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Why switch to Rental? Costing of Laundry Services at an Apex Tertiary Care Hospital from the View of Outsourcing based on Rental Linen Management Services

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Abstract

Introduction Modern hospitals are matrix organizations with a high investment in terms of capital, labor, and resources. It is imperative for the hospital administration to provide right material of right quality at the right time. Hospitals that set up in-house laundry operations generally make the decision without thoroughly identifying and accounting for total linen and laundry costs. Now evidence has emerged that hospitals that outsource were seeing improved linen utilization rates. If proper and clean linen is not provided, this can result in patient dissatisfaction. Further, innovations in laundry equipment have led to tremendous increases in efficacy. So, there is a need to ascertain the cost incurred in providing linen and laundry services so as to gauge the plausibility of transitioning to outsourcing-based models. Aims and objectives To study the cost incurred in providing linen and laundry services at an apex tertiary care hospital and to evaluate outsourcing model based on rental linen management. Materials and methods A descriptive, cross-sectional, retrospective, record-based study was conducted during a period of 1 month from March 1, 2016 to March 31, 2016. Observations The quantity of monthly linen washed in Dr Rajendra Prasad Centre was found to be 22,465 kg. The monthly laundry expenditure in Dr RP Centre was Rs. 1,415,295. The linen procurement expenditure per month at Dr RP Centre was Rs. 419,386. So total expenditure on linen and laundry per month at Dr RP Centre was Rs. 1,834,681. Thus, cost/kg (with inclusion of linen cost) was Rs. 82. Discussion and conclusion The rate quoted by a leading vendor to supply washed, sterilized linen to the hospital was Rs. 55 per kg. Since the expenditure incurred per kg at Dr RP Centre was Rs. 82, this amounted to a saving of around Rs. 27 per kg. It would mean saving of around Rs. 606,555 per month and Rs. 7,278,660 per annum. So, it was recommended that rental linen management services may be hired for Dr RP Centre after taking care of functional, operational, and strategic contingency. How to cite this article Tadia VK, Gupta SK, Arya SK, Lathwal A, Jain K, Ahlawat R. Why switch to Rental? Costing of Laundry Services at an Apex Tertiary Care Hospital from the View of Outsourcing based on Rental Linen Management Services. Int J Res Foundation Hosp Healthc Adm 2016;4(2):79-88.
Why switch to Rental? Costing of Laundry Services at an Apex Tertiary Care Hospital
International Journal of Research Foundation of Hospital & Healthcare Administration, July-December 2016;4(2):79-88
79
JRFHHA
ABSTRACT
Introduction: Modern hospitals are matrix organizations with
a high investment in terms of capital, labor, and resources. It
is imperative for the hospital administration to provide right
material of right quality at the right time. Hospitals that set
up in-house laundry operations generally make the decision
without thoroughly identifying and accounting for total linen
and laundry costs. Now evidence has emerged that hospitals
that outsource were seeing improved linen utilization rates. If
proper and clean linen is not provided, this can result in patient
dissatisfaction. Further, innovations in laundry equipment have
led to tremendous increases in efcacy. So, there is a need
to ascertain the cost incurred in providing linen and laundry
services so as to gauge the plausibility of transitioning to
outsourcing-based models.
Aims and objectives: To study the cost incurred in providing
linen and laundry services at an apex tertiary care hospital
and to evaluate outsourcing model based on rental linen
management.
Materials and methods: A descriptive, cross-sectional, retro-
spective, record-based study was conducted during a period
of 1 month from March 1, 2016 to March 31, 2016.
Observations: The quantity of monthly linen washed in
Dr Rajendra Prasad Centre was found to be 22,465 kg.
The monthly laundr y expenditure in Dr RP Centre was Rs.
1,415,295. The linen procurement expenditure per month at Dr
RP Centre was Rs. 419,386. So total expenditure on linen and
laundry per month at Dr RP Centre was Rs. 1,834,681. Thus,
cost/kg (with inclusion of linen cost) was Rs. 82.
Discussion and conclusion: The rate quoted by a leading
vendor to supply washed, sterilized linen to the hospital was
Rs. 55 per kg. Since the expenditure incurred per kg at Dr RP
Centre was Rs. 82, this amounted to a saving of around
Rs. 27 per kg. It would mean saving of around Rs. 606,555
per month and Rs. 7,278,660 per annum. So, it was recom-
mended that rental linen management services may be hired
for Dr RP Centre af ter taking care of functional, operational,
and strategic contingency.
JRFHHA
ORIGINAL ARTICLE
1Resident Administrator, 2Medical Superintendent, 3Professor
4Associate Professor, 5Assistant Professor, 6Senior Resident
1,3-6Department of Hospital Administration, All India Institute of
Medical Sciences, New Delhi, India
2Dr. RP Centre for Ophthalmic Sciences, All India Institute of
Medical Sciences, New Delhi, India
Corresponding Author: VK Tadia, Resident Administrator
Department of Hospital Administration, All India Institute of
Medical Sciences, New Delhi, India, e-mail: vijay@vijaytadia.org
10.5005/jp-journals-10035-1064
Why switch to Rental? Costing of Laundry Services at an
Apex Tertiary Care Hospital from the View of Outsourcing
based on Rental Linen Management Services
1VK Tadia, 2SK Gupta, 3SK Arya, 4A Lathwal, 5K Jain, 6R Ahlawat
How to cite t his articl e: Ta d i a V K , G u pt a SK , A r ya S K , L a t hw a l A ,
Jain K, Ahlawat R. Why switch to Rental? Costing of Laundry
Services at an Apex Tertiary Care Hospital from the View of
Outsourcing based on Rental Linen Management Services. Int
J Res Foundation Hosp Healthc Adm 2016;4(2):79-88.
Source of support: Nil
Conict of interest: None
INTRODUCTION
Organizations that set up in-house laundry operations
generally make the decision without thoroughly identi-
fying and accounting for total linen and laundry costs.
This was the conclusion of Textile Cost Manual for the
Hospitality Industry #71578, a 1991 study completed for
the Textile Rental Services Association of America by
Pannel, Kerr, Forster, Certified Public Accountants.1
If proper and clean linen is not provided, this can
result in patient dissatisfaction. Almost all soiled linen
(96.1%) possess some detectable bacteria.2
A study by association for the advancement of medical
instrumentation found that reusable garment if laun-
dered properly is 70% more effective in providing barrier
precaution. Staff handling used linen is predisposed
to risk and can be potential agent for environmental
contamination.
Moreover, the evidence is emerging that hospitals out-
sourcing linen and laundry services are seeing improved
linen utilization rates. For example, when the University
of Nebraska Medical Center outsourced its linen services,
it saw its pounds per adjusted patient day decrease. The
savings were nearly $100,000 in the first year and the
anticipated savings in the future is $250,000 per year.3
Further, innovations in laundry equipment have led
to tremendous increases in efficiencies. Large tunnel
washing systems, with the capacity to wash more than
3,000 pounds of textiles at one time, have significantly
decreased water usage from three gallons per pound
to less than 0.75 a pound today.3 These systems, along
with chemical injection systems that precisely control
the amount of chemicals injected into the washer, have
allowed health care textile service companies to reduce
the amount of chemicals they need to wash a pound of
laundry. Water reuse and recycling systems are becom-
ing more commonplace in professional laundries and are
VK Tadia et al
80
also helping to reduce the amount of water necessary for
the wash process. Heat reclamation systems are allowing
energy to be captured throughout the laundry process
and returned to heat wash water.3
Approach to Costing
Cost is the sacrifice incurred in an economic activity to
achieve a specific objective, such as to consume, exchange,
or produce. Cost is incurred when, in order to achieve its
objectives, an organization acquires resources, transforms
them in some manner, and delivers units of products or
services to its customer.
Elements of costing are4:
• Manpower
Direct manpower, also known as process labor,
productive labor, etc., is one which actively
or directly takes part in the production of a
com mo d it y.
• Indirectmanpoweristhelaboremployedforcar-
rying out of tasks incidental to the goods produced
or services provided.
• Material/Resources
Direct material: The material which becomes an
integral part of a finished product and which can
be conveniently assigned to specific physical unit
is termed as direct material.
Indirect material: This is the material which cannot
be conveniently and wholly allocated to a specific
cost center. The material, i.e., used for purposes
ancillary to the business and which cannot be
conveniently assigned to specific physical units
is termed as indirect material. Consumable stores,
printing and stationery material, etc., are some of
the examples of indirect material.
• Expenses
Direct expenses: are those that can be wholly and
directly allocated to the goods produced or to the
service rendered, e.g., cost of buying the equipment.
Indirect expenses: For example, water or electricity
charges which cannot be directly allocated to the
expenses incurred are indirect expenses.
MATERIALS AND METHODS
Study Setting
The study was conducted at the Laundry of All India
Institute of Medical Sciences (AIIMS), New Delhi, and Dr
RP Centre for Ophthalmic Sciences at AIIMS, New Delhi.
Study Design
Descriptive, cross-sectional, retrospective, record-based
study.
Study Period
The period of study was 1 month from March 1, 2016 to
March 31, 2016.
Inclusion Criteria
The laundry services at AIIMS including the outsourced
services have been included in this study. Both infected
and noninfected linen have been considered together for
calculation of cost per kg of linen.
Exclusion Criteria
• Costofthelandwasexcludedfromthestudy.
• Minorcostsonstationery,etc.,wereexcluded.
Data Collection
The data collection was done in the following phases:
• Theprocessoflaundryservicesfromreceiptinwards
to delivery to the wards was considered for the study.
The operational aspects were studied and data col-
lected for enabling calculation of the cost of the process.
• ThedatawerecollectedduringthemonthofMarch
2016.
• Keyinformantsincludedlaundrymanagerand the
engineering representatives, medical store personnel
from whom various details of cost heads and opera-
tional aspects were found.
• Theengineeringsectionwasapproachedtoacquire
the Central Public Works Department (CPWD) rates
in order to calculate the cost of laundry building and
boiler room.
• Details ofrate contract of outsourcingwere also
perused.
Cost Ascertainment Process
The cost centers (cost heads) were identified and data
pertaining to each were collected under the following
heads. The traditional method of costing was used for
cost estimates as follows.
Building Cost
Depreciation cost of building: The land being that of the gov-
ernment, cost of land was not considered. Replacement
cost method was used to arrive at the current construction
cost, based on current CPWD construction rates (CPWD
manual).5 The area was physically calculated on ground.
Life of the building being assumed as 100 years and the
annual depreciation is estimated to be 1%.
Maintenance of building: The maintenance rate of the
building as per engineering department as on 10.11.89
wasRs. 15/sqm.The cost index was Rs. 5,104/sqm
(CPWD memorandum dated 23.02.15)6 with base of
Why switch to Rental? Costing of Laundry Services at an Apex Tertiary Care Hospital
International Journal of Research Foundation of Hospital & Healthcare Administration, July-December 2016;4(2):79-88
81
JRFHHA
100 on 01.01.79. The annual maintenance cost was calcu-
lated on this basis.
Since the laundry was not air conditioned, no cost has
been apportioned to the same.
Cost of Equipment, Fixtures, and Fittings
Depreciation of equipment, fixtures, and fittings: The inventory
of the equipment purchased from the supplier firm was
generated from the stores section along with cost incurred.
Depreciation was computed based on the useful life of the
product. An inventory list of electrical fixtures was gener-
ated with the help of the electrical engineering in-charge
of the area and depreciation computed using straight line
method, i.e., the cost of the asset was divided by the useful
life, to arrive at the annual cost to the department.
Maintenance: The cost of maintenance of the equipment
was already part of the contract drawn and was the
responsibility of the vendor.
Cost of Electricity
The direct electricity consumption was calculated using
the wattage system as the submeters were not installed.
The total wattage and number of working hours have
been taken to work out the electricity consumption cost.
Manpower cost
This was determined based on the pay commission as
gross monthly salary. Other indirect manpower cost, e.g.,
that of the staff of the medical stores department, was not
considered, being negligible.
Other Cost Heads
• Costofoutsourcing
• Costofdiesel
• WaterCost
Costing unit:Cost/kgofdirtylinen
OBSERVATIONS AND DISCUSSION
Outsourcing Details
As a result of the decision taken by the hospital, the
laundry services were outsourced, following a tendering
process in November 2009. Six firms took part in the open
tendering process and one of them was selected as per
the rates quoted and specifications of tender document.
Since January 2010, laundry services of AIIMS have been
partially outsourced.
Costing
For the ease of analysis and costing, the various cost heads
have been described along with the description of the
infrastructure, equipment, manpower, and consumables.
The equipment, however, was considered to depreciate
at the rate of 10%.
Facility Cost
Facilities cost consists of the cost of the space utilized and
the cost of electricity to operate the equipment.
Building Cost
Total area of laundry complex = 611.7 sqm
Total area of boiler room = 43.7 sqm.
The CPWD building cost index April 2015 with
01/10/12(as base100)issued by directorgeneral(DG)
CPWD is 104. The building cost for 1 sqm area calculated
after incorporating this cost index and after discussion
with the engineering department5 was Rs. 37,465.
Area of laundry
+ area of boiler
in sqm
CPWD rate
per sqm
Total building
cost
Annual building
cost of laundry
(1%)
655.4 Rs. 37,465 Rs. 24,554,561 Rs. 245,545
There are three passenger lifts, the cost of which was
apportioned as 32 lakh, each based on plinth area rates.
So, the total cost of lifts was Rs. 96 lakh.
Chartered Institution of Building Service Engineers
(CIBSE) has a lift cycle that indicates the life span of a
lift as 15 years. Based on this, the annual cost of lift came
to be Rs. 6.4 lakh.
So, the net monthly cost of lift was apportioned as
Rs. 53,333.
Building Maintenance Cost
• ThecostindexwasRs.5,104/sqm(CPWDmemoran-
dum dated 23.02.15),6 with base of 100 on 01.01.12. The
annual maintenance cost required to maintain the
building was:
Area of manifold
Maintenance per
sqm
Annual maintenance
cost
655.4 sqm Rs. 5,104 Rs. 3,345,162
The annual maintenance cost of lifts at laundry was
Rs. 594,000.5
So, the monthly maintenance cost of lifts was appor-
tioned as Rs. 49,500.
• Electricity cost of equipment and fixtures: The electricity
cost has been worked out based on Rs. 10 per unit*
(NDMC rates). The following formulae were used
after consultation with the electrical engineering
in-charge:
1 kW = 1 unit
1 Horsepower (HP) = 0.76 kW
*AverageunitcostincludingDGsets
VK Tadia et al
82
As there was no separate submeter to measure the
consumption of electricity at the laundry, the total
wattage and number of working hours was taken to work
out electricity consumption cost.
Equipment
Machine Details
Washer extractor: There were 13 washer extractors in
the laundry section. The washer extractors were used
to wash and rinse the cloths. There were six washer
extractors of capacity 100 kg; six washer extractors
were of capacity 50 kg; and one washer extractor was
ofcapacity25 kg.Thus,thetotal capacitywas925kg/
cycle time.
Hydro extractor: There were nine hydro extractors in the
laundry section. The hydro extractors were used for the
removal of water from the linen mechanically. There
were total nine hydro extractors of capacity 50 kg each.
So,totalcapacitywas450kg/cycletime.
Tumbler dryer: There were 12 tumbler dryers in the laundry
section. The tumbler dryers were of capacity 50 kg each.
The tumbler dryers were used for drying the washed and
hydro extracted linen. Two energy sources were available
for drying linen in tumbler dryer – steam and electricity.
Therefore,thetotalcapacitywas600kg/cycletime.
Calendar dryer: There were two calendar dryers in the
laundry section. The calendar dryers were used to press
and final finishing of linen. The calendar dryer utilizes
steam as energy source to press the linen which could
then be finally used in the hospital.
Other equipments were:
• Boilers—electricaswellasdiesel
• Steampresses
• Watersofteningplant
• Directorgeneralset
Process Description
Laundry Steps with Time
Sl. no. Laundry steps Quantity Time taken Temperature
1 Rinsing Water 400 L 5 minutes 43°C
2 Washing Chemicals Opal 500 gm 40 minutes 60–75°C
3 100S 100 mL
4 OX-bleach 500 mL
5 Legro 300 mL
6 Whitener 400 mL
7 Hypo wash Hypo 500 mL 10 minutes 39°C
8 Shower Johnson Diversey/Washing powder As per required 10 minutes 36.2°C
9 Rinsing Normal water 400 L 5 minutes 33°C
10 Neel wash Neel 250 mL 5 minutes 32°C
11 Hydro 15 minutes
12 Drying 40 minutes
13 Total 125 minutes
ANALYSIS OF AVERAGE WEIGHT OF LINEN
AND LINEN WASHED PER DAY
To analyze average weight of the linen, different linen
items processed in the laundry department and their
respective weight have been taken. The historical data
was obtained retrospectively to see the baseline.
Weight trials were undertaken to crosscheck the
weights of different linen. The average weight per linen
was evaluated based on number of pieces processed of
different type of linen and their respective weight. The
details are as follows:
Different Type of Linen Pieces received at
Laundry per Month and Their Average Weight
Sl. no. Description Qty. per month Weight per piece Total weight
1 Bedsheet 76,163 0.65 49,506.0
2 Draw sheet 28,328 0.323 9,149.9
3 Patient coat 18,917 0.215 4,067.2
4 Patient pyjama 17,037 0.21 3,577.8
5 Women skirt 3,566 0.21 748.9
6 Women jacket 3,155 0.215 678.3
(Contd…)
Why switch to Rental? Costing of Laundry Services at an Apex Tertiary Care Hospital
International Journal of Research Foundation of Hospital & Healthcare Administration, July-December 2016;4(2):79-88
83
JRFHHA
Sl. no. Description Qty. per month Weight per piece Total weight
7 Pillow cover 18,493 0.115 2,126.7
8 Turkish towel 782 0.475 371.5
9 Hand towel 1,034 0.15 155.1
10 OT towel 100,884 0.122 12,307.8
11 DL wrapper 33,337 0.267 8,901.0
12 Screen cover 6 0.72 4.3
13 OT gown 28,057 0.547 15,347.2
14 Curtain 189 0.72 136.1
15 Surgical shirt 20,938 0.1425 2,983.7
16 Surgical pyjama 20,158 0.17 3,426.9
17 Surgical frock 8,407 0.285 2,396.0
18 Patient sheets 2,632 0.203 534.3
19 Abdominal sheet 3,901 0.72 2,808.7
20 Trolley cover 13,202 0.187 2,468.8
21 Lagging 3,090 0.38 1,174.2
22 Syringe capper 8,277 0.086 711.8
23 Blanket 252 1.9 478.8
24 Baby frock 3,910 0.03 117.3
25 Children coat 1,070 0.114 122.0
26 Children pyjama 420 0. 111 46.6
27 Door panel 99 0.02 2.0
28 Baby sheet 1,951 0.132 257.5
29 Couch cover 129 0.72 92.9
30 DL bags 2 0.1 0.2
31 Binder 9 0.12 1.1
Total 418,395 124,700.4
Average weight/piece 0.298 kg
Different Types of Linen Pieces received from Dr RP Centre and Their Average Weight
Sl. no. Items Total monthly linen (no.) Avg weight (kg) Total weight (kg)
1 Bedsheet 10,492 0.650 6,819.80
2 Draw sheet 373 0.323 120.48
3 Patient gown 3,095 0.215 665.43
4 Patient pyjama 2,904 0.210 609.84
7 Pillow cover 4,290 0.115 493.35
8 Bath towels 87 0.475 41.33
9 Hand towel 431 0.150 64.65
10 OT towel 17,931 0.122 2,187.58
11 DL wrapper 8,598 0.267 2,295.67
13 Surgeon gown 9,259 0.547 5,064.67
15 Curtains 31 0.720 22.32
16 Dr Kurta 5,956 0.142 845.75
17 Dr Pyjama 5,809 0.170 987.53
18 Surgeon’s frock 5,326 0.285 1,517.91
24 Trolley cover 2,598 0.187 485.83
25 Child coat 561 0.114 63.95
26 Child pyjama 376 0.111 41.74
33 Blankets 72 1.900 136.80
Total 78,189 22,464.62
(Contd…)
VK Tadia et al
84
Monthly Average Linen processed
Monthly linen processing for one year was evaluated
using retrospective data based on monthly linen pro-
cessed and average weight evaluated in an earlier table.
Month
Average
monthly
qty. in
pieces
Average
weight/
piece
Monthly
total weight
(kg)
Working
days
Average
weight/
day
Oct-15 402,099 0.298 119,825.5 26 4,608.7
Nov-15 381,653 0.298 113,732.6 26 4,374.3
Dec-15 397,719 0.298 118,520.3 26 4,558.5
Jan-16 398,152 0.298 118,649.3 26 4,563.4
Feb-16 408,340 0.298 121,685.3 26 4,680.2
Mar-16 419,266 0.298 124,941.3 26 4,805.4
Apr-16 392,345 0.298 116,918.8 26 4,496.9
May-16 409,644 0.298 122,073.9 26 4,695.2
Jun-16 383,928 0.298 114,410.5 26 4,400.4
Jul-16 398,387 0.298 118,719.3 26 4,566.1
Aug-16 432,524 0.298 128,892.2 26 4,957.4
Sep-16 425,042 0.298 126,662.5 26 4,871.6
Average 404,091.9 120,419.3 4,631.5
Average daily washing load: 4,632 kg
Average monthly washing load: 120,419 kg; i.e.,
120.4 ton
Monthly Average Payment to the Outsourced Agency
Month
Monthly payment to
outsourced agency
Oct-15 2,647,329
Nov-15 2,465,403
Dec-15 2,564,746
Jan-16 2,576,412
Feb-16 2,624,396
Mar-16 2,689,817
Apr-16 2,515,558
May-16 2,624,915
Jun-16 2,461,197
Jul-16 2,558,877
Aug-16 2,789,313
Sep-16 2,747,897
Average 2,605,488
Averagepaymentto theoutsourced agency/month:
Rs. 2,605,488 per month
Rs. 31,265,860 per annum
The payment made to the outsourced agency covers
the scope of work outsourced. The payment covers the
following cost:
• Manpower
• Material
• Equipmentmaintenanceexpenses
• Watertreatmentexpenses
In addition to the payment made to the outsourcing
agency, AIIMS incurs cost of:
• Electricity
• Water
• Generator
• Boilers
• Manpowerexpenses (other than suppliedbyout-
sourced agency)
• Buildingmaintenance
ANALYSIS OF UTILITY ENERGY CONSUMPTION
Boiler Fuel and Electricity Consumption
The boiler house has one oil fired boiler and two electric-
ity operated boilers. This was operated as per require-
ment to meet the steam demand of the laundry unit. The
general operational details of the boiler are as follows:
• Operating pressure:4kg/cm2
• Operating temperature: 130 to 140°C
• Boiler steam capacity:500kg/hour
• Boiler make: INDCON
• Electric boiler model: ES20
• Electric boiler make: COLLIN WALKER
• Electric boiler rating: 215 kW
Thepressureatsteamheaderwasaround3kg/cm2
andatthemachineenditwasapprox.1to1.5kg/cm2.
All three boilers were operated to cater steam demand
of laundry. To evaluate fuel consumption in steam boiler
trials have been taken and based on that it has been
found the average fuel consumption per day in boiler
wasapproximately80to85liters/day(diesel).
To evaluate the energy input of electrical boilers
three phase power analyzer was used to record power
consumption of electric boiler. All relevant electrical
parameters like voltage, current, harmonics, kW and
kVA power and power factor were recorded. The details
are as follows.
Load Prole of Other Utilities
The details of the electrical load profile of other equip-
ment and utilities are as follows:
Type Name Voltage Current kW PF
Utility 1. Compressor 388.3 9.98 5.778 0.857
2. Submersible
Pump-1
401.3 10.93 6.89 0.629
3. Submersible
Pump-2
401.1 8.517 5.198 0.876
4. Filling pump-1 402.5 12.5 7.348 0.861
5. Filling pump-2 398.1 11.06 6.857 0.897
6. Filling pump-3 401.7 12.33 7.773 0.905
Lighting 1. Lighting 15
Total Load of Other Utilities: 54.5 kW
Laundry Machines Power Consumption
The power consumption of all the machinery process
like washer extractors, tumbler dryers, hydro extractor,
and calendars was evaluated respectively. The details
are as follows:
Why switch to Rental? Costing of Laundry Services at an Apex Tertiary Care Hospital
International Journal of Research Foundation of Hospital & Healthcare Administration, July-December 2016;4(2):79-88
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JRFHHA
Type Equipment name Nos Load/equipment Average load (kW) Power factor (liters/day) Load (kVA)
Utility 1. Electric boiler 2 206 412 0.85 484.71
2. Diesel boiler 1 88
3. Submersible pump-1 1 6.9 6.9 0.85 8.12
4. Submersible pump-2 1 5.2 5.2 0.85 6.12
5. Overhead tank pump 3 7.43 22.29 0.85 26.22
6. Compressor 1 6.8 6.8 0.85 8
Rest utilities 1. Ceiling fans 31 0.07 2.17 0.85 2.55
2. Exhaust fans 21 0.25 5.25 0.85 6.18
Equipment 1. Washer extractor 13 2.33 30 0.85 35.29
2. Hydro extractor 9 1.66 15 0.85 17.65
3. Tumbler dryer 12 28.3 340 0.85 400
Lighting 1. Lighting 250 0.06 15 0.85 17.65
Capital Cost of Equipment and
Machinery Depreciation Cost
The cost of the equipment have been taken from an
unpublished study done in the year 2011 to 2012.
• The cost of equipmentwith maintenance cost was
Rs. 74 lakhs.
• The boilers havebeen installed at a capital cost of
Rs. 3,000,000.
• Thepanelshavebeeninstalledinnewlaundry ata
cost of Rs. 3,600,000.
• Totalapproximatemachinerycost=Rs.14,000,000.
*The lifespan of equipment was taken as 10 years,
thus depreciation of 10% was calculated on per annum
basis.
Machinery Depreciation Cost
• Approximatemachinerycost:Rs.14,000,000
• Estimatedlife:10years
• Depreciationperyear@10%:Rs.1,400,000
• Monthlydepreciation:Rs.116,667
Manpower Cost
Overall manpower cost borne by AIIMS toward laundry
is given below:
Sl. no. Category No.
Pay/month/
in Rs. Total
1Laundry manager 1 50,000 50,000
2Laundry supervisor 1 46,000 46,000
3 Assistant laundry
supervisor
3 35,000 105,000
4 Clerk 3 18,000 54,000
5 Tailor 2 25,000 50,000
6* Laundry attendant 32 25,000 800,000
7* Sanitary attendant 5 25,000 125,000
8* Sulabh volunteers 28 10,000 280,000
Total 1,510,000
*Used for distributing washed linen to all the hospital areas as
well as to collect dirty linen from these areas daily
Water Cost
Average monthly water bill of AIIMS for the months of Aug, Sep, and Oct 2016
Sl. no. Source of supply Water consumption (in Kiloliters) Cost/month (in Rs.)
1 Delhi Jal Board 54,160 4,638,555
2 NDMC 1,492 104,470
Total 4,743,025
Thecostofwaterwasapportionedtolaundry@2%,
i.e., Rs. 94,860 per month.
Overall Cost of Laundry per kg of Linen
Overallexpensesoflaundry/kgoflinenhavebeenevalu-
ated based on the following details:
• Averageweight/linen
• Averagemonthlyproduction
• Electricalloadproleofutilities
• Electricalloadproleofmachineries
• Fuelconsumptioninboiler
• Contractualexpense
• Maintenanceexpense
• Softenerexpense
• Manpowerexpense(AIIMS)
Thedetailsofoverallcostoflaundry/kgoflinenwere
as follows:
VK Tadia et al
86
Total Monthly Cost
Sl.
no. Equipment name Nos.
Load/
equipment
Average
load (kW)
Power
factor
Load
(kVA)
Running
hours
Avg.
days/
month
Unit
cost
Cost/
month
I. Electricity cost
1 Electric boiler 2 206 412 0.85 484.71 9 26 10 1,134,221
2 Washer extractor 13 2.33 30 0.85 35.29 9 26 10 82,579
3 Hydro extractor 9 1.66 15 0.85 17.65 9 26 10 41,301
4 Tumbler dryer 12 28.3 340 0.85 400 9 26 10 936,000
5Lighting 250 0.06 15 0.85 17.65 12 26 10 55,068
6 Ceiling fans 31 0.07 2.17 0.85 2.55 12 20 10 6,120
7 Wall fans 21 0.25 5.25 0.85 6.18 12 20 10 14,832
8Submersible pump-1 1 6.9 6.9 0.85 8.12 6 26 10 12,667
9Submersible pump-2 1 5.2 5.2 0.85 6.12 12 26 10 19,094
10 Overhead tank pump 3 7.43 22.29 0.85 26.22 2 26 10 13,634
11 Compressor 1 6.8 6.8 0.85 8 6 26 10 12,480
II. Oil cost
12 Diesel boiler 1 88 liter/day 26 56/liter 128,128
III. Consumable cost
IV. Depreciation cost
13 Machinery depreciation cost 116,667
V. Maintenance cost
14 Boiler maintenance cost 3 26 370,000
VI. Building cost
15 Building cost (including lifts) 73,795
16 Building maintenance cost
(including lifts)
328,264
VII. Manpower cost
17 Manpower cost (AIIMS) 1,510,000
VIII. Outsourcing cost
18 Outsourcing expenditure 2,605,488
IX. Water cost 94,860
Total expense per month 7,555,198
Average annual linen purchase at Dr RP Centre
Linen items Year 2013–14 Year 2014–15 Year 2015–16
Average annual
quantity
Rate per piece
(in Rs.)
Average annual
cost (in Rs.)
Bedsheet 2,000 2,500 3,500 2,667 416 1,109,333
Draw sheet 0 0 500 167 89 14,833
Patient kurta 2,000 1,000 2,000 1,667 198 330,000
Patient pyjama 2,000 1,000 2,000 1,667 180 300,000
Pillow cover 1,000 1,000 2,000 1,333 86.03 114,707
Eye towel 7,500 7,100 9,000 7,867 105.6 830,720
DL wrapper 2,100 1,000 2,000 1,700 189 321,300
Surgeon gown 2,000 4,100 4,500 3,533 252 890,400
Dr Kurta 2,000 1,100 1,500 1,533 97.08 148,856
Dr Pyjama 2,000 1,100 1,500 1,533 152 233,067
Surgeons frock 1,500 1,000 1,000 1,167 199 232,167
Trolley cover 1,500 1,000 2,000 1,500 185 277,500
Child kurta 500 500 500 500 98.01 49,005
Child pyjama 500 500 500 500 98.01 49,005
Blankets 400 200 200 267 494 131,733
Average annual cost 5,032,626
Why switch to Rental? Costing of Laundry Services at an Apex Tertiary Care Hospital
International Journal of Research Foundation of Hospital & Healthcare Administration, July-December 2016;4(2):79-88
87
JRFHHA
• Operatingthelaundrymachines
• Collectinganddistributinglinen
• Ironingoflinen
• Repairingoflinen
• Repairandmaintenanceoflaundrymachines
• Provisionofmanpower
• Provisionofmaterials
In this model, linen, space, machinery, electricity,
steam, and water were provided by the Institute.
The Vendor was being paid Rs. 2,605,488 per
month, which is equivalent to Rs. 31,265,856
Annually
Linen was procured and provided by the Institute.
Expenditure incurred in procuring linen per year at
Dr RP Centre = Rs. 50,32,626
In addition to the direct expenditure being incurred
on linen, cost was also being incurred on procurement,
storage, as well as condemnation of linen, which if cal-
culated would be significant.
In addition to the cost calculated earlier, a few indi-
rect costs which had not been taken into considerations
but if calculated would have been significant were as
follows:
• Procurement
• Lineninventorymanagementcosts
• Watercosts
Financial Implications of the Proposed Model
The rate quoted by a leading vendor to supply washed,
sterilized linen to the hospital: Rs. 55 per kg. Since the
expenditure incurred per kg at Dr RP Centre is Rs. 82, so,
there can be a saving of around Rs. 27 per kg. It would
mean saving of around Rs. 606,555 per month and Rs.
7,278,660 per annum. So, it was recommended that rental
linen management services could be hired for Dr RP
Centre after taking care of functional, operational, and
strategic contingency.
In the proposed system, the vendor shall be respon-
sible for purchasing, washing, sterilizing, collecting,
distributing, and mending any linen required by the
hospital. The vendor shall also be responsible for con-
demning and replacing linen as and when the need
arises. Further, a feedback about the existing rental linen
management services in the National Capital Region
of Delhi was also collected to gauge the plausibility of
transitioning to such a system.
Feedback about the available Rental Linen Mana-
gement Services from various hospitals in national capital
Region of Delhi:
Cost of laundry per kg
Laundry monthly expense 7,555,198 Rs.
Average monthly output of washed linen 120,419 kg
Cost of washing linen per kg 63 Rs.
Cost of linen processing for Dr RP Centre
Monthly linen washed in RP Centre 22,465 kg
Monthly laundry expenditure in RP Centre (a) 1,415,295 Rs.
Linen procurement expenditure per month (b) 419,386 Rs.
Total (a + b) 1,834,681 Rs.
Cost/kg (with inclusion of linen cost) 82 Rs.
SUMMARY AND CONCLUSION
The laundry system at the AIIMS follows the out-
sourced system wherein the linen, machinery, electricity,
water, and space was provided to the vendor by the
Institute.
It was observed that the current system of laundry
management entails a number of costs, such as cost of
space, electricity, water, linen, and supervisory man-
power designated for the laundry. In addition, other
costs which are borne by the Institute in the current
system are linen procurement-related costs, storage
costs, both at the central and the ward level. Further,
a lot of nursing manpower was being utilized only for
linen management in the hospital which could have been
used for other patient care services. Yet, the quality of
wash and linen being supplied remains uncertain in
terms of microbial load it may carry postwash and cross-
contamination occurring during the various laundry
process from collection of dirty linen to supply of clean
linen to the user areas. The above statement can be cor-
roborated from the fact that a large quantity of linen
was getting condemned on a regular basis prior to its
expected useful life.
Internationally, laundry services in health care are
expected to conform to a few standards, such as RABC
(EU), BS-EN, HLAC (USA), DHS, etc. These standards
dictate not only the linen quality, but also the wash
processes to be followed in order to ensure efficient and
effective washing expected in a hospital. In the current
scenario, where patients are becoming increasingly aware
of their rights and responsibilities in a hospital and the
law tightening its noose on health care institutions for
every lapse in service, it is time to accept and develop
systems which shall enable us to follow such international
standards to provide the best quality of linen and a linen
safe environment to our patients.
Financial Implications
Financial Implications in the Existing Model
In the existing model, the vendor was responsible for
following services:
VK Tadia et al
88
Sl. no. Hospital Feedback (written verbatim)
1 A 1,000 bedded
corporate
hospital
Uninterrupted supply of high-quality
disinfected linen, professional
approach
2 A 600 bedded
missionary
hospital
Meets high standards for its
services in all respects in a very
professional manner; highly
appreciated by all the stakeholders
in the hospital, namely patients,
staff, and management; have no
reservation in recommending its
services to other hospitals
3 A 300 bedded
private hospital
Uninterrupted and smooth supply of
consistently high-quality disinfected
linen; professional approach and
high-quality has played a key role
in enhancing patient satisfaction
and has added value to services
provided by hospital
4 A 150 bedded
trust hospital
Services provided by them are to
our most satisfaction and the work
done by them is commendable
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Article
Full-text available
The linen are the medical consumables which are used on everyday basis in the hospitals. The cost incurred due to the linen procurement, processing and maintenance may be invisible to the eyes but they have a significant impact on the overall budget of the hospitals. Hence, costing is important for efficient linen management and also to keep a check on the costs which may increase if not monitored carefully. The objective of the study was to study the various costs incurred to the hospital for linen management at a tertiary care teaching hospital. A retrospective study was carried out for a period of 6 months from December,2018 to May,2019. The data regarding the expenses incurred was collected from various departments of the like purchase department, linen department, finance department, transportation department and outsourced laundry service. The costing method was used to assign the various cost heads to laundered and non-laundered items. It was found that the hospital incurred Rs.25 per kg in procurement, processing and maintenance of linen excluding the space cost, electricity, water and chemical cost. The conclusion was drawn that the hospital was not required to outsource the linen department.
Article
We determined whether the bacteriological quality of fabrics cleaned in a hospital laundry could be maintained at wash temperatures lower than 75 degrees C by the use of economically reasonable formulas and wash conditions. Three groups of bacteria were examined to determine bacteriological quality: aerobic, nonexacting chemoorganotrophs, staphylococci, and total coliforms. The distribution of bacteria on soiled fabric was patchy, with staphylococci and total coliforms ranging from less than 0.1 to greater than 4 X 10(3) CFU/cm2 and chemoorganotrophs ranging from less than 0.1 to greater than 5 X 10(5) CFU/cm2. The washing process routinely produced fabric containing less than 1 CFU/cm2. Low-temperature (47.8 to 60.0 degrees C) wash procedures eliminated all bacterial groups at least as effectively as did high-temperature procedures. The effectiveness of bacterial density reduction at low temperature was augmented by increased concentrations of bleach. Successful low-temperature washing such as that shown here may save both energy and money for hospitals.
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Government of India plinth area rates central PWD
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Rates, PA. Government of India plinth area rates central PWD. 2012.
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Making the decision to outsource linen and laundry service
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