Factoring in cost
After patient safety and health, cost reduction at newly acquired facilities takes top priority. One of the first operational changes Geisinger expects of acquisitions is a focus on energy management. “Our experience typically is that we can reduce their energy costs in the first two or three years from somewhere around $5 a square foot down to $3 a square foot,” Neuner says.
Geisinger has a three-pronged strategy for decreasing energy expenditures: leverage its buying clout to make better energy purchases, improve efficiency and upgrade outdated equipment.
“The first way to reduce energy costs is to buy better,” Neuner says. “We have contracts with energy brokers, so the way we purchase power is generally different from the way our acquisitions have done it in the past. We can usually reduce their utility costs by 10 percent just through our purchasing agreements.”
Second, Geisinger expects all of its hospitals to benchmark their energy usage and identify and rectify inefficiencies. “For example, a facility may be running 40-degree chilled water where it only needs to be 42 degrees,” Neuner says. “By going in and tuning up systems, we can gain another 10 percent in cost savings.”
Finally, Geisinger will make capital investments where indicated. “Chances are the acquired facilities are operating chillers and boiler plants that are well in excess of 30 years old and sometimes in excess of 50 years old,” Neuner says. “When we replace old equipment with systems that are much more efficient, that accounts for the majority of our energy cost savings.”
As when negotiating with utilities, large health systems are able to obtain better pricing on equipment and other purchases than smaller organizations can. Typically the toughest adjustment for facility directors in the wake of a merger or acquisition is the loss of purchasing autonomy, notes Smith.
“In a lot of markets, they like to be able to go to Fred’s Hardware and buy from Fred, whom they’ve known for years,” he says. “Usually, it’s just convenient for them. But we have national agreements driving pricing that we expect they will participate in.
“Having been a facility director, I know that when you’ve not done this before and you’re asked to do it, it’s not fun,” Smith continues.
At Geisinger, newly acquired hospitals also are expected to purchase equipment from specific vendors, though buying a gallon of paint or a bucket of bolts from the local hardware store is not considered a big deal, says Neuner. Some flexibility is allowed to meet pressing needs and maintain relationships.
Because environmental services departments consume a lot of products and have a variety of contractual agreements, Geisinger environmental services managers generally must take advantage of negotiated pricing discounts, points out Bruce Thomas, the health system’s vice president of guest services.
“The big advantage of mergers and acquisitions is the ability to capitalize on volume purchasing,” Thomas says. “In environmental services, if there is not a written contract that we have to wait out, we’ll bring new facilities up on our hand sanitizer program, we’ll bring them up on our recycling program, and we’ll bring them up on our outsourced linen program. This doesn’t necessarily happen on Day 1. But our intent is to have everybody participate in these programs, because that’s where the savings start to come in.”
Maintaining consistent ES quality
When one health system acquires another, it can take years before environmental services departments become standardized, because many hospitals and small health care organizations outsource housekeeping, and existing contracts generally need to be honored. Such was the case when UCLA Health acquired Santa Monica Hospital, says Arturo Sanchez, the Los Angeles-based health system’s administrative director for environmental services.
Five or six years passed before all of the Santa Monica campus’s environmental services functions could be integrated, he recalls.
UCLA Health prefers to insource housekeeping because it plays an important role in supporting the health system’s patient-centered brand, Sanchez says. He notes that the hospitality industry heavily influences the way his housekeepers are expected to communicate with patients.
“Our housekeepers act more like ambassadors and interact and connect a lot more with our patients than they used to in the past,” he says.
At all UCLA Health hospitals, housekeepers must knock on a patient’s door and request permission to enter before going into an occupied inpatient room. They greet the patient warmly, introduce themselves and explain what they are going to do, asking if it’s OK to begin their cleaning tasks. Afterward, they connect with the patient again, asking whether anything else is needed.
“They make sure that everything is up to the satisfaction of the patient,” says Sanchez, noting that housekeepers must leave on the bed table a Post-it note with their name and a contact number should the patient have additional requests later on. “Then they exit with courtesy, thanking the patient and wishing him or her a good day,” Sanchez explains.
When health systems have multiple hospitals, practices can be pilot-tested at one facility before being rolled out to the rest, Sanchez says. For example, at UCLA Health, housekeepers fold the leading end of a new toilet paper roll into a “V” and affix a gold seal to indicate that it is fresh and safe to use. And they place a band around the seat of just-cleaned and sanitized toilets. “These practices were piloted at a few units in Santa Monica before becoming systemwide,” he says. “We’ve seen an improvement in our quality scores as a result.”