Capital Improvement Approval Made Easier (Part 1)

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(Image credit: Alissa Ausmann)

“How can a laundry manager most effectively demonstrate to management or institutional administration the need for capital improvements in his or her facility?”

Uniforms/Workwear Manufacturing: Carl Rocco, Uniform Advantage, Plantation, Fla.

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Carl Rocco

Carl Rocco

I am most fortunate to reside in the Fort Lauderdale area and am thus enjoying a balmy winter. I do not mention this to make anyone feel badly about cold weather situations, but found this a relatable experience regarding an equipment upgrade I faced upon closing on my house—to fix or not fix the pool heater.

My wife immediately started thinking of benefits that would outweigh the cost of completing this service:

  • Increased usage of pool by my family.
  • Relatives being able to come down from the North to enjoy.
  • Higher quality of water with better use of the pool pump equipment.

A fairly impressive presentation by my wife to capture my attention put me in a position that beckoned for a speedy decision. As the pool came with the house, she wanted badly to maximize the utilization and thus, after much debate, we approved the fix and upgrade. Turns out, our pool is a benefit that is used virtually every day.

So, presenting any capital expenditure in today’s highly competitive and lean spending world comes down to the overall return on investment and how that is presented (and ultimately received) by key administration.

From my experience, discussions in the following areas usually provide critical presentation points:

  • Expense reduction — Will the purchase reduce overhead costs, allowing for a greater profit margin?
  • Operating efficiencies — Will this purchase allow for a re-allocation of staff to provide better coverage or additional revenue-producing services?
  • Additional revenue capabilities — Will this afford your plant a competitive market advantage? Can this equipment help in turning a cost center into a profit center?

In all of this, it is vital to realize that the healthcare environment is in constant change. Today’s healthcare environment is all about cost, quality and outcomes.

  • Cost — Not just lowest purchase price, but will purchasing higher quality increase utilization?
  • Quality — Does this meet or exceed the standards at the institution?
  • Outcomes — How is the patient experience affected?

The next factor is, of course, financial. How will the operating budget be affected, not just this year, but in the subsequent three years? What is the cost of making no changes?

Additionally, it never hurts to have a “champion” in administration—one who can provide you with the critical details that could make the difference with respect to the capital expenditure and conditions within the executive suite. Their insight on overall budgetary issues, along with long-term business strategies, may affect the overall nature of the proposal. For example, will this be part of a larger overall enterprise upgrade affecting other institutional areas?

As a person who has been in a selling environment for most of my adult life, having the correct presentation tools is critical. A well-crafted PowerPoint presentation with vital financial and benefit data can make the process far simpler for an executive to follow.

Be prepared and anticipate a variety of questions surrounding your proposal, and remember that no detail is too small. Presenting your vision around these critical points will assist in the potential adoption of the desired product or service.

Long-Term Care Laundry, Kathrine Flitsch, Wheaton Francsican Healthcare, Brookfield, Wis.

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Kathrine Flitsch

Kathrine Flitsch

When looking at this question, I thought instantly about the quality of service we provide our patients. I want the laundry they receive from us to be the best. That means we may need to do some updating to our equipment, chemicals or labeling system.

Approaching anyone for money is a tough thing to do no matter what you are trying to get it for. When I am faced with asking for improvements to our laundry department, I know I need to present my administrator with the facts.

Recently, a component within our garment labeling system began to fail. When comparing the cost of the repairs and the cost of a new system, there was a difference. It would have been less expensive to fix the old one, but it was becoming dated.

Parts were harder to find, the software was no longer going to be supported and, as a result, it would be harder to repair the system in the future. By explaining this to the administrator and showing him the facts, it was easier for him to understand the need for the new system.

I believe that the more information you can provide to the leader about the needs, the better chance you have at obtaining what you need.

Come to the table with information, pictures, brochures, and pricing of what you are exploring. Explain yourself thoroughly until the leader understands the need for what you are requesting. Explain how the improvements would suit the needs of your facility. Is the new equipment a good thing for the environment, water savings, etc.? Is the current machine dated, and what type of savings would new equipment offer?

By doing your research and coming ready to explain your need, I believe you will have an advantage in getting what you need to run laundry operations efficiently at your facility.

Commercial Laundry: Rick Rone, Laundry Plus, Bradenton, Fla.

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Rick Rone

Rick Rone

Fiscal budgeting is a topic that can be construed in many ways. There are some major differences if you are associated with a governmental agency, not for profit [501(c)(3)], publicly traded or privately held company.

In most instances, there might be two words that come to mind: money talks. That might be in the form of an acceptable return on investment (ROI), or it may, in another case, be in the context of quality improvements. These quality improvements might then lead to additional sales and ultimately to a boost to the bottom line.

I believe that at most laundries, labor is often the largest line item on the budget. That being the case, machinery that would benefit additional or faster production, and therefore increased pounds per operator hour, are quite frequently reviewed.

I believe that having your customer service department record all comments, both bad as well as good, and grouping them in prearranged categories can be a valuable tool. We utilize this tool to see trends and look at potential machinery needs and updates.

Obviously, when we are in budget meetings, there are representatives from all areas of the company. If top management is indicating it wants a 10% increase in sales, plant managers as well as production managers must be able to review their current machinery loads and calculate if current machines can provide the required increase or if additional equipment is required. Capital improvements might also mean additional space requirements as well as many other possibilities.

I would like to add that sometimes I find that there might be a particular project that will not offer an acceptable financial ROI. That does not mean that it is not just the correct thing to do. It may be a “green” concern or it may even be community-oriented. I believe that it ultimately cannot be just about the bottom line. 

Check back tomorrow for insight from other panelists.

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