Repair & Mending (@$8.00 per hour) $ 108.00

Reprocessing (650 pounds @ $0.28/lb) $ 182.00

Surgical Towel Packs 950 @ $1.25/ea) $ 1,187.50 $ 1,187.50

Total Miscellaneous Charges $ 1,477.50

TOTAL - ALL CHARGES $ 37,080.90

Total Clean Pounds Processed 127,155127,155

TOTAL COST PER POUND $ 0.292

44


Linen Processing Costs

• Processing suppliers may charge more than one cost per pound to process linen if some items are more expensive to launder than others. The example below shows how to calculate an overall cost per pound if the supplier charges varying costs per pound and also provides additional products or services.

Linen Processing Costs: Multiple Costs/Pound for Linen Processing

Pounds Costs

Patient Linen Clean Pounds Processed 115,343Patient Linen Processing Charges @$0.25/lbPatient Linen Processing Charges @$0.25/lbPatient $28,835.75

Surgical Linen Clean Pounds Processed 22,145Surgical Linen Processing Charges @$0.295/lb $ 6,532.78

Repair/Mending Services: 10.5 hrs. @$8.00/hour $ 84.00 Labels for surgical apparel $ 127.50

Totals 137,488 $35,580.03

Linen Processing Cost/Pound $ 0.259

45


Productivity Measures

PurposePurpose

• One way to measure how effective a laundry processes product is to measure the labor used to process linen compared to the amount of linen processed. Below are two measures–Pounds per Operator Hour and Cost Per Operator Hour–which are frequently used.

Pounds & Cost per Operator Hour: Based on 6 Day/Week Processing, 1 Shift

Formula Pounds Costs

a Clean Linen Pounds Processed (1st Quarter) 230,000b Total Labor Cost 1st Quarter (hourly staff only) $ 31,500

c Labor Hours (hourly staff only) 3,700 3,700

d = a / c Pounds per Operator Hour (hourly staff only) 62.2

e = b / c Cost per Operator Hour (hourly staff only) $ 8.51

46


Overhead Costs

PurposePurpose

To calculate how overhead costs contribute to linen costs per pound. Overhead includes utilities and miscellaneous costs that are not direct product or labor costs. Overhead costs are especially important to processing suppliers since utilities, direct costs, and other supplies contribute signifi cant costs to their operations. These costs are reviewed periodically (monthly, bi-monthly) to monitor cost effectiveness.

Costs to Include

1. Direct Costs–the cost of chemicals and other items used directly for processing 2. SuppliesSupplies–Cover gowns, gloves, and other items used during processing 3. Utilities–Electric, gas, water, & sewer costs4. Miscellaneous ExpensesMiscellaneous Expenses–offi ce supplies, advertising, periodical subscriptions, fl oor space,

membership dues, and other general expenses.

Overhead Cost Calculation

April YTD Jan - AprilPounds - 98,000 Pounds - 411,600

Total $ Cost/lb Total $ Cost/lbdivide by

pounds abovedivide by

pounds aboveElectricity $ 4,909.00 $ 0.0501 $ 19,636.00 $ 0.0477 Gas $ 1,425.00 $ 0.0145 $ 5,700.00 $ 0.0138 Water $ 578.00 $ 0.0059 $ 2,601.00 $ 0.0063 Sewer $ 221.00 $ 221.00 $ 0.0023 $ 0.0023 $ 884.00 $ 884.00 $ 0.0021 $ 0.0021

Total Utilities Costs $ 7,133.00 $ 0.0728 $ 28,821.00 $ 0.0700

Processing Supplies $ 547.00 $ 0.0056 $ 2,079.00 $ 0.0051

General Expenses $ 476.00 $ 476.00 $ 0.0049 $ 0.0049 $ 1,904.00 $ 1,904.00 $ 0.0046 $ 0.0046

Total Overhead Costs $ 8,156.00 $ 0.0832 $ 32,804.00 $ 0.0797

47


Equipment Costs

PurposePurpose

To calculate how much equipment expenses adds to linen costs per pound. These costs can either be annual depreciation costs from capital equipment or machinery (washers, dryers, folders, etc.) or from utility equipment that is purchased and expensed (utility tubs, exchange carts, etc.). Accounting practices vary between facilities, so it is best to check with your Accounting or Finance Department for the proper depreciation and expense methods.

Costs to Include

1. Depreciation–annual depreciation from high value machinery or other equipment2. Utility equipment expense–purchase costs of low value utility equipment that is replaced

periodically, but not depreciated.

Straight Line Depreciation–Capital Equipment/Machinery

Machinery Name Purchase Cost Depreciated Live Annual Depreciation

Washer $ 250,000.00 20 $ 12,500.00 Ironer $ 10,000.00 20 $ 500.00 Folder $ 25,000.00 10 $ 2,500.00

Total Cost $ 285,000.00 $ 15,500.00

Annual Pounds 25,000,000

Depreciation Cost/lb $ 0.0006

Annual Utility Equipment ExpenseEquipment NameEquipment Name Purchase CostExchange Carts $ 5,700 Utility Tubs $ 1,250 Tools $ 575 Truck Leases $ 375,000 $ 375,000

Total Expense $ 382,525 Annual Pounds 2,500,000

Equipment Cost/lb $ 0.15

49

Chapter Six–Procurement

Chapter Six

ProcurementProcurement

GoalProcurement must address when, why and how much product is required. Not only must inventory requirements, labor, products, and suppliers be considered, but four common conditions complicate the process.

• Numerous Locations–As a recyclable product, linen may be at any one of fi ve stages–processing, distribution, consumption, retrieval or lost/damaged–at any one point in time. In addition, linen may be stored in hundreds of locations including exchange carts, closets, and examination rooms, making it diffi cult to access, circulate, and estimate quantities in use.

• Inconsistent Product Mix–If there are no written product specifi cations, or if several suppliers Inconsistent Product Mix–If there are no written product specifi cations, or if several suppliers Inconsistent Product Mixprovide similar products, the circulating inventory can become a mix of sizes, colors, styles, and quality. This can create "hoarding" of preferred items and reprocessing of clean, unwanted items.

• Inventory vs. Labor–Appropriate Labor–Appropriate Labor– circulating inventory levels typically result in adequate linen quantities for consumers and fewer unanticipated restocking trips. However, if linen inventory decreases, more frequent delivery trips of smaller quantities are necessary, resulting in increased labor time. This additional labor may come from linen staff, nursing, suppliers, as well as require administrative time to address complaints.

• Price vs. Value–An inexpensive product is not necessarily a cost effective product. The old saying "you get what you pay for" also applies to linen. Saving $1.00 on a fl at sheet that will last less than half as long as a more expensive product doesn't "save" money. In fact, it will incse costs if you purchase two inexpensive products to match the effectiveness and life span of one cost effective product.

50


Why Buy?New linen purchases are either an ongoing requirement or a one time event. Each of these situations is described below.

• Circulating Inventory ReplacementCirculating Inventory ReplacementCirculating –Existing Inventory Replacement–Existing Inventory Replacement inventory levels are maintained by replacing lost –Existing inventory levels are maintained by replacing lost –Existingor worn out goods. This is a recurring situation that is necessary to keep suffi cient quantities incirculating inventory.circulating inventory.circulating

• Start Up Inventory–Opening a new facility or department or implementing a new product creates Inventory–Opening a new facility or department or implementing a new product creates Inventorythe need for new linen inventory. Once this inventory is established, it must be maintained through replacement orders. This is a one time event that requires more product that the currentcirculating inventory can provide.circulating inventory can provide.circulating

• New linen purchases typically require input from several parties before approval. Staff members may provide information about the type and quantity of product required and suppliers provide availability and shipment data. These people, as well as historical data and recent trends, are a valuable source of information for determining the proper product quantities and delivery timing.

Procurement ConsiderationsProcurement requires understanding present conditions and expectation of future changes to the cycle. There are six conditions which represent historical and future events and must be considered to develop a sound procurement plan.

• Linen Replacement Factors–Since linen is a recyclable product, it can leave the circulatinginventory intentionally due to wear or stain. It can also leave unintentionally as a result ofmysterious disappearance. These two situations infl uence the quantity purchased. Reviewing your facility's specifi c replacement history or using industry benchmarks can guide replacement history or using industry benchmarks can guide replacement history or using industry procurement decisions.

• Par Levels. Determining a standard inventory stocking level for each department is a valuable inventory stocking level for each department is a valuable inventorymethod for allocating inventory. When all par levels are added together, they determine the method for allocating inventory. When all par levels are added together, they determine the method for allocatingdaily quantity necessary for the entire facility. This is the fi rst piece of data necessary to calculate an accurate quantity to purchase (as shown in the following section). The initial steps involve speaking with users to determine what products they need and use on a daily basis. Historical delivery data defi nes quantities required. As shown below, the average daily usage is calculated, and 10% more is added to allow for variations in linen using activities. For example:

51


Distribution Point: 4th Floor Medical Surgical

formula Flat Sheet Pillowcase ermal Blanket

Patient Gown

a Total Monthly Usage (pieces) 2,120 2,275 497 1,035b = a / 30 days Average Daily Usage 71 76 17 35

c Average Activity per Day 18.5 18.5 18.5 18.5d = b / c Average Daily Pieces per Activity 3.82 4.1 0.9 1.86

e = b * 10% Safety Stock (10% of daily usage) 7 8 2 3f = b + e Suggested Daily Stocking Level 78 84 19 38

• Cost Per Use–Procurement decisions typically isolate the acquisition cost, but don’t incorporate the costs incurred over the life of the product. Typically, processing costs over a product’s life will cost 300% more than the initial acquisition cost. Evaluating a product based on its cost per use is a more accurate method of determining the true value of a product. For example:

a b c d = (a*b) / c e f g = e * f h = d + g

ItemPurchase

Cost

Annual Replacement

Percent

Annual Washings per Eachper Each

Replacement Cost per Use

Weight per Each

Processing Cost per Pound

Processing Cost per

Use

Total Cost per Use

Thermal Blanket #1 $ 18.00 50% 50 $ 0.18 3.5 $ 0.25 $ 0.88 $ 1.06

Thermal Blanket #2 $ 22.00 50% 50 $ 0.22 3.0 $ 0.25 $ 0.75 $ 0.97

a b c d = (a*b) / c e f g = e * f h = d + g

ItemPurchase

Cost

Annual Replacement

Percent

Annual Washings per Eachper Each

Replacement Cost per Use

Weight per Each

Processing Cost per Pound

Processing Cost per

Use

Total Cost per Use

Thermal Blanket #1 $ 18.00 85% 50 $ 0.31 3.5 $ 0.25 $ 0.88 $ 1.18

Thermal Blanket #2 $ 22.00 35% 50 $ 0.15 4.0 $ 0.25 $ 1.00 $ 1.15

• Supplier Requirements–Suppliers usually have minimum order requirements. These requirements should be reviewed prior to creating orders.

• Lead Time–There is often a delay before new products can be ordered, received, laundered, and prepared for use. Understanding the manufacturer’s and processor’s lead time requirements, as well as any time it will take your facility to handle the product, will dictate how far in advance you must order products. For instance:

Your Order Processing Time

to create, approve & submit order

Linen Manufacturer’s Lead Time to

create order and deliver to your

facility

After Delivery to your facility, time to receive & ship to laundry for

processing

Laundry’s Lead Time to Process & deliver goods

before use

Total Lead Time before ready for

useFlat Sheets 3 days 7 days 2 days 2 days 14 days14 days

52


Procurement ElementsAt many facilities, we found that linen purchases were created from a reaction to a crisis, copied from historical orders, or made based on visual estimates of existing supplies. These purchases were made in response, or reactively, to a need or crisis. Low inventory levels or consumer complaints are often the to a need or crisis. Low inventory levels or consumer complaints are often the to a need or crisis. Lowdriving force behind this reactive behavior. Anticipating new linen needs–or being proactive–results in proactive–results in proactiveconsistent inventory levels and minimal complaints.

A more stable procurement plan can be established by understanding the basic elements which affect each purchase decision. These elements require knowledge of the consumer’s needs, recent trends, inventory stocking policies and supplier purchase requirements.

To describe the basic elements, we will use a sample purchase decision for fl at sheets. In this situation, we have determined the facility’s requirements for 1 day (1 par). We expanded the analysis to calculate what would be necessary to support a 5, 6, or 7 par circulating inventory supply. The following pages describe circulating inventory supply. The following pages describe circulatingeach of the basic elements included in this example:

Procurement Example–Flat Sheet Requirements for 1 MonthTARGET PAR LEVELS

formulaformula DescriptionDescription 1 Par 5 Par 6 Par 7 Para Daily Requirements 1,000 5,000 6,000 7,000

b = a * 10% Safety Stock (10%) 100 500 600 700

c = a + b Circulating Requirements 1,100 5,500 6,600 7,700d = c * 6% Loss Factor (annual loss = 72%; monthly loss = 6%) 66 330 396 462

e = c + d Total System Requirements 1,166 5,830 6,996 8,162f = physical inventory On Hand Inventory (estimated 4 Par) 4,000 4,000 4,000

g = e - f Inventory Requirements 1,830 2,996 4,162h = existing orders On Order (receive within 2 weeks) 1,440 1,440 1,440

I = g - h Purchase Requirements 390 1,556 2,722j = supplier cost Cost per Each $ 6.00 $ 6.00 $ 6.00

k Total Purchase Cost $ 2,340.00 $ 2,340.00 $ 9,336.00 $ 9,336.00 $ 16,332.00 $ 16,332.00

l Dollar Value Increase in Par $ 6,996.00 $ 6,996.00

53


Now we will review each element listed in the procurement example.

1. Daily Requirements–The average quantity required to supply the facility for one day. Typically, a par level system is used to determine the averagea par level system is used to determine the averagea consumption for each department and then added together to get the total facility requirements for 1 day. All remaining processes (distribution, retrieval, and processing) are assumed to be a multiple of average daily consumption.

1st Par Location 2nd Par LocationTotal Par in

SystemSystemDistribution Linen Room 1Consumption On Beds In carts & rooms 2Retrieval In Retrieval Area 1Processing Laundry In Transit 2Total 6

2. Safety Stock–Additional stock kept (usually in linen room) to provide for increases in patient activity. This is usually stated as a percentage of a daily requirement (10%, 15%, etc.).

3. Circulating Requirements–This is the total quantity necessary to meet the Daily Requirements and Safety Stock.

4. Replacement Factor–This is an estimate of the percentage ofReplacement Factor–This is an estimate of the percentage ofReplacement Factor inventory expected to be removed –This is an estimate of the percentage of inventory expected to be removed –This is an estimate of the percentage offrom circulating linen supplies. This estimate is usually stated as a percentage and includes loss due to discard, or mysterious disappearance. Historical facility replacement rates can be used or mysterious disappearance. Historical facility replacement rates can be used or mysterious disappearance. Historical facilityan industry benchmark such as Standard Textile Co., Inc.’san industry benchmark such as Standard Textile Co., Inc.’san industry ControlTex®ControlTex®ControlTex norms may be used.

5. Total System Requirements–This is the total quantity necessary to meet Daily Requirements, Safety Stock, and the Replacement Factor.

6. On Hand Inventory–This is the total amount of Inventory–This is the total amount of Inventory inventory that physically exists in–This is the total amount of inventory that physically exists in–This is the total amount of circulatinginventory. On hand inventory can be based on the results of a physical inventory count or an estimate of existing supplies.

7. Inventory Requirements–This is the required amount to retain after On Hand inventory quantities have been deducted from Total System Requirements.

8. On Order–This is the quantity of product that is expected to be received in the near future. This On Order–This is the quantity of product that is expected to be received in the near future. This On Orderis typically the sum of the purchase orders which are expected to be received.

9. Purchase Requirements–This is the total amount which should be immediately purchased and injected into circulating inventory to meet Total System Requirements. This amount should be circulating inventory to meet Total System Requirements. This amount should be circulatingcompared to the supplier’s requirements for order quantities and availability.

10. Cost Per Each–Purchase cost as determined by supplier or contractual.11. Total Purchase Cost–Total cost of suggestedTotal Purchase Cost–Total cost of suggestedTotal Purchase Cost replacement order to increase inventory levels.12. Dollar Value Increase in Par–Dollar value investment difference between par levels.Dollar Value Increase in Par–Dollar value investment difference between par levels.Dollar Value Increase in Par

Tracking procurement data is a valuable method of fi nding historical–and potentially future–purchasing Tracking procurement data is a valuable method of fi nding historical–and potentially future–purchasing Trackingtrends. This information allows managers to purchase proactively from sound data instead of purchase proactively from sound data instead of purchase proactively reactively to reactively to reactivelycrisis situations.

54


Item Specifi c Replacement ProcurementOur previous example showed how procurement costs will change according to the requiredOur previous example showed how procurement costs will change according to the requiredOur previous example showed how par level. Procurement costs will also vary in accordance with the replacement factor associated with each item. Below we show an example of expected annual acquisition costs by assigning a replacement percentage to acquisition costs by assigning a replacement percentage to acquisition costs by assigning aeach item.

formula: a b c = a * b d e = c * dDescription Avg. Daily

Usage (1 Par)Estimated Price per

Each

Required Invetment

1 Par

Annual Replacement

Factor

Required Replacement

per Item

Bath Blanket 73X90 1,479 $ 7.00 $ 10,353 85% $ 8,800 Bath Towel 2,274 $ 3.00 $ 6,822 110% $ 7,504 Flat Sheet 66X118 2,765 $ 7.50 $ 20,738 65% $ 13,479 Patient Gown 309 $ 8.00 $ 2,472 $ 2,472 72% $ 1,780 $ 1,780 Total Investment $ 40,385 $ 31,563

Since the costs are based on the percentage of goods which must be replaced, reducing the replacement percentage through consumer awareness programs and other efforts will reduce the annual replacement costs, as shown below.

formula: a b c = a * b d e = c * dDescription Avg. Daily

Usage (1 Par)Estimated Price per

Each

Required Invetment

1 Par

Annual Replacement

Factor

Required Replacement

per Item

Bath Blanket 73X90 1,479 $ 7.00 $ 10,353 75% $ 7,765 Bath Towel 2,274 $ 3.00 $ 6,822 92% $ 6,276 Flat Sheet 66X118 2,765 $ 7.50 $ 20,738 65% $ 13,479 Patient Gown 309 $ 8.00 $ 2,472 $ 2,472 59% $ 1,458 $ 1,458 Total Investment $ 40,385 $ 28,979

A savings over $2,500 was achieved by reducing the amount of replacement necessary to maintain the A savings over $2,500 was achieved by reducing the amount of replacement necessary to maintain the A savings over $2,500 was achieved by reducing the amount ofsame par level. The value of a single par level remains the same, but the acquisition costs necessary to maintain the inventory levels can decrease as a result of utilization changes or other practices. inventory levels can decrease as a result of utilization changes or other practices. inventory levels can decrease as a result of

55


Tex Tip: The Domino Effect

The Domino Effect

It is common for facilities to face budget reductions every year. To meet these aggressive goals, most managers reduce the two most "controllable" expenses–labor and new linen purchases. If these reductions are too severe, a chain reaction can develop, resulting in a crisis situation for manager and users, as shown below.

1. Linen distribution or in house laundry staff is reduced.2. New linen replacement budget is reduced.3. Fewer replacement purchases result in lower inventory levels since

items that were lost, thrown out, or worn out are not replaced.4. Lower inventory levels result in increased labor requirements to

deliver several times per day instead of during scheduled routes.5. Lower inventory levels increase the possibility of "stock outs"–not

enough product to fi ll user's requirements. 6. Product quality and life span is reduced by excessive processing.7. Stock outs and decreased quality reduce user's level of trust in

linen availability.8. To increase their level of trust, user's start to "take control" of

linen inventory by hoarding and hiding linen in their department9. Stock outs and user complaints may escalate to senior

management, requiring extra attention from administration.10. Administration devotes additional time and money to increase

inventory, labor, and user's trust.

56


Sample PolicyMemorial Medical Center–New Linen Purchases Policy


It is MMC’s intention to purchase quality linen which balances patient care, staff requirements, and cost effectiveness. Materials Management has determined that the primary linen supplier, Standard Textile Co., Inc., will be responsible for supplying goods based on the their ability to provide quality, cost effective products to MMC.

Goods will be procured based on contractual agreements, following pre-determined specifi cations for linen items. As part of the XXX Purchasing Alliance, MMC will submit all new linen purchase orders to our primary linen supplier for fulfi llment. Should the primary supplier be unable to provide requested products within a reasonable time period, orders will be submitted to a secondary linen vendor for fulfi llment.

An approved list of existing linen and apparel items is available from the Materials Management department and should be reviewed prior to submitting a new linen requisition. Materials Management will process purchase orders and forward them to the supplier. Orders submitted to the supplier from individual departments or staff without the permission of the Materials Manager will not be honored.


1. The Linen supervisor will review inventory levels monthly to determine if new linen is required to maintain par levels. A The Linen supervisor will review inventory levels monthly to determine if new linen is required to maintain par levels. A The Linen supervisor will reviewPurchase Order Requisition will be fi lled out and submitted to the Assistant Materials Manager.

2. Department Managers must requisition new linen required for department expansions, newly hired staff, or other events that require increases to existing supplies.

3. Materials Management staff will process orders to suppliers.

Equipment & SuppliesEquipment & Supplies

1. Purchase Requisition forms and the Linen Supply list are available from Materials Management.

Information

1. Linen room inventory par levels will be reviewed weekly to determine the new linen needs.

2. New linen requisitions submitted by departments will be charged to their budget.

SecuritySecurity

1. All newly received goods are to be locked in the linen storeroom.

Distribution List

Materials Management Linen Staff Materials Management Linen Staff Materials Management Linen Staff Nursing Administration


57


Whoa!

Before pulling out your calculator to analyze any linen related costs, answer these questions:

• What specifi c product, situation, or process do I want to evaluate? (Hint: Write it down so you can refer to it and explain it to others.)

• Where do I get the data I need ? (if I don’t already have it)

• Do I have the tools necessary to calculate these costs (spreadsheet, calculator, etc.)?

• Is a pie chart or graph a better way to illustrate costs? If so, which costs do I include?

Tex Tip: Before an a lyz ing linen related costs, answer these ques tions

58


Replacement PurchasePurposePurpose

To identify the quantity of goods to purchase in order to maintain adequate circulating linen par levels. Procurement analysis should incorporate historical usage and replacement factors, anticipation of future changes, and knowledge of desired par levels.

Calculations

Procurement Example–Flat Sheets Requirements for 1 Month

TARGET PAR LEVELS

formulaformula DescriptionDescription 1 Par 5 Par 6 Par 7 Para Daily Requirements 1,000 5,000 6,000 7,000

b = a * 10% Safety Stock (10%) 100 500 600 700

c = a + b Circulating Requirements 1,100 5,500 6,600 7,700d = c * 6% Loss Factor (annual loss = 72%; monthly loss = 6%) 66 330 396 462

e = c + d Total System Requirements 1,166 5,830 6,996 8,162f = physical inventory On Hand Inventory (estimated 4 Par) 4,000 4,000 4,000

g = e - f Inventory Requirements 1,830 2,996 4,162h = existing orders On Order (receive within 2 weeks) 1,440 1,440 1,440

I = g - h Purchase Requirements 390 1,556 2,722j = supplier cost Cost per Each $ 6.00 $ 6.00 $

6.00

k Total Purchase Cost $ 2,340.00 $ 2,340.00 $ 9,336.00 $ 9,336.00 $ 16,332.00 $ 16,332.00

l Dollar Value Increase in Par $ 6,996.00 $ 6,996.00

59


Start Up Inventory PurchasesPurposePurpose

To identify the quantity of goods necessary to support a new product implementation or increase instocking levels.

Calculations

Start Up Inventory–New Department Example

formula DescriptionNew Inpatient

Unit

New Outpatient Department

Estimated ActivityEstimated Activitya Number of Beds 20 N/Ab Anticiapted Occupancy 80% N/A

c = a * b, or other estimate Estimated Patients/Procedures 16 80

Anticipated Product UsageAnticipated Product Usaged Sheets per Patient/Procedure 2 1e Changes per Patient/Procedure 2 1

f = d * e Sheets per Patient/Procedure 4 1

Daily Par Level RequirementDaily Par Level Requirement= c Estimated Patients/Procedures 16 80 = f Sheets per Patient/Procedure 4 1

g = c + f Estimated Daily Usage 64 80

h = g * 10% Safety Stock (10%) 6.4 8

I = g + h Total Daily Requirement 71 88

j = 6 * I 6 Par Requirement 426 528

k = supplier cost Cost per Each $6.00 $6.00

l = j * k Total Purchase Cost $2,556 $3,168

60


Purchase CostsPurposePurpose

• To calculate the total cost to purchase an item, including purchase costs, discounts, and associated freight charges.

Costs to Include

1. Purchase–the supplier’s listed or quoted price2. Discounts–a percentage or fi xed sum that is deducted from the purchase price of the product.

Discounts may be given for large quantity purchases, discontinued items, or as rebates for contractual compliance.

3. FreightFreight–the cost to transport the item from theFreight–the cost to transport the item from theFreight supplier to the fi nal destination. This cost may either be included in the price of the product or listed as a separate cost. If freight is charged separately, it often includes the cost of transporting many different items. Therefore it can be diffi cult to calculate how much freight cost is attributable to individual products. Several common freight terms are listed below:• Prepaid–included in the price of the productPrepaid–included in the price of the productPrepaid• FOB Destination–freight paid by the supplier from the original storage location to the fi nal

destination• FOB Shipping Point–freight paid by the purchaser of the product from the original storage FOB Shipping Point–freight paid by the purchaser of the product from the original storage FOB Shipping Point

location to the fi nal destination.

Example: New Linen Purchase Cost per Each- Bath Towels

Cost/Case $ 252.50 listed price including freightMinue: 2% Qty discount $ 5.05 = Cost * (1.0 - 2%)Net Cost $ 247.45 = Cost after Discount

Items per Case 144

Cost per Each $ 1.72 = Net Cost / No. of Items

61


New linen purchase costs may also be refl ected on a cost per clean pound processed. This calculation New linen purchase costs may also be refl ected on a cost per clean pound processed. This calculation New linen purchase costs may also be refl ected on arefl ects purchases over time: monthly, semi-annually, or annually. This calculation also includes the purchase of multiple items, not just a specifi c product. Calculating linen purchases per pound is shown below:

Example: New Linen Purchase Cost per Pound

Annual New Linen Purchases $ 322,565 Divide By: Annual Clean Pounds Processed 2,827,685 2,827,685

New Linen Cost Per Pound $ 0.114

Cost Per Use–Single ItemPurpose Purpose

To provide an accurate measurement of the costs associated with a single item over its useful life. Cost per use is a combination of purchase and processing costs over the expected life of an item. The expected life can be unique to a facility and represent the actual lifespan and potential for loss.

Calculations

Cost Per Use–Single Item (Flat Sheet)

formula Cost per Usea New Replacement Cost $ 5.25 b Expected Life (Washings) $ 100.00

c = a / b Replacement Cost per Use $ 0.05 d Weight per each $ 1.25

e Processing Cost/Pound $ 0.30 f = d * e Processing Cost Per Use $ 0.38 g = c + f Total cost Per Use $ 0.43

62


Cost Per Use Comparison of Multiple Items

Purpose Purpose

Cost per use is a valuable indicator of cost effectiveness over the life of a specifi c type of product. Calculating the cost per use for two or more like items allows a comparison to be made between the true cost effectiveness of similar items. Cost per use is especially valuable when the volume of products used is included in the calculations, as shown below.

Calculations

Cost Per Use–Two Similar Items (Flat Sheets)

formula

Cost Per UseName Print Flat

SheetCost Per Use

Kaumograph SheetCost Per Use

Engineered Sheeta New Replacement Cost $6.00 $5.50 $5.00 b Expected Life (Washings) 100 75 50

c = a * b Replacement Cost per Use $0.06 $0.07 $0.10

d Weight per each 1.4 1.25 1.1e Processing Cost/Pound $0.30 $0.30 $0.30

f = d * e Processing Cost Per Use $0.42 $0.38 $0.33

g = c + f Total cost Per Use $0.48 $0.45 $0.43 h (1,000/ day) Annual Sheets Processed 365,000 365,000 365,000

i = g * h Average Annual Cost $175,200 $163,642 $156,950

63


Annual Apparel CostsPurpose Purpose

To calculate the overall cost of providing and maintaining apparel (lab coats, uniforms). The example shown below details costs on an annual, per piece basis to show the total cost of providing items to staff members. Although distribution labor may also be involved in providing lab coats, the labor cost per piece is typically negligible. This information can be useful when developing an apparel policy or determining costs to recharge to individual staff or departments.

Calculations

Annual Lab Coat Costs

formula Description Costs

Purchase Cost:

a Purchase Cost per Each $8.25

Processing Costs:Processing Costs:

b Number of times laundered per week 2

c Weeks per year 52

d = b * c Average Number of Processings/year 104

e Cost per Processing $1.25

f = d * e Annual Processing Cost $130.00

g = a + f Annual Cost for New Lab Coat $138.25

64


Disposable Product Costs

Purpose Purpose

To calculate the costs associated with the life of the product, from purchase to disposal. Product costs are readily available from suppliers, but waste disposal costs must be calculated separately, as shown below.

Calculations

Waste Disposal Costs per Pound

formula

a Waste Disposal Cost Per Container $ 1,000 b Average Weight Per Disposal Container 5,000

c = a / b Average Disposal Cost Per Pound $ 0.20

Disposable Product Costs Per Use: Pillows and Surgical Towels

formula Disposable Pillow Surgical Towela Purchase Cost $ 2.95 $ 0.50 b Weight per Each* 0.85 0.1c Waste Disposal Cost/Pound $0.20 $ 0.20

d = b * c Waste Disposal Cost/Each $ 0.17 $ 0.02 e = a + d Cost per Use $ 3.12 $ 0.52

* Soiled weight of disposable items may be considerably higher than weight prior to use. Sample weights of items prior to disposal may be sampled prior to calculations.

65


Comparison of Reusable and Disposable Product Costs Per Use

PurposePurpose

To calculate a cost for similar disposable and a reusable products that allows them to be compared for cost effectiveness. The cost calculation includes costs that occur over the lifetime of the product, not just the purchase cost. Labor costs are not included in the examples below since the labor cost associated with the distribution and use of the product would be insignifi cant.

Calculations

Costs Per Use: Reusable vs. Disposable Pillows

formula Reusable Pillow System Disposable Pillow

a Acquisition Cost $ 5.50 $ 2.95 b Average Lifespan (days) 365 6.0

c = a / b Acquisition Cost Per Day $ 0.015 $ 0.492 d Average Length of Stay (days) 6.0 6.0

e = c * d Acquisition Cost per Stay $ 0.090 $ 2.950 f Cleaning Labor (15 seconds) $ 0.035 $ - g Weight per Each $ 0.85 h Waste Disposal Cost/Pound $ 0.20

i = g * h Waste Disposal Cost/Each $ - $ 0.170 j = e + f + I Total Cost Per Patient Stay $ 0.125 $ 3.120

Costs Per Use: Reusable vs. Disposable Surgical Towels

formula Reusable Surgical Towel Disposable Surgical Towel

a Acquisition Cost $ 0.95 $ 0.50 b Average Number Lifetime Uses 50 1

c = a / b Purchase Cost per Use $ 0.02 $ 0.50

d Weight per Each 0.20 0.10 e Waste Disposal Cost/Pound $ 0.20

f = d * e Waste Disposal Cost/Each N/A $ 0.02

g Processing Cost Per Pound $ 0.30 h = d * g Processing Cost Per Use $ 0.06 N/A

i = c + f + h Total Cost per Use $ 0.08 $ 0.52

66


Product StandardizationPurpose Purpose

To reduce costs by reducing the number or similar items in circulating inventory. Standardizing to a circulating inventory. Standardizing to a circulatingsingle or limited number of products or styles can reduce the purchase, labor, and storage costs necessary to support multiple items. In the example shown below, purchase costs can be reduced by standardizing scrub apparel from three styles to one style.

Calculations

Step 1: Defi ne Current Order Requirements: Scrub Apparel (3 Colors)

formulaformula

Blue Scrub Shirts

Blue Scrub Pants

Misty Scrub Shirts

Misty Scrub Pants

Pattern Scrub Shirts

Pattern Scrub Pants

Total RequirementsRequirements

a Required Circulating Inventory 225 225 175 175 100 100 1000

b On Hand Inventory 165 195 95 155 45 65 720

c = a - b Order Requirement 60 30 80 20 55 35 280

d Case Pack (items per case from supplier) 24 24 24 24 24 24

e = c / d Cases Required for Order 2.50 1.25 3.33 0.83 2.29 1.46 11.67

f =”e” rounded to whole no.f =”e” rounded to whole no.Full Cases to be purchased from Supplier (cases rounded to whole number)

3 2 4 1 3 2 15

g = d * f Pieces to be Purchased 72 48 96 24 72 48 360

h Cost Per Each $ 5.95 $ 5.75 $ 5.95 $ 5.75 $ 9.95 $ 9.25

i = g * h Purchase Cost $428.40 $276.00 $571.20 $138.00 $716.40 $444.00 $ 2,574.00

67


Calculations

The calculations below indicate the order requirements necessary to support the same number of users and the resulting order requirements from theand the resulting order requirements from theand the resulting supplier.

Step 2: Defi ne Proposed Order Requirements: Scrub Apparel (1 Color)

formula1 Color

Scrub Shirts1 Color

Scrub PantsTotal

Requirementsa Required Circulating Inventory 500 500 1,000

b On Hand Inventory 305 415 720c = a - b Order Requirement 195 85 280

d Case Pack (items per case from supplier)

24 24

e = c / d Cases Required for Order 8.13 3.54 11.67f =”e” rounded to whole no. Full Cases to be purchased

from Supplier (cases rounded to whole number)

9 4 13

g = d * f Pieces to be Purchased 216 96 312h Cost Per Each $5.95 $5.75

i = g * h Purchase Cost $1,285.20 $552.00 $1,837.20

Below are the purchase cost savings that result from standardizing scrub apparel from 3 colors to 1 color. In addition to purchase costs, there may also be a resulting decline in the amount of labor or storage associated with fewer styles.

Step 3: Calculate Standardization Savings

3 Color Scrubs

1 Color Scrubs

Savings:1 Color vs.

3 Colors

Full Cases to be purchased from Supplier (cases rounded to whole number)

15 13 2

Pieces to be Purchased 360 312 48Purchase Cost $2,574.00 $1,837.20 $736.80

68


Internal Labor vs. Supplier Service ChargePurpose Purpose

To examine the cost of a product or service provided by a supplier vs. the cost of internal staff performing To examine the cost of a product or service provided by a supplier vs. the cost of internal staff performing To examine the cost of a product or service provided by athat activity.

Calculations

This example compares the cost of preparing surgical towel packs by facility staff vs. incurring a service charge by the supplier to provide similar towel packs. The calculations involve fi ve steps as shown below.

Example: Supplier Provided vs. Internally Built Surgical Towel Packs

Step 1: Calculate Acquisition Cost per Use

formula => a b c = a / b d e = c * d

Linen Acquisition

CostLifetime

Uses*

Linen Acquisition Cost/Use

Components/Pack

Total Linen Acquisition Cost/Use

Surgery Towels $1.250 15 $0.083 6 $0.498Wrapper $5.000 50 $0.100 1 $0.100Acquisition: Total Pack $6.250 $0.183 $0.598

*Lifetime uses will vary based on product quality, facility practices, and other factors.

69


Step 2: Calculate Processing Cost Per Pack Processing Cost Per Pack Processing

Formula --> a b c = a * b

Weight/EaWeight/EaProcessing

Cost/lbProcessing Cost/Ea

Surgery Towels 0.21 $ 0.28 $ 0.059

Wrapper 0.34 $ 0.28 $ 0.28 $ 0.095 $ 0.095

Processing: Total Pack 0.55 $ 0.154

Step 3: Calculate Labor Cost per Pack Labor Cost per Pack Labor

Formula --> a b c = a * b

Hourly Wage (w/benefi ts)(w/benefi ts)

Assembled Packs/Hr

Labor Cost per Pack

Labor: Total Pack $ 12.50 50.00 $ 0.250

Step 4: Calculate Overhead Cost per Pack

Formula Cost Per Packa Annual Facility Overhead $ 10,000,000

b Facility Square Feet 750,000 750,000

c = a / b Ave Overhead Cost per Square Foot $ 13.33

d OR Pack Room Square Feet 500

e = c * d Annual OR Pack Room Overhead Costs $ 6,665

f Potential Packs Assembled per hour 50

g Hours per year 2,000 2,000

h = f * g Annual Packs Assembled 100,000

i = e / h Overhead Costs Per Pack $ 0.067

Step 5: Determine Total Cost Per Pack

Cost/PackAcquistion $0.598 Processing $0.448 Labor $0.250 Overhead $0.067 Supplies* $0.090 $0.090 Total Cost per Pack $1.45

*estimated at $.09 per pack

70


Step 7: Calculate Annual Savings

Formulaa Supplier Cost Per Pack $1.85 b Internal Cost Per Pack $1.45

c = a - b Savings Per Pack $0.40 d Packs Per Year 8900

e = c * d Annual Savings $3,560.00

71


Measuring New Products & Services Costs

Purpose Purpose

To identify the product, service, and labor costs necessary to make an equipment, product, or service cost effective. Typically, services may be performed internally at a facility, but a supplier may offer the same service or product for a charge. These calculations measure when it is cost effective to use a supplier provided product or service.

Calculations

Example: Payback required for Scrub Apparel Dispensing Machine • Cost to lease machine: $24,000 annually. This is the cost to which we will compare any facility

costs (scrub replacement).• Labor costs, if signifi cant, could also be included in this calculation, but we excluded from this

example.• After calculating several reduction percentages, the example shows that new scrub replacement

purchases would have to be reduced by nearly 50% to compensate for the annual cost of the dispensing machine.

Percent Reduction Required

formula 20% 30% 40% 50% 60% 70%

a Current Scrub Replacement Costs

$50,000 $50,000 $50,000 $50,000 $50,000 $50,000

b Potential Percent Reduction in Replacement Costs

20% 30% 40% 50%* 60% 70%

c = a * b Potential Replacement Cost Savings

$10,000 $15,000 $20,000 $25,000 $30,000 $35,000

d Annual Dispensing Machine Lease Costs

$24,000 $24,000 $24,000 $24,000 $24,000 $24,000

e = c - d Savings or (Loss) ($14,000) ($9,000) ($4,000) $1,000 $6,000 $11,000

*percent reduction needed to be cost effective

72


Measuring New Products & Services Costs

Calculations

Example: Payback required for Supplier Prepared Linen Exchange Carts

• Supplier's cost to prepare exchange carts: $4.50 per cart• To identify if the supplier's rate is cost effective, the current internal labor cost to count and build

exchange carts must be identifi ed. Using the total number of hours to build the total number of exchange carts will identify the internal cost per cart.

• The hourly wage used should include the hourly rate plus benefi ts. We used a rate of $6.50 per hour plus 25% benefi ts ( $6.50 * 125% = $8.13).

• Our example below indicates that it would not be cost effective to use the supplier's service:

formula Internal Labor Costs

a Exchange Cart FTEs 2.0b Hrs per FTE to Count & Load Card 3.0c = a * b Total Hours 6.0d Hourly Wage (with benefi ts) $ 8.13 $ 8.13 e = c * d Total Exchange Cart Labor Cost $ 48.78 f No. of Exchange Cards Built/Day 12.0g = e / f Labor Cost per Exchange Cart $ 4.07

73

Chapter Seven–Physical Inventory

Chapter Seven

Physical Physical InventoryInventory

Goal Physical inventories traditionally have been used to determine the amount (quantity and cost) of linen owned or used by a facility. However, counting linen throughout a facility can be a labor intensive process, so the reasons behind the physical inventory process must be examined. Historically, physical inventories have been used for 4 purposes.

• Determine Value–to calculate the fi nancial worth of linen assets.• Support Procurement Decisions- to calculate the quantity of goods necessary to reach a desired

inventory par level or balance existing inventory levels.• Identify Non Circulating Linen–to fi nd departments where excess linen is stored so it can be

retrieved and recirculated.• Calculate Loss–to compute the quantity and cost of items missing since the last inventory and

determine product replacement rates.

After determining that a physical inventory count is required, consistent procedures must be followed to insure a complete and accurate count. The guidelines listed on the following pages will guide you in performing an accurate, effi cient count.

74


Physical Inventory Count Guidelines 1. Follow consistent counting procedures. Several recommendations are shown below:

• If the facility uses a commercial laundry, Inform them in advance that you will be taking a physical inventory. They will count the clean linen already processed and the soiled linen received from the facility the day of the count. If the laundry is onsite, the laundry manager or other facility staff members will coordinate.

• Choose a full staff day and a convenient time for counting. Linen is diffi cult to count when in use. Early morning, late evening, or weekends are typically good times for counting. Future physical inventories should be taken at the same time so the results are comparable. For instance, inventory counts for an individual department taken on a holiday and on a normal working day may not be comparable. Avoid shift time changes and times of high activity (i.e. bed care, patient baths, etc.).

• Notify linen using departments in advance. Inform departments what time and day to expect counting. Encourage them to recirculate linen "stashes" by placing items into soiled linen.

• Prepare count sheets in advance. Prepare a master list of all departments that require counting. Prepare count sheets which list the department name and specifi c products distributed to that area.

• Gather and remove soiled or excess clean linen. Prior to the inventory count, collect as much soiled and excess clean linen as possible and send it to the laundry. These items will be counted after they are processed by the laundry.

• Use teams of 2 when counting. As one person physically counts linen, the other writes the count down. This method can take less time than having one person count and write.

• Count all linen that is clean or in use. At each location, count items in the Linen Department, on exchange carts, storage closets, patient rooms, patient beds, exam rooms, and other storage areas. Personal items (i.e. scrub apparel) can be calculated by counting the number of staff members wearing linen or apparel item.

2. Tabulate the results. On each department's count sheet, total the quantity of items counted in that area. Transfer these numbers to a master count sheet that summarizes all items counted. Make sure to include all counts made by the laundry. If possible, use a computer software spreadsheet program to assist you.

75


Departmental Count Sheet Example: 4 West Medical/Surgical UnitItem Patient Rooms Exchange Cart Other Storage TotalFlat Sheet 44 75 25 144Pillow Case 56 100 25 181Draw Sheet 21 50 15 86

Memorial Hospital: Physical Inventory Master Count Sheet 12/31/97

ItemInpatient

AreasAncillary (Clinics) Linen Room

Linen Storage

Laundry Count Total

Flat Sheet 1,200 900 2,500 720 2,200 7,520 Pillow Case 1,500 1,200 1,800 720 1,600 6,820 Draw Sheet 800 200 400 0 200 1,600

3. Once the results are tabulated, investigate products with relatively high, consistent loss rates. Physical inventory counts will reveal losses in many items. Several items may have above average loss rates. These items should be reviewed with users to identify ways to reduce losses. Losses (Mysterious Disappearance) can be calculated using this formula:

Calculation Description

+ Beginning Inventory counds from last physical inventory + New Linen Purchases quantity injected into system since last physical inventory

- Recorded Discards quantity of recorded itemsquantity of recorded itemsquantity of (usually due to wear or stain) that were removed from recorded items (usually due to wear or stain) that were removed from recorded itemssystem since last physical inventory

- Ending Inventory current physical inventory count = Mysterious Disappearance

quantity of unrecorded items unrecorded items unrecorded removed from system since last physical inventory

Inventory Tracking

Standard Textile Co., Inc.'s ControlTex® software allows you to track physical inventories, purchases, and discards. The reporting features allow you to monitor perpetual inventories, mysterious disappearance rates and comparative reports. To fi nd out more about the software, contact Standard Textile Co., Inc. at 1-800-999-0400.

Tex Tip: In ven to ry Track ing

76


Alternative Physical Inventory PracticesPrior to performing a physical inventory count, review why the count is necessary. As stated previously, if a count is necessary to determine the fi nancial value of linen, a full inventory count is appropriate. However, if your goal is to identify high loss items or departments which hoard linen, a partial inventory count may suffi ce. There are several alternatives that will provide useful information using less time and labor.

• Only count the 10-12 items you most frequently purchase. A facility may spend 70% or more of their new linen purchase dollars on 10-12 items. Limiting annual or semi-annual physical inventory counts to these items can be an effective use of time and create valuable information.

• Only count the items with the highest value or loss rate. A primary linen management goal is to protect linen assets. Focus on specifi c items which increase procurement costs and the departments which use those items.

• Only count high volume linen using departments. Inpatient and high volume outpatient departments typically consume and store the highest percentage of linen in the facility. Limiting counts to these areas and eliminating the counts of low volume clinics can reduce the amount of time and labor devoted to physical inventories. Low volume areas can be periodically observed to remove excess inventory.

• Use “Cycle Counts”. Counting 2 to 3 high volume items each month takes less time, creates useful information, creates a linen staff “presence” with consumers, and provides a regular opportunity to observe linen utilization practices in each department. The items counted should rotate each month so all of the high volume are counted throughout the year. For instance:

January sheets, bath towels July sheets, bath towelsFebruary bath blankets, thermal blankets August bath blankets, thermal blanketsMarch patient gowns, IV gowns September patient gowns, IV gownsApril pillow cases, pillows October pillow cases, pillowsMay incontinent pads, draw sheets November incontinent pads, draw sheetsJune scrub apparel, surgical towels December scrub apparel, surgical towels

77


Mysterious Disappearance CostsPurpose Purpose

To calculate the cost of linen which leaves circulating inventory. These items usually are removed from circulation due to theft, inaccessible storage, or placement in the wrong receptacle (trash container instead of soiled linen hamper). Typically, items which have mysteriously disappeared from circulating inventory must be replaced with new linen in order to maintain suffi cient inventory levels.

Calculations

formula Flat Sheets

Bath Towels

ermal Blankets

Grand Total

a Beginning Physical Inventory: 1/1/96 10,000 12,500 14,500 8,750 45,750 b Purchases 1/1/96 - 6/30/96 1,440 2,880 2,160

780 7,260

c Rag Out/Removed from Service 175

220

250

35

680

d = a + b - c

Calculated Ending Inventory 11,265 15,160 16,410 9,495 52,330

e Ending Physical Inventory: 6/30/96 7,785 9,695 7,075 5,950 30,505 f = d - e Mysterious Disappearance 3,480 5,465 9,335 3,545 21,825

g Cost Per Each $ 5.50 $ 1.75 $ 1.50 $ 15.75

h = f X g Mysterious Disappearance Value $ 19,140 $ 9,564 $ 14,003 $ 55,834 $ 98,540

i = f / a Percent of Beginning Inventory Lost 34.80% 43.72% 64.38% 40.51% 47.70%

79

Chapter Eight - Action Plans

Chapter Eight

Action PlansAction Plans

Goal Not only are linen managers charged with supervising the daily activities of their department, but they are often asked to perform cost analysis, implement special programs, train staff members, and monitor supplier's performance. We have provided you with tools to support these activities, but perhaps the most important key to successfully meeting these challenges is organization.

Many great ideas have come and gone, often because no one outlined the specifi c actions that must occur to meet the goal. One of the most effective tools for organizing a project is an Action Plan. This plan provides a "blueprint" for a project that outlines the specifi c steps necessary to complete a project, without being too complex to create, monitor, or revise. An effective Action Plan contains four key elements:

• Specifi c, concisely written, project goal - what policy, procedure, activity, or report should be in place at the end of the project?

• Steps required to complete goal - what specifi c actions are required to meet the goal? • Target dates - what is a reasonable time estimate for completing each step? • Responsible parties - who must be involved to complete each step? • Monitoring mechanism - what measurement indicates that the project is completed and reaches

the desired goal?

Action Plans are effective for both long and short term planning. Using this template for a process improvement goal or for a daily guide is an effective way to monitor the processes, people, and times that must be coordinated to reach a goal or provide a service. Once an Action Plan is complete, it serves as a monitoring tool for management and staff. Each step can be reviewed regularly - usually weekly or monthly - and revised as needed.

Examples of several Action Plans are listed on the following pages. Each one was designed for a specifi c goal and shows the key steps and target dates necessary to complete the project.

80


Action Plan Example: Creating a Linen Utilization Tracking System

Project Goal: Create a PC based linen utilization tracking system. Target Date Responsibility Comments

Linen Utilization Tracking 1. Crate Product Profi le Jan 15th Linen Supervisor Need Data from supplier 2. Create Distribution Location

Profi leJan 30th Linen Supervisor Requires linen staff input

3. Install PC in linen room. Feb 1st Materials Mgr Materials Mgr to investigate existing PC equipment

4. Create computer database of products and distribution locations

Feb 15th Data Energy Clerk Materials Mgr. To inquire about Standard Textile’s ControlTex® linen management software

5. Train staff in usage data collection

March 1st Linen Supervisor

6. Monitor staff progress March 1st - 30th Linen Supervisor & Materials Mgr

Utilization reports to be reviewed weekly

7. Review month end reports April 1st Materials Mgr Results to be shared with consumers

Action Plan Example: Implementation Action Plan Used as Project Status Report

Project Goal: Coordinate Changeover to New Processor Est. Date: Responsibility Current Status

Establish Facility Contact Names, phone & faxes

6/3 Asst. MM to coordinate Done

Establish Conversion Date (suggest conversion date of Aug 4th)

week of 6/10 MM & New Processor Done (conversion planned for Aug 4th)

Obtain facility usage data 6/3 Linen Supervisor DoneEstablish Par Level requirements by line item (suggest 7 par)

week of 6/10 Asst. MM; STC Sales Consultant

Done

Coordinate conversion plan and dataes with new processor

week of 6/10 MM, Asst. MM, New Processor

Done

Confi rm facility product and quantity needs

6/24 - 6/25 Asst. MM; STC Sales Consultant

Date extended to 7/1

Develop Internal Facility Communication Plan

week of 6/17 Asst. MM To be sent out via e-mail

Confi rm Product Availability from Standard Textile

7/5 Asst. MM; STC Sales Consultant

Open

Perform Product Inservices for facility staff

8/6 Asst. MM; STC Sales Consultant

Open

81

Chapter Eight - Action Plans

Action Plan Example: Implementation Action Plan Used as Project Status Report

Linen Awareness Day Action Plan Expected Date Responsibility Comments

Preparation

• Work with Value Analysis Committee to establish date, time, and participants

• Optain administration support and involvement

• Defi ne materials to use

• Prepare Materials

• Communicate date and event throughout facility:

- Flyers - two weeks prior

- Article in hospital publication - one week prior

- E-mail departments 2 days before

Day of Event

• Set up visual aides

Follow-Up

• Publish article in hospital publication summarizing event

• Critique with Value Analysis Committee

82


Action Plan Example: 90 Day Priorities

Project Goal: Begin the Linen Management Improvement Process by addressing teh following four (4) areas:

PeoplePeople Distribution Consumers Products

Train employees in the following areas:the following areas:

Identify Distribution Bottlenecks

Begin monitoring consumers

Review Purchasing Practices

ResponsibilityResponsibility ResponsibilityResponsibility ResponsibilityResponsibility ResponsibilityResponsibilityLinen Manager & Supplier Contact

Linen Manager & Linen Staff

Materials Manager & Linen Manager

Materials Manager & Linen Manager

• Train staff to respond promptly and courteously to users

• Review current clean linen delivery time schedule

• Monitor 3 high volume users with ControlTex® utilization data

• Review current product line for standardization opportunities

• Review JCAHO standards with linen staff

• Review Soiled linen pick up schedule to insure circulation

• Conduct weekly walk through of high volume areas

• Review inventory stocking levels in linen room

• Cross train linen preparation and delivery staff

• Review current par levels with high volume users

• Review linen security in unlocked or high traffi c areas

• Replace linen on regular time schedule (every 2-4 weeks)

83

Chapter Nine - Compliance

Chapter Nine

ComplianceCompliance

GoalsFederal, state, and local government agencies are empowered to insure quality processes are in place and routinely followed. Regulations change periodically and must be reviewed by linen and laundry departments to insure they follow mandated procedures. Generally, these regulations address three primary areas:

• Safe and proper handling of clean and soiled linen to reduce the potential for contamination to staff and patients.

• Awareness of facility's mission, patients, and linen products.• Employee training and associated documentation to verify awareness of regulations.

Below is a list of processes monitored by JCAHO, OSHA, EPA, and other agencies, but is not limited to those agencies. Each process requires annual or semi annual employee training. Documentation of each training session, as well as policy and procedure manuals, must be on fi le at the facility. Since these regulations are designed and enforced by agencies external to the facility, they can only be monitored by infrequent onsite (and often unannounced) visits and documentation provided by the facility.

Safe Handling TrainingSoiled Linen Handling and Appropriate Use of Protective Attire

Clean Linen Delivery Guidelines Universal/Standard Precautions

Handwashing Technique Sharps and Infectious Waste Procedures

Chemical Use, Storage, and Spill Containment

Fire Safety Machine Safety Confi ned SpacesLock Out / Tag Out

Employee AwarenessFacility Orientation Facility mission and Values

StatementProduct and Procedures Training

Performance Review Competency Review

Employee Health and Safety

Hepatitis B Vaccination Employee Physicals Life Saving/CPRAppropriate Use and Personal Protective Equipment (PPE) (attire, etc.)(attire, etc.)

Reporting Accidents Observing Safe Work Practices

84


MonitoringThere are two ways to evaluate and monitor your facility's degree of compliance. Both methods require active participation by management. Identifying, addressing, and correcting potential violations requires aggressive action and follow up by supervisory staff. These two general methods are:

1. Observation - Visually observing the implementation of mission statements, policies, practices, equipment, and existing documentation is a method to insure that compliance procedures are in place. This method is often used by federal, state, and local agencies during a formal review, but should also be used by managers and supervisors on a more frequent basis to insure that staff members regularly meet regulatory requirements.

2. Documentation - Written verifi cation that procedures are followed is one of the primary measurements of compliance. Below you will fi nd a list which includes, but is not limited to policies and procedures which must be in place.• Policy and Procedure Manual• Infection Control Manual (or section within Policy & Procedure Manual)• Exposure Control Plan• Employee Training Documentation• Agency violations related to linen and laundry procedures

To contact your nearest local JCAHO representative, contact the national association at:

One Renaissance Blvd

Oakbrook Terrace, IL 60181

708-916-5600

Tex Tip:

87

Index

IndexIndexAAAMI 39accounting mechanism 26acquisition 51, 54acquisition cost 23, 51acquisition cost per pack 68action plan 25, 79, 80, 81, 82activities 40acuity level 13adjusted patient days 10, 24American Laundry and Linen College 39annual savings 70

Bbed changes 13, 27benchmark 25, 36, 38, 50, 53

Ccensus 30census/inpatient days 24circulating inventory 2, 3, 8, 29, 36, 49, 50, 52, 53,

66, 77circulating inventory replacement 50circulating requirements 53clean weight 35, 37, 38customer owned goods 2collection times 35commercial laundry 2, 5, 9, 37, 74compliance 2, 83–84consumers 2, 5, 6, 7, 26, 76direct users 2end users. See Consumers; consumersconsumption 2, 6, 8, 13, 16, 18, 23, 25, 26, 32,

36, 39, 49, 53consumption practice guidelines 26ControlTex® 14, 25, 30, 32, 53, 75cost per activity 41

cost per adjusted patient day 10cost per cart 72cost per clean pound processed 61cost per discharge 10cost per each 10, 53, 60cost per hour 21cost per operator hour 45cost per pack 68, 69cost per piece 63cost per pound 9, 10, 41, 43, 61cost per unit of activity 10cost per use 51, 61, 62costs per pound 43cross contamination 35COG 2customers 2, 3, 6, 8, 9, 26, 40cycle counts 76

Ddaily requirements 53database 14, 25, 26delivery review practices 18delivery routes 17delivery schedule 16depreciation 3, 9, 47direct costs 46discards 2, 75discharge 24, 27, 28, 30, 34distribution 2, 3, 5, 6, 8, 13, 14, 15, 20distribution location profi le 15dollar value increase in par 53domino effect 55

88


Eend users 2, 5, 24, 29equipment 3, 7, 9, 16, 17, 39, 40, 42, 47, 71, 84

FFOB 60

Iin total 10incontinence care 27incontinent pads 27incontinent patients 27infection control 27, 42information systems 3inject 3inventory 1, 2, 3, 7, 8, 9, 16, 20, 29, 35, 36, 49, 50, 52,

53, 54, 55, 56, 59, 66, 73, 74, 75, 76, 77inventory requirements 53inventory tracking 75inventory vs. labor 49item substitution 33

JJCAHO 83, 84

Llabor 3, 7, 9, 24, 40, 41, 43, 45, 46, 49, 65, 68, 71labor and delivery 29labor cost calculations 21labor cost per activity 10labor cost per pack 69Laundry Digest 39Laundry News 39linen carts 35linen circulation 5, 6, 35linen consumption 23linen costs 2, 9, 23, 24linen costs per pound 43linen cycle 2linen distribution policy 20linen exchange cart 20, 27

linen exchange carts 72linen fl ow model 7linen management program 23linen processing costs 44linen replacement factors 50linen retrieval policy 37linen usage 26linen utilization 2, 13, 18, 26, 76linen utilization costs 30linen utilization tracking system 80loss 6, 29, 32, 53, 61, 73, 75, 76

Mmaterials management 28, 29, 37, 42Materials Management Magazine 39materials manager 29, 42mysterious disappearance 3, 50, 53, 75, 77

NNational Association of Institutional Linen Managers

(NAILM) 39NOG 2non circulating linen 73not our goods 2

Oon hand inventory 53on order 53order requirements 51, 67OSHA 83overhead 3, 9, 46, 69

89

Index

Ppar level 19, 29, 31, 36, 50, 53, 54, 73patient activity 30, 53patient care activity 26patient linen 29patient transfer 32, 33patient transfer linen consumption 32patient volume 1, 24, 37payback 71, 72percent reduction required 71pieces 24pieces per operator hour 41pounds 24pounds per operator hour 41, 45price vs. value 49procedures 24, 30processing 1, 2, 3, 6, 7, 8, 9, 10, 23, 24, 33,

35, 36, 39, 41, 42, 43, 46, 49, 51, 53, 55, 61

processing cost per pack 69procurement 8, 49, 50, 52, 53, 54, 76production 39productivity 41project status report 80, 81purchase requirements 53

Rrecharge 24, 30, 63recommended practice 26replacement 1, 2, 7, 9, 10, 24, 33, 36, 50, 53,

54, 55, 58, 71replacement factor 53retrieval 2, 8, 35–36, 36, 49, 53routine processing costs 43

Ssafety stock 53sample practice guidelines 26scrub apparel 29scrub apparel dispensing machine 71security 7, 29, 37skin care 27software 25soil weight 35soiled linen 2, 5, 6, 8, 23, 28, 35, 36, 37, 39,

40, 42, 74, 77, 83soiled linen carts 35soiled linen weight 35sorting 39, 40standardization 66standardization savings 67start up inventory 50, 59stocking level 50stocking levels 8, 31, 59substandard linen 27supplier 8, 20, 37, 42, 43, 44, 51, 52, 53, 56,

60, 67, 68, 71, 72supplier labor costs 43supplies 46

TTex Tip 24Textile Rental Services Association (TRSA) 39total cost per pack 69total purchase cost 53total system requirements 53traditional linen model 5

Uutility equipment expense 47utilization 2, 3, 13, 14, 18, 19, 23, 24, 25, 26,

30, 33, 36, 54

90


AssociationsAssociations

American Association of Textile Chemists and Colorists (AATCC)One Davis DrivePO Box 12215Research Triangle Park, NC 27709-2215Website: http://www.aatcc.org

American Reusable Textile Association (ARTA)P.O. Box 1073 Largo, FL 33779-1073Website: http://www.arta1.com

American Society for Healthcare Environmental Services (ASHES)One North FranklinChicago, IL 60606 Phone: (312) 422-3860 Fax: (312) 422-4572Website: http://www.ashes.org

The Association of Operating Room Nurses (AORN)AORN, Inc.2170 South Parker Rd, Suite 300Denver, CO 80231-5711Phone: (303) 755-6300 or (800) 755-2676Website: http://www.aorn.org

International Executive Housekeepers Association, Inc. (IEHA)1001 Eastwind Dr., Suite 301Westerville, OH 43081-3361Phone: 614/895-7166 or 800/200-6342Fax: 614/895-1248Internet: www.ieha.org

National Association of Institutional Linen Management (NAILM)2130 Lexington Road, Suite HRichmond, KY 40475Phone: (606) 624-0177Fax: (606) 624-3580Website: http://www.nailm.com

Textile Rental Services Association (TRSA)1130 E. Hallandale Beach Blvd. Suite B, Hallandale, FL 33009 Phone: (954) 457-7555Fax: (954) 457-3890Website: http://www.trsa.org

91

Index

For Further ReadingFor Further Reading1998 Guidelines for Healthcare Linen Service

by Joint Committee on Healthcare Laundry GuidelinesTextile Rental Services Association (TRSA)1130 E. Hallandale Beach Blvd. Suite B, Hallandale, FL 33009 Phone: (954) 457-7555Fax: (954) 457-3890

AIDS/HIV Guide: An In-Service Program for Laundry and Linen Personnel

By Raymond B. Otero, Ph.D. and the National Association of Institutional Linen Management (NAILM)

2130 Lexington Road, Suite HRichmond, KY 40475Phone: (606) 624-0177Fax: (606) 624-3580

Analytical Methods for a Textile Laboratory (Third Edition 1984)Edited by J. William WeaverAmerican Association of Textile Chemists and Colorists

(AATCC)One Davis DrivePO Box 12215Research Triangle Park, NC 27709-2215Library of Congress: 84-70596ISBN 0-9613350-0-9

Good hospital practice: Steam sterilization and sterility assuranceAssociation for the Advancement of Medical Instrumentation3330 Washington Boulevard, Suite 400Arlington, VA 22201-4598Phone: (703) 525-4890 or (800) 332-2264

OR ManagerOR Manager, Inc.1807 Second Street, Suite 61Santa Fe, NM 87505-34991-800-442-9918

OR ReportsOR Manager, Inc.1807 Second Street, Suite 61Santa Fe, NM 87505-34991-800-442-9918

Procedures for Infection Control Practices: An In-Service Program

for Laundry and Linen PersonnelBy Raymond B. Otero, Ph.D. and the National Association of

Institutional Linen Management (NAILM)2130 Lexington Road, Suite HRichmond, KY 40475Phone: (606) 624-0177Fax: (606) 624-3580

Recommended Practice for Central ServiceSterile Storage Inventory Management and DistributionSection Seven

American Society for HealthcareCentral Service Personnel of the American Hospital AssocationOne North Franklin Chicago, Illinois 60606Phone: (312) 422-3880

Selection of Surgical Gowns and Drapes in Health Care FacilitiesAssociation for the Advancement of Medical Instrumentation3330 Washington Boulevard, Suite 400Arlington, VA 22201-4598Phone: (703) 525-4890 or (800) 332-2264AAMI TIR No. 1-1994

Standards, Recommended Practices, & Guidelines 1998Association of Operating Room Nurses, Inc.2170 South Parker Rd, Suite 300Denver, CO 80231-5711Phone: (303) 755-6300 or (800) 755-2676

Sterilization Technology for the Health Care Facility, Second Edition

Edited by Marimargaret Reichert and Jack H. YoungAspen Publishers, Inc., Gaithersburg, Maryland1-800-234-1660ISBN: 0-8342-0373-1

Textile Laundering Technology (1990)by Charles L. Riggs, Ph.D. and Joseph C. Sherrill, Ph.D.Textile Rental Services Association (TRSA)1130 E. Hallandale Beach Blvd. Suite B, Hallandale, FL 33009 Phone: (954) 457-7555Fax: (954) 457-3890

Textiles, 5th Edition (1979)by Norma Hollen, Jane Saddler and Ann LangfordISBN 0-02-356130-0 (Hardbound)ISBN 0-02-978790-4 (International Edition)

ISBN 0-9663708-1-3

00099637-11/04

Documents

Sample Linen Management