I believe the purchase of National Linen by ALSCO means that a number of healthcare facilities will be changing vendors over the next several years.
ALSCO doesn’t feel that servicing hospitals falls into its field of expertise. Unless ALSCO changes its corporate philosophy, a highly unlikely event, it’ll be looking to shed a number of hospital accounts over the next several years. I’ve been told that ALSCO will honor existing contracts but that it’s not interested in extending or renewing any of them.
At least one of the National Linen facilities purchased by ALSCO was almost exclusively dedicated to hospital and healthcare work. It’s logical that this facility will probably be sold in the next year to a company that wants to be in this type of business.
National Linen had a number of corporate contracts for linen service that were developed because of the company’s geographical coverage. Their loss creates a void in the marketplace and will open the door for a number of regional providers that were unable to compete under the old system.
I expect to see prices in the hospital market climb. The loss of competition and heavily discounted national contracts will set in motion price increases that will be most obvious when hospitals go back out to bid.
The laundry industry, which has been battered by increased costs on natural gas, electricity, water, sewer and gasoline, will finally have a chance to properly adjust prices without the fear of losing customers.The Wall Street Journal, in an article dated Sept. 6, reported that hospitals are in no better shape to deal with disasters than they were on Sept 11, 2001.
“In addition, Premier – a non-profit alliance of 1,500 hospitals and health systems – convened a task force this summer to develop protocols on supply-chain continuity, noting that hospitals using ‘just-in-time’ inventory procedures may lack necessary stockpiles to sustain operations in the aftermath of a disaster,” the newspaper reported.
This statement, when put in context of the new Y2K-type fear – “global pandemic” – means that hospitals are looking for more secure providers for personal protective equipment.
I shared with you last month that Kimberly-Clark announced a potential shortfall in certain personal protective items and made plans to ration its supplies to existing customers by allowing no more than a 10% increase in purchases over the previous year’s. Whether this is a marketing scheme by Kimberly-Clark or a real potential problem is yet to be seen, but it does open the door for reusable linen items.
Hospitals cannot afford to tie up scarce capital resources in extra inventory. The current model of just-in-time inventory was designed to minimize the money and space used in inventory management. Hospitals must now choose between using reusable personal protective equipment from a dependable supplier or finding the space and money needed to increase their inventory on these items.
Historically, a number of us gained a substantial amount of reusable O.R. towel business when the cheap O.R. towel supply was interrupted after the freedom demonstrations in China.
A once dependable supply became almost nonexistent, and hospitals and suppliers scrambled to fill the void. The production eventually was moved to India and Pakistan but a number of us were able to supply high-quality reusable O.R. towels to help fill the void.
It often takes this type of marketplace trauma to get someone to look outside their comfort zone.
If you’re not prepared to embrace this opportunity to supply reusable personal protective equipment, then now’s the time to quickly learn this side of the industry.
Have a question or comment? E-mail our editor Matt Poe at [email protected].