Cost Reduction

Henry Ford Health System Cuts Food Service Net Cost Per Patient Day

December 1, 2017 1:01 pm

Bringing food services in-house allowed the health system to realize revenues from its retail food services to offset its costs in patient food services.

For nearly 15 years, Detroit-based Henry Ford Health System has been transforming its food service operations by balancing the need for healthy nutrition with a healthy bottom line.

“A few decades ago, healthcare food services really did a dismal job—we didn’t walk the talk,” says John Miller, system director, system culinary wellness. Since moving into the system director role in 2004, Miller has aimed to create a better experience for patients, visitors, and staff by improving food quality and the appearance of the offerings and boosting his department’s financial outcomes.

Over the past decade, Miller and his team have trimmed the net cost of food service per patient day by 1-3 percent, depending on the hospital site and year.

Moving to Self-Operated Services

Soon after joining the health system, Miller recognized the opportunity to switch from contract-managed to self-operated food services at three hospitals of various sizes. By doing so, the health system could leverage its purchasing power across the system and reduce costs. Bringing food services in-house also would allow the health system to realize revenues from its retail food services to offset its costs in patient food services.

During an 11-month period, Miller and his team started the transition with the smallest hospital (which had 200 beds) and worked their way up to the largest of the three (with 800 beds). They retained most of the hourly staff, but had to recruit new management staff. Yet the biggest challenge was migrating the hospitals’ food service operations to the same IT platform. Miller and his team developed a standardized IT application to transfer the menu templates across facilities and allow staff at each hospital to access a shared recipe database.

Since moving to self-operated food services at all of its hospitals, Henry Ford Health System has achieved significant savings, Miller says. One site realized a 5.6 percent reduction in net cost per patient day after taking patient and retail food services in-house.

Standardizing for Savings

Each year, Henry Ford Health System spends more than $8 million on food for patients and retail services for guests and staff. A value analysis team, which includes culinary wellness staff from across the system, meets monthly to standardize recipes, menus, products, and contracts, allowing the health system to get the most from its budget. “We make decisions as a team for all of our operations,” Miller says.

For example, during a recent meeting, the team conducted a taste test and cost analysis of 90 percent lean/10 percent fat ground beef versus 95 percent lean/5 percent fat ground beef. They chose the leaner, healthier version, even though it is more expensive.

The team also has helped the health system reduce the number of produce vendors from five to two. “Produce is such a variable when it comes to pricing—you can have one vendor sell you a case of tomatoes for $15, and another vendor sell the same product for $20 in the same week,” he says. “As a group, we decided we needed to narrow that field of vendors and look at this from a quality perspective.”

The team made unannounced visits to the produce vendors’ warehouses to see how they were running their operations and then narrowed the field from five to two. Now, the health system uses just two produce vendors that send Miller and his team their competitive prices every week.

The health system applied a similar approach to their bakery and dairy vendors, narrowing to just two suppliers. They also moved from having contracts with four beverage vendors to a sole-source agreement.

Making Healthier Choices

In 2012, Henry Ford Health System became one of only 17 health systems to join the Partnership for a Healthier America. The organization already had taken several steps to offer healthier menus, including eliminating their deep fat fryers. But joining the partnership gave their initiative more structure and accountability by including a third-party validation.

“For me, this was about moving our whole philosophy forward and getting our industry to make a shift,” Miller says.

In addition to reducing sodium and saturated fats and eliminating trans fats in its recipes, Henry Ford Health System offers only antibiotic-free poultry at its five hospitals. The health system raised its retail prices on poultry to account for the change but received only positive feedback, thanks to a robust communications plan that announced the change to staff and guests.

“They had no complaints because they want those products even if they cost more,” he says. “In fact, today, people expect them.”

Offering healthier items, combined with moving to self-operated services, has helped the health system realize a 3-12 percent increase in retail sales, depending on the site.

Offering Room Service

Since 2005, Henry Ford Health System has offered room service from 6:30 a.m. to 6:30 p.m. at most of its facilities, with made-to-order meals delivered within an hour of ordering. “The vast majority of the time, patients will order only want they think they can eat,” Miller says. This reduces waste associated with traditional tray delivery in which 10-20 percent of food is not eaten and discarded. To ensure patients receive appropriate nutrition for their specific conditions, call center staff who take patients’ orders over the phone can suggest appropriate choices by leveraging the food service operations’ standardized IT application. They also receive formal training with a registered dietitian on what choices to suggest.

As part of the rollout, Miller and his team developed a template design for an efficient room service kitchen. “Timing and placement is extremely important in a kitchen,” he says. For example, they added refrigerators close to the lines to reduce how far staff would have to travel.

The goal is not necessarily to achieve cost savings with room service, but rather to keep the program budget-neutral, Miller says. In addition, the health system has boosted its patient satisfaction. “If patients get to order what they want when they want, they are happier patients,” Miller says.

Balancing Food Options and Costs

Miller offers the following advice for organizations that are trying to balance healthy food offerings with the need to contain costs and boost retail revenues.

Set goals and timelines.  One of Miller’s first steps when he moved into the system director role was developing a strategic plan with clear goals, such as raising patient satisfaction and improving financial outcomes. He also established timelines to achieve these goals, along with measures of success, such as bottomline performance and guest satisfaction scores.

Involve staff in process changes.  Culinary wellness staff were involved at every stage of the room service rollout at Henry Ford Health System. “By the time we were ready to launch, everyone had buy in into how this was going to work,” Miller says.

Focus on the details According to Miller, it does not take much extra effort to design menus with pleasing layouts that include accurate descriptions of menu items so patients can select appropriately.

Find new markets When leaders decided to eliminate deep fat fryers, they made a compelling case. “After we launched the program, we told staff and guests that we would be taking 7,000 pounds of fat out of their diets,” Miller says. When they replaced the popular fried chicken entree, they offered samples of a healthier baked chicken item.

“There was no doubt in my mind that we were missing a portion of the market, including our staff, that wanted healthier food,” Miller said. “Once we made that change, we had more people buying from our retail areas. It was like flipping a switch—we created a new market.”

Another bonus: The health system has saved $30,000 annually because it no longer purchases deep-fryer oil.

By applying innovative approaches to food service, the health system also has uncovered new international markets for its product. Henry Ford Health System has licensed more than 500 hospital food recipes to an urban center in India, where recipes are modified to fit local tastes and sold in corporate food courts and schools and through home delivery.

Building on Successes

Although it can be tempting to want to realize significant cost savings from food services in short order, transforming food services takes time. Miller’s advice: “Don’t try to do everything at once,” he says.

Interviewed for this article:

John Miller is director, system culinary wellness, Henry Ford Health System, Detroit.


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