Case Study | Cost Reduction

Hospitals Save When They Reduce Food Waste

Case Study | Cost Reduction

Hospitals Save When They Reduce Food Waste

Leaders can use smarter purchasing, menu planning, and technology strategies to contain costs and reduce food waste in hospitals.

As healthcare organizations move toward value-based payment (VBP) models like bundles, cost has become even more of a consideration for food service leaders, says Michael Atanasio, director of food and nutrition, parking, and patient transportation at Atlantic Health System Overlook Medical Center, Summit, N.J. “Everything that is happening in health care affects my department, my costs, and my patients,” he says.

At the same time cost pressures are on the rise, so are calls to reduce the estimated 40 percent of food that gets wasted in the United States. In fact, several states, including Connecticut, Massachusetts, Rhode Island, and Vermont, have enacted laws effectively banning organic waste, according to the not-for-profit ReFED and Harvard Law School Food Law and Policy Clinic. Meanwhile, California is phasing in a law requiring businesses that generate organic waste to recycle it through composting or other measures.

“Unfortunately, waste is a part of the food service business,” says Dan Henroid, director of nutrition and food services at UCSF Health, part of University of California, San Francisco.

Yet there are strategies that cut waste and costs. Reducing food waste can help hospitals cut their food purchasing budgets by up to 6 percent, according to Practice Greenhealth, a source for environmental solutions for the healthcare sector. The group estimates that food waste accounts for 10 to 15 percent of an average hospital’s waste.

Both Overlook Medical Center and UCSF Health have been recognized for their efforts to reduce food waste by Practice Greenhealth. Here, Atanasio and Henroid offer cost-saving suggestions to send less food to landfills.

Be smart about purchasing and menu planning. Food purchasing and menu development offer the best opportunities for cost containment and waste reduction in food service, Atanasio says. 

Overlook Medical Center, part of Atlantic Health System, has a self-operated food service that provides 2,900 meals per day as well as three retail outlets generating $3.5 million a year. Atanasio frequently reviews his department’s descending dollar report, which shows direct food expenses by ranking food by the total dollar amount purchased, to identify potential cost savings. In the past five years, Atanasio has pulled more than $400,000 out of his operation by choosing less costly items without affecting quality and service. 

His team also focuses on menu development with common ingredients, allowing them to optimize economies of scale for labor and food. In addition, they develop menus that can repurpose unused food products the following day, provided they are maintained properly and safe to consume. 

Invest in the right technology. Leaders should look for new technologies or innovations that can reduce costs and waste. A few years ago, Overlook Medical Center implemented a robust point-of-service (POS) system that provides data that can help leaders identify opportunities to increase sales, such as by bundling products to boost the average check. The POS system also tracks what does not sell and creates waste. Leaders also have used the POS system to uncover opportunities to reduce inventory by comparing invoices to sales. This strategy helped them cut expenses for one vendor by at least 60 percent each week.

More recently, Overlook Medical Center invested in a new, 30-foot flight-type dishwasher that is more efficient than traditional machines. The new machine will save $70,000 in water and electric costs. It also has a grinder and a dehydrator that pulls 92 percent of the weight out of food waste, reducing waste removal costs, Atanasio says.

When making the case for the new $267,000 machine, Atanasio did his due diligence and provided finance with objective data, which showed that the organization would achieve an ROI in 3.3 years due to reduced water and utilities, hauling, and other costs.

Think beyond food service. Atanasio also aims to contain costs that do not come out of his own budget, such as energy costs. When possible, he looks for machines that can go into sleep mode when not in use, such as soda chillers. 

Opt for made-to-order stations. On the retail side, being savvy to what customers want is one of the best strategies to reduce food costs and waste, says Henroid, who manages seven retail food outlets with $14 million in gross annual revenue. He also oversees food services providing 1,500 patient meals a day at two UCSF Health hospital campuses, as well as dining services for a health sciences campus that serves approximately 6,000 graduate students, residents, and fellows daily. 

In recent years, UCSF Health has added more made-to-order stations for retail customers, which helps to reduce food waste. “We’ve really tried hard to minimize concepts where we have to make large quantities of food in advance,” he says.

Cater with a conscience. In addition, Henroid oversees a catering business with $3 million in annual revenue. To reduce food waste, the catering staff works with customers to calibrate the amount of food needed for their event. They also provide to-go containers so attendees can take food away.

Try on-demand dining but check your expectations. UCSF Health has implemented hotel-style on-demand dining for patients, a shift from the traditional model in which all patient meals were delivered to the units at the same time. “Although [the traditional model] was very cost-efficient, it was not patient-centric,” Henroid says. After rolling out the process gradually across their sites, leaders saw a 30 percent reduction in food and supply costs although labor costs increased. “You may or may not save money doing this, but on-demand is where everything is moving right now,” he says.

Measure, measure, measure. A few years ago, leaders at UCSF Health installed scales with cameras to measure all food that was prepared as well as food that was returned unconsumed. This allowed them to quantify their food waste before it was sent into the waste stream. Since then, they have moved to a new food recovery service at both hospitals that weighs food waste but also picks it up each day so that safe, consumable food can be delivered to half-way houses, shelters, and other organizations. 

“This puts our food waste to use,” Henroid says. “We’re able to track and trend so we can try to push that number down over time, but we also know that when we do have it, it’s going to a better use.”

Henroid concedes that not all finance leaders may understand the value of paying to have food waste taken away, but he believes such services are worth the investment because they can provide good data for the health system’s community benefit report. After six months with the service, one UCSF Health campus achieved a 20 percent reduction in food donations due to more efficient practices, resulting in more than $31,000 in cost savings after food recovery service fees. The campus diverted 221,000 pounds of food from waste resulting in approximately 42,130 meals for the San Francisco community. This volume also saved approximately 18.4 million gallons of water. Since then, UCSF Health has added the food recovery service to another hospital campus.  

Address food insecurity. Nearly 12 percent of American households do not always have enough food to meet their needs, according to 2017 data from the U.S. Department of Agriculture. To address food insecurity among UCSF students, the student affairs group created a homegrown app just for students that alerts subscribers on their cell phones when and where there is leftover food after a catered event on campus. This puts leftover food to good use while reducing waste.

Be committed to change. Henroid urges finance leaders to work with food service leaders to identify opportunities to reduce waste and cut costs. “We can, in fact, save money, but it can be challenging because it is not always big money,” he says. 

Addressing food waste also helps healthcare organizations prepare for new regulations like those to be implemented in California that aim to keep organic materials like food out of landfills. “We’re getting ahead of the curve,” Henroid says.

Interviewed for this article:

Michael Atanasio is director of food and nutrition, parking, and patient transportation, Atlantic Health System Overlook Medical Center, Summit, N.J.

Dan Henroid, MS, RD, is director of nutrition and food services, UCSF Health, San Francisco, Calif.

About the Authors

Laura Ramos Hegwer

is a freelance writer and editor based in Lake Bluff, Ill.

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