Life-saving operation
For a New Yorker, Thomas Purcell seems relaxed. This is a surprising quality to find in a man in charge of catering for more than 1,000 patients a day at the city's biggest emergency hospital. And when you realise that if he doesn't meet the terms of a stiff performance-related contract the client won't pay, it becomes astonishing.
But you could argue that some of his hardest work is behind him. As resident district manager healthcare services Marriott Management Services (MMS) at the Columbia-Presbyterian Medical Center, Purcell has had to revamp the catering system to cope with the demands of the catering-only contract, which kicked in more than a year ago.
The new contract forced Purcell, who has handled Columbia's catering for three of the seven years MMS has been at the hospital, to make his system more cost-effective. In a four-pronged attack, he closed down the hospital's on-site kitchen and moved patient catering toa nearby central distribution unit; redesigned the menus; cut catering staff by 100; and downscaled the hospital's cafeterias.
The process has been tough, but ironically it was Purcell himself who pushed for the contract's constraints. Driving his quest to renegotiate the original, fee-based management agreement was MMS's bottom line.
The client, which is part of one of the largest private healthcare providers in the USA and embraces the main Presbyterian Hospital, the 250-bed Allen Pavilion and the luxurious 50-bed McKeen Pavilion, was struggling to make a profit in the early 1990s - and that included the catering operation.
"The cash cafeterias, for instance, were taking $3m (£1.88m) and costing us $5m (£3.13m)," says Purcell.
With both client and supplier losing, MMS realised it had to be proactive. "We sat down and said, ‘How can we make this a win-win situation for both sides?'. We realised that if we put some teeth into our contract we could both benefit," explains Purcell.
Eighteen months on, Purcell claims the catering operation at the hospital has regained profitability, with the 1996-97 figures showing a saving of $5.2m (£3.3m) to the client. He also claims that, in the first two quarters of 1997, MMS is on target in all of the four performance areas that the contract specifies.
The first performance area is that MMS must stay within the annual patient-feeding budget of $15.8m (£9.88m) provided by the hospital.
Secondly, as patient expectation in the USA is much higher than in the UK, about 30% of MMS's fees are tied into patient satisfaction, monitored by a quarterly survey. MMS has guaranteed a minimum of 82% satisfaction on criteria ranging from menu variety to temperature of food.
The next area is revenue management, which MMS finished negotiating in June. The caterer has guaranteed cash sales from the four cafeterias, restaurant and countless vending operations of $3.2m (£2m) a year. "Our goal is to break even - we get a fee for hitting the revenue figure," says Purcell.
The fourth benchmark is an undertaking to improve outside sales. "We've guaranteed we'll achieve a $500,000 (£312,500) profit margin for the hospital on sales to outside business such as childcare, and when we do they will release that portion of our fees. At the year-end we will reconcile," says Purcell.
Key to the catering operation's cost-effectiveness is the regeneration and cook-chill system Purcell set up in February 1996, whereby the food is cook-chilled, plated cold, transferred to the hospitals by refrigerated vehicle and then reheated in regeneration units before being taken up to the wards.
To launch the system, Purcell closed the hospital kitchen and moved the 3,000-meals-a-day catering operation for the Presbyterian Hospital and the Allen Pavilion to the cavernous Resource Center, a Marriott-managed food production plant run by PH Lenox Products in the nearby Bronx. Catering for the McKeen Pavilion, which charges patients $1,300 (£812) a day per room, is handled by the pavilion's own kitchens.
But the new system needed a cash injection. Underlining the spirit of collaboration, Purcell secured a $2m (£1.25m) investment from the hospital. "Marriott persuaded the hospital to invest, based on its reorganisation proposals," says Purcell. "They could see that the system would pay for itself."
According to Purcell, the system has already clawed back $3m. Furthermore, the Resource Center's capacity to produce at least 90,000 meals a week gives MMS scope to boost outside business.
Besides Columbia's meals, 37,000 meals a day are provided for 50 state-funded childcare accounts, 2,400 meals a day for St Barnabas Hospital, and weekend meals for the 400-bed Peninsula Hospital. The caterer is currently negotiating contracts with other New York hospitals.
Not least of the advantages is that the regeneration operation is less labour-intensive - staff now work just one shift instead of the original two.
This was a coup for Purcell, who had to axe at least 100 jobs to stay within budget. With 386 catering staff and an average wage of about $13 (£8) an hour, labour costs were 70% of the total budget - considerably more than most contracts, which run at 50-55%.
Keeping a wary eye on the trade unions, Purcell kept redundancies to a minimum. Instead, over six months staff were offered jobs in different hospital departments such as housekeeping, and some job specifications were merged.
Purcell achieved further cuts in labour, as well as tightening up on costs, when he scaled down the cash operations by cutting cafeteria service from 21 to 10 meals a week. The cafeteria now serves breakfast and lunch on weekdays.
To help meet his $3.2m break-even target, he maximises business in the fine-dining Top of the Nines restaurant in the McKeen Pavilion by opening it to the public. Other business includes about 300 corporate events a week in the five function rooms that overlook the Hudson River.
As for improving customer satisfaction, the cook-chill operation was identified as a means of improving food quality. The survey for the second quarter of 1997 shows that patient satisfaction has risen from 82% to 83.1%. "The beauty of cook-chill is that it is much fresher and reheats better than frozen food," explains Gary Weinstein, general manager at PH Lenox.
To be cost-effective, the new one-week menu, which was developed over nine months, offers a choice of three dishes and has cut out expensive ingredients such as swordfish and salmon. It includes traditional food, such as roast beef with gravy and veal loaf.
As the average stay of patients is 6.2 days, most don't see the menu more than twice. Purcell is aware, however, that the system could be improved further for long-term patients.
MMS is working to introduce a system whereby when a patient hits day 22, they will be offered more choices. Similarly, the maternity wing will be given a special menu. There are also plans to close the gap between ordering and meal times, as patients currently choose meals a day-and-a-half beforehand.
Purcell says there is still plenty of hard work ahead. If his more streamlined catering operation continues to be competitive, however, he will have reason to maintain his relaxed appearance. "If we do this well, we're compensated very nicely."
