As the NHS tightens its belt, contract caterers are pacing the corridor to see if it outsources a bigger proportion of its food provision. Daniel Thomas asks healthcare caterers how their processes can breed cost savings.
Caterers such as Compass say they can bring investment as well as cost savings to NHS catering operations. One of the biggest innovations in recent years has been the introduction of steam plated meals, such as Compass's own Steamplicity system (left)
With the coalition Government promising to take an axe to public spending and to overhaul the management structure of the NHS, there has been much talk of a "bonanza" of healthcare contracts for outsourcing firms such as contract caterers.
While NHS funding has been ringfenced by the Government, underlying inflation in healthcare (both volume and cost) is running at around 8% per year, meaning health service organisations are under pressure to keep costs down.
With an estimated 60% of hospitals in the UK still using in-house catering teams, contractors are confident that there is plenty of space in the market for them to make an impact.
Speaking after Compass Group announced its half-year figures in May, chief executive Richard Cousins said that in sectors such as healthcare, the Government is "under pressure to fix its balance sheet".
"It may take time; nothing is going to happen next week, but there are opportunities out there that we intend to exploit," he added.
It is talk of "exploitation" by outsourcers that concerns many healthcare professionals, according to Kevan Wallace, national chairman of the Hospital Caterers Association.
"I feel quite strongly that contractors should not be involved in hospital catering," he says. "They provide a good service but they are there purely to make a profit to satisfy their shareholders."
But Steve Cenci, managing director of healthcare at Compass Group UK & Ireland, which operates healthcare contracts under the Medirest banner, insists that partnering with an outsourced caterer is "mutually beneficial" for both the NHS Trust and the service provider.
"We can bring cost savings to most, if not all self-operated sites, without compromising on service or quality," he says. "We can also bring in investment, which can go towards updating facilities or equipment, or introduce new innovations to improve working practices."
Alan Starling, sales director of Healthcare Initial, part of Rentokil Initial, says there is "strong demand" for outsourcing right now as many trusts waited until after the General Election before starting tender processes.
"We are certainly looking at the opportunities that exist in the healthcare sector," he says. "Outsourcing is not solely about cutting costs; it is also about benefiting from fixed-price contracts that offer financial stability and budget certainty."
When a trust first outsources its catering operation, the cost savings can be considerable, particularly when the incumbent is very traditional, according to Cenci.
"In these cases it would not be unusual for us to yield a cost benefit of around 10% in the annual cost of those operations," he says. "For example, if a hospital staffs a large kitchen with a team of cooks, using energy-guzzling stoves throughout the day and then using heated trolleys to transport food to wards, we can make significant labour and cost savings when we introduce more modern systems."
This is a point picked up by Simon Scrivens, managing director for healthcare at Sodexo, who says there are three fundamental challenges for operating catering within hospitals.
"Labour costs within the NHS can be rather high, space is at a premium as hospitals are fantastically expensive to build and capital is limited," he says. "Trusts who decide to invest in, for example, new diagnostic equipment instead of a new kitchen tend to start looking for outsourced food provision."
And it's not just food provision - with many of the major players expanding rapidly into facilities management and other services, there are further opportunities to exploit, says Scrivens.
"Whether it's cleaning, catering, portering, or even health records, pathology and space management, we are well positioned to assist the NHS with achieving effective operational delivery within challenging budgets - all, of course, while maintaining front line services," he adds.
|Catering remains the core of Sodexo's NHS business|