oversight

VA Health Care: Laundry Service Operations and Costs

Published by the Government Accountability Office on 1999-12-21.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                 United States General Accounting Office

GAO              Report to the Chairman, Subcommittee
                 on Oversight and Investigations,
                 Committee on Veterans’ Affairs, House
                 of Representatives

December 1999
                 VA HEALTH CARE
                 Laundry Service
                 Operations and Costs




GAO/HEHS-00-16
      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      Health, Education, and
      Human Services Division

      B-283006

      December 21, 1999

      The Honorable Terry Everett
      Chairman
      Subcommittee on Oversight and Investigations
      Committee on Veterans’ Affairs
      House of Representatives

      Dear Mr. Chairman:

      The Department of Veterans Affairs (VA) health care system requires a
      number of nonclinical services, such as food services, laundry, and
      housekeeping, to support the delivery of clinical care. About one-third of
      VA’s health budget is spent on support services. Because support services
      make up a large share of health care operating expenses, one focus of
      health care systems in the 1990s was on reinventing the way they provided
      support services within their overall efforts to increase the efficiency of
      health care delivery. Health care systems have used a variety of methods
      to increase efficiency, such as consolidating services, changing
      technology, and outsourcing services.

      VA provides many of these support services to inpatients. VA spent
      approximately $8.4 billion on inpatient services—which included clinical
      and support services—for about 650,000 inpatients admitted to its facilities
      in fiscal year 1998. VA provides inpatient health care in 175 locations in its
      hospitals, nursing homes, and domiciliaries.1

      You have expressed concern that VA may not have focused adequately on
      increasing the efficiency of services that support its delivery of patient
      care. To address this concern, you asked us to develop a body of work
      providing baseline data on major VA support services and assessing
      options for increasing their efficiency. This is the second report in a series
      on VA support services; the first report described VA food service
      operations.2 As requested, this report provides fiscal year 1998 baseline
      information on (1) the type and volume of laundry service VA provides,
      (2) how VA provides laundry services, (3) the cost VA incurs, and (4) the
      revenue VA generates from selling laundry services. We will examine


      1
       A VA domiciliary is a residential rehabilitation and health maintenance center for veterans who do not
      require hospital or nursing home care but are unable to live independently because of medical or
      psychiatric disabilities.
      2
       VA Health Care: Food Service Operations and Costs at Inpatient Facilities (GAO/HEHS-00-17, Nov. 19,
      1999).



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                   options for increasing the efficiency of VA laundry services in a subsequent
                   review.

                   To perform our work, we interviewed VA headquarters officials, conducted
                   site visits with local VA officials and telephone interviews with officials
                   from all 22 Veterans Integrated Service Networks (VISN), and surveyed VA
                   officials who were associated with laundry operations at local VA facilities.
                   Through this survey, we identified 210 VA Health Care Delivery Locations
                   (HCDL) that required laundry service, including hospitals, nursing homes,
                   domiciliaries, outpatient clinics, or some combination of these types of
                   facilities. See appendix I for a complete description of our scope and
                   methodology. We performed our work between May 1999 and
                   October 1999 in accordance with generally accepted government auditing
                   standards.


                   VA’s 210 HCDLs generated nearly 159 million pounds of laundry in fiscal year
Results in Brief   1998. Most of VA’s laundry services involved the routine cleaning of
                   textiles, although some also included specialized work, such as laundering
                   operating room textiles and uniforms and making textile repairs. The
                   amount of laundry that HCDLs used varied greatly among locations, ranging
                   from 116 pounds at a small outpatient clinic to nearly 3 million pounds at a
                   large health care facility.

                   Sixty-eight VA-owned and VA-operated laundries processed 91 percent
                   (145 million pounds) of VA HCDLs’ total laundry poundage. Laundries varied
                   in the amount of pounds processed, with the larger facilities serving
                   multiple HCDLs. Private vendors operating VA-owned laundries or
                   vendor-owned laundries processed about 9 percent (14 million pounds) of
                   VA’s laundry poundage.


                   In fiscal year 1998, VA spent about $78 million on laundry services. Of this
                   cost, 89 percent was for VA-owned and VA-operated laundries that
                   employed a total of 1,462 full-time-equivalent employees (FTEE). The other
                   11 percent was for services that vendor-operated laundries provided. VA’s
                   average total cost per pound to process laundry was 50 cents, but VA’s unit
                   costs varied from 23 cents to $1.04 per pound. Since 1982, VA also incurred
                   modernization costs totaling nearly $256 million for its laundries.

                   Thirty-six VA laundries also sold laundry service to 74 non-VA customers,
                   primarily other public agencies. VA laundries processed almost 11 million
                   pounds for non-VA organizations in fiscal year 1998, generating nearly



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                        $4 million in gross revenue while incurring costs of about $3.7 million.
                        More than half of the non-VA customers were federal facilities such as
                        Department of Defense (DOD) installations and federal prisons. The others
                        were state and local, private nonprofit, and private for-profit
                        organizations.


                        VA’s health care delivery locations include hospitals, nursing homes,
Background              domiciliaries, outpatient clinics, or some combination of these facilities.
                        Overall, VA operates 172 hospitals, 131 nursing homes, and 40
                        domiciliaries. Over the past decade, VA has dramatically decreased
                        inpatient hospital care by about 58 percent, most of the decline in the past
                        3 years. At the same time, VA increased its emphasis on outpatient care by
                        establishing community-based clinics and increasing outpatient care at its
                        existing delivery locations. The downsizing of inpatient care has created
                        additional pressures to minimize the costs of support services because
                        fewer patients need these services in most locations.3

                        As a support service, VA laundries provide clean laundry for VA patients in a
                        variety of settings. The volume of services can be as little as laundering an
                        examination gown for an outpatient visit to a VA clinic to laundering
                        bedding for pre-operation, surgical, recovery, and patient beds and all the
                        necessary textiles surgical staff use in an operating room for a patient
                        undergoing surgery.

                        In fiscal year 1996, VA consolidated the management of its inpatient
                        delivery locations into 22 VISNs. These VISNs are responsible for making
                        basic budgetary, planning, and operating decisions to meet the health care
                        needs of veterans within specified geographic areas. VISNs vary in the
                        extent to which they delegate or direct initiatives regarding VA laundry
                        operations at their HCDLs.


                        Routine cleaning accounts for about 70 percent of VA’s total laundry
VA’s Laundry Services   services. VA’s 210 HCDLs require laundry services primarily for the routine
Are Primarily for       cleaning of such textiles as sheets, blankets, towels, and pajamas. They
Routine Cleaning        also require cleaning for specialized items such as operating room textiles
                        and uniforms. In addition, laundry locations need services to mend
                        damaged textiles and replace buttons and zippers.



                        3
                         See VA Health Care: Challenges Facing VA in Developing an Asset Realignment Process
                        (GAO/T-HEHS-99-173, July 22, 1999).



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                                        Routine cleaning among VA HCDLs ranged from 116 pounds at an outpatient
                                        clinic in Lorain, Ohio, to 2.7 million pounds at a large medical center in
                                        Houston, Texas. The average amount of laundry generated by HCDLs was
                                        about 757,000 pounds, with most HCDLs totaling less than 1 million pounds,
                                        as shown in figure 1.



Figure 1: Pounds of Laundry VA HCDLs Generated in Fiscal Year 1998




                                        In fiscal year 1998, 68 VA-owned and VA-operated laundries served most of
VA-Operated                             VA’s HCDLs, but two other types of laundries also served HCDLs. VA owned 3
Laundries Served                        laundries whose space and equipment contractors used to process laundry
Most Delivery                           onsite, while 13 off-site contractor-owned and contractor-operated
                                        laundries also processed laundry for HCDLs.
Locations




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VA Owns and Operates 68   The 68 VA-owned and VA-operated laundries provided 91 percent of VA’s
Laundries                 laundry service in fiscal year 1998. These laundries are widely dispersed
                          throughout the country (see figure 2).




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Figure 2: Locations of 68 VA-Owned and VA-Operated Laundries in Fiscal Year 1998




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                                       Amounts of processed laundry ranged from about 270,000 pounds in
                                       Grand Junction, Colorado, to approximately 11.4 million pounds in St.
                                       Albans, New York. More than half of VA-operated laundries processed
                                       2 million pounds or less (see figure 3).


Figure 3: Pounds of Laundry
Processed at VA-Owned and
VA-Operated Laundries in Fiscal Year
1998




                                       Almost two-thirds of VA-owned and VA-operated laundries serve between
                                       two and nine HCDLs. Twenty-six VA-operated laundries serve a single HCDL.
                                       (See figure 4.)




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Figure 4: Number of HCDLs VA-Owned and VA-Operated Laundries Served in Fiscal Year 1998




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                                         The laundry in St. Albans, New York, is the largest that serves two or more
                                         HCDLs. In fiscal year 1998, the St. Albans laundry served all nine of the
                                         major health care facilities in VISN 3. The farthest that the St. Albans facility
                                         transported laundry was the 65 miles to Castlepoint, New York, the
                                         roundtrip driving time taking approximately 3 hours.

                                         Several VA laundries that serve only one HCDL are hundreds of miles away
                                         from any other HCDL. For example, the HCDL nearest to Albuquerque, New
                                         Mexico, is El Paso, Texas, and the distance between the two is 263 miles.

                                         Most laundries that served one location processed less than 1 million
                                         pounds of laundry in fiscal year 1998, whereas most laundries that served
                                         more than one location processed more than 3 million pounds (see figure
                                         5).



Figure 5: Pounds of Laundry Processed for Single HCDLs and Multiple HCDLs in Fiscal Year 1998




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                            The size of VA laundry facilities varied from about 3,300 square feet in Fort
                            Harrison, Montana, to 71,000 square feet in Hines, Illinois. Of the 68
                            VA-owned and VA-operated laundries, 52 are located in a separate structure
                            near the main health care delivery building. The remaining 16 occupy
                            space within the main health care building.

                            VA-owned   and VA-operated laundries employed 1,462 FTEEs in fiscal year
                            1998. All wage rate employees were represented by unions and received
                            hourly wages from $5.25 to $22.65. The number of FTEEs ranged from 4 at
                            the laundry in Iron Mountain, Michigan, to 78 in St. Albans, New York. The
                            average number of FTEEs employed by VA-operated laundries was 21.


VA Owns Three Laundries     In fiscal year 1998, VA owned three laundries in which contractors
That Contractors Operated   provided production labor and used VA’s laundry facility and equipment.
                            These laundries provided about 3.6 percent of VA’s service. The one in
                            Battle Creek, Michigan, was the largest, processing a total of about
                            2.8 million pounds for four HCDLs. The laundries in Albany and Bath, New
                            York, processed nearly 2.2 million and about 729,000 pounds, respectively.


VA Used 13 Laundries That   VA contracted with 13 commercial laundries to provide laundry service
Contractors Owned and       offsite for 21 HCDLs in fiscal year 1998. These commercial laundries
Operated                    provided about 5.8 percent of VA’s laundry services. The largest amount of
                            laundry processed by a contractor was in Palo Alto, California—about
                            2.6 million pounds for five HCDLs. The Anchorage, Alaska, domiciliary had
                            the smallest amount processed by a contractor—nearly 19,000 pounds. In
                            fiscal year 1998, the HCDLs that contracted out laundry services were
                            located primarily in the western part of the United States (see figure 6).




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Figure 6: Locations of the 21 HCDLs That Contracted Out Laundry Services in Fiscal Year 1998




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                                         In fiscal year 1998, VA spent about $78 million to meet its annual operating
VA-Operated                              costs for laundry services and employed a total of 1,497 FTEEs. VA spent
Laundries Accounted                      $70.4 million to provide services at laundries it owns and operates with
for the Majority of                      production costs—direct and administrative labor, supplies, and
                                         utilities—accounting for the majority of VA’s laundry expenditures.
Costs                                    Additionally, VA spent $8 million at contractor-operated laundries,
                                         including three that VA owned. The total cost per pound to process laundry
                                         at VA-operated laundries ranged from 23 cents to $1.04 per pound, while
                                         the cost per pound at contractor-operated laundries ranged from 36 cents
                                         to $1.01. Since 1982, VA has incurred modernization costs totaling about
                                         $256 million to equip, renovate, or construct new laundry facilities or do
                                         some combination of these. (See figure 7 for the percentage of costs
                                         accounted for by the three types of laundries.)


Figure 7: Percentages of Total Laundry
Costs by Type of Laundry in Fiscal
Year 1998




VA’s Costs to Own and                    Annual operating costs for VA-owned and VA-operated laundries totaled
Operate 68 Laundries                     $70.4 million in fiscal year 1998. Operating costs covered four primary
                                         functions: (1) production, (2) distribution, (3) procurement, and
                                         (4) equipment maintenance and repair. Production accounted for the
                                         majority of operating costs. (See figure 8.)



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Figure 8: Percentages of Laundry
Facility Operating Costs by Function in
Fiscal Year 1998




                                          VA’s production costs included all costs that were directly related to
                                          processing laundry: direct and administrative labor, supplies, and utilities.
                                          Production costs for VA-operated laundries totaled almost $43 million. Of
                                          this amount, direct labor accounted for 62 percent and involved 965 FTEEs.

                                          VA’s laundry distribution costs totaled slightly more than $10.4 million,
                                          which consisted of external transportation and internal distribution.
                                          External transportation is the shipment of soiled laundry from an HCDL to
                                          the laundry plant and the shipment of the clean laundry back to the HCDL.
                                          External transportation costs include FTEEs’ salaries, vehicle leases and
                                          purchases, fuel, and vehicle maintenance and repair and totaled
                                          approximately $4.5 million in 1998. Internal distribution costs include the
                                          number of FTEEs required to collect soiled laundry and distribute the clean
                                          laundry within the HCDLs. In total, 204 FTEEs distributed laundry at an
                                          annual cost of $5.9 million.

                                          VA laundry service also incurs procurement costs primarily for purchasing
                                          new textiles. Procurement costs at VA-operated laundries totaled nearly




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$12.9 million, of which 89 percent was spent to purchase new textiles.
Thirty-nine FTEEs repaired damaged textiles at a cost of $1.2 million.

VA’sequipment maintenance and repair costs totaled $4.2 million at
VA-operated laundries. A total of 58 FTEEs maintained and repaired VA’s
laundry equipment at an annual cost of nearly $2.4 million.

The total cost per pound at VA-owned and VA-operated laundries ranged
from 23 cents in Buffalo, New York, to $1.04 in Big Springs, Texas. In fiscal
year 1998, the Buffalo facility employed 14 direct labor FTEEs to process
nearly 3.4 million pounds of laundry, while the Big Springs facility
employed 6 direct labor FTEEs to process about 300,000 pounds. The ratio
of direct labor FTEEs to pounds processed in a year was 1 to nearly 240,000
in Buffalo and 1 to about 50,000 in Big Springs. Overall, total costs
averaged 50 cents per pound at VA-operated facilities. (See figure 9 for the
total cost per pound at VA-owned and VA-operated laundries.)4




4
  Appendixes II and III provide additional information regarding the 68 VA-owned and VA-operated
laundries.



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Figure 9: Laundry Costs Per Pound at VA-Owned and VA-Operated Laundries in Fiscal Year 1998




VA’s Costs for the Three                In fiscal year 1998, three VA-owned and contractor-operated laundry
VA-Owned and                            facilities in Battle Creek, Michigan, Albany, New York, and Bath, New
Contractor-Operated                     York, incurred total operating costs of about $2.7 million. Of these costs,
                                        approximately $1.3 million, slightly less than half, were solely for laundry
Laundries                               production the contractors performed. VA spent the remaining $1.4 million
                                        for oversight, supplies and utilities, distribution of laundry, procurement
                                        of textiles, and maintenance and repair of laundry equipment. The total
                                        cost for laundry service was 36, 54, and 55 cents per pound in Albany,
                                        Bath, and Battle Creek, respectively.

                                        The Battle Creek laundry, which provided laundry service for Battle
                                        Creek, Ann Arbor, Detroit, and Saginaw, Michigan, HCDLs, had total
                                        laundry operating costs of approximately $1.5 million to process
                                        2.8 million pounds. The Albany, New York, laundry facility, which
                                        provided laundry service to the Albany HCDL only, incurred total operating



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                            costs of approximately $795,000 to process 2.2 million pounds. The Bath,
                            New York, laundry facility, which provided laundry service only to the
                            Bath HCDL, incurred total laundry operating costs of approximately
                            $392,000 to process almost 729,000 pounds.

                            The Battle Creek laundry facility contracted with a nonprofit entity to
                            process its laundry while Albany and Bath contracted with for-profit
                            organizations. All three contracts were based on a negotiated price per
                            pound. The contract costs amounted to approximately $453,000, $137,000,
                            and $690,000 for the Albany, Bath, and Battle Creek facilities, respectively.

                            Since all three facilities process laundry onsite, VA incurred additional
                            operating costs for equipment maintenance and repair, utilities, and
                            procurement of textiles that the contractor did not provide. These costs
                            amounted to $342,000, $254,000, and $840,000 for Albany, Bath, and Battle
                            Creek, respectively. VA incurred slightly more than half of the total laundry
                            costs. All three facilities retained a total of 10.4 FTEEs to provide services
                            not covered by their contracts.


VA’s Costs for              In fiscal year 1998, 21 HCDLs purchased services from 13 commercial
Contractor-Provided         laundries, paying about $3.4 million to contractors and incurring almost
Laundry Service             $1.9 million in additional VA operating costs. Contract costs accounted for
                            approximately two-thirds of total costs. Services that contractors provided
                            varied widely. For example, contractors transported laundry to and from
                            the facilities for 18 of the 21 HCDLs.

                            Most contracts did not include a provision for contractors to distribute
                            laundry at the HCDL or to procure new textiles. As a result, VA provided
                            these and other services at a total cost of about $1.9 million. VA staff
                            engaged in these activities totaled about 25.3 FTEEs in 1998. The total cost
                            per pound for HCDLs served by contractor-owned and contractor-operated
                            laundries ranged from 39 cents per pound in San Francisco, California, to
                            $1.01 per pound at the Anchorage, Alaska, domiciliary. Of the 21 HCDLs that
                            contracted out for laundry services, 11 had contracts that calculated
                            laundry costs by the pound. Ten HCDLs entered into contracts in which
                            laundry costs were calculated from a fixed price, from a combination of a
                            fixed price and price per pound, or by the piece.


VA’s Costs Incurred From    In addition to its annual operating costs, VA made significant capital
Modernizing Its Laundries   investments to modernize its laundries. The laundry modernization



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                     program that VA began in 1982 cost a total of $256 million. Construction
                     costs totaled $120 million, and equipment costs amounted to $106 million.
                     Associated central office support costs amounted to about $30 million.
                     Support that the central office provided included managing project
                     development, prioritizing funding, providing equipment funding, preparing
                     specifications, and serving as project manager for the National Acquisition
                     Center.

                     In fiscal year 1998, Battle Creek’s laundry, one of the more recent projects,
                     was modernized at a cost of $7.1 million dollars. It cost VA $1.9 million
                     dollars to purchase and renovate the building where the laundry is located
                     and another $5.2 million for new equipment. According to Battle Creek
                     officials, the useful life expectancy of the equipment is about 15 years.


                     In fiscal year 1998, 36 VA laundries sold laundry service to 74 non-VA
VA Generates         customers. (See appendix IV for summary information about the 36 VA
Revenue by Selling   laundries that sell service to non-VA customers.) Gross revenue amounted
Laundry Service to   to approximately $4 million, with processing costs totaling $3.7 million,
                     resulting in net revenue of about $300,000. Gross revenue generated by VA
Non-VA Customers     laundries varied from $255 in Fort Lyon, Colorado, to $992,000 in
                     Richmond, Virginia.

                     At the 36 laundries that sold services in fiscal year 1998, 11.5 percent of
                     pounds processed was for non-VA customers and 88.5 percent was for VA
                     customers. VA sold laundry service to federal, state, local, and private
                     entities. Of the 74 contracts with non-VA customers, 13 involved
                     competitive bids and 61 did not. About half of the 61 contracts that were
                     not competitively bid were the result of VA and DOD sharing agreements,
                     and the rest combined other types of arrangements. Slightly more than half
                     of these non-VA customers were federal facilities such as DOD installations
                     and federal prisons, as figure 10 shows.




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Figure 10: Percentages of Non-VA
Laundry Contracts in Fiscal Year 1998




                                        In a November 29, 1999, letter printed in appendix V, VA said that our
Agency Comments                         report provides an accurate description of laundry service delivery in the
                                        Veterans Health Administration. VA also provided technical comments that
                                        we incorporated as appropriate.


                                        As we arranged with your office, unless you publicly announce the
                                        contents of this report earlier, we plan no further distribution of it until 30
                                        days after its date. We will then send copies to the Secretary of Veterans
                                        Affairs, interested congressional committees, and others who are
                                        interested. We will also make copies of the report available to others upon
                                        request.

                                        If you have any questions about the report, please call me at (202) 512-7101
                                        or Paul R. Reynolds, Assistant Director, at (202) 512-7109. Other major




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contributors to this report were Jean N. Harker, Senior Evaluator; Michael
Gorin, Evaluator; Richard Geiger, Evaluator; and Susan Lawes, Senior
Social Science Analyst.

Sincerely yours,




Stephen P. Backhus
Director, Veterans’ Affairs and
  Military Health Care Issues




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Contents



Letter                                                                                          1


Appendix I                                                                                     24

Scope and
Methodology
Appendix II                                                                                    25

68 VA-Owned and
VA-Operated
Laundries
Appendix III                                                                                   27

VA Laundry Operating
Costs Per Pound by
Function
Appendix IV                                                                                    29

36 VA-Owned and
VA-Operated
Laundries That Sell
Laundry Service to
Non-VA Customers
Appendix V                                                                                     30

Comments From the
Department of
Veterans Affairs
Figures                Figure 1: Pounds of Laundry VA HCDLs Generated in Fiscal Year            4
                         1998
                       Figure 2: Locations of 68 VA-Owned and VA-Operated Laundries             6
                         in Fiscal Year 1998




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Figure 3: Pounds of Laundry Processed at VA-Owned and                     8
  VA-Operated Laundries in Fiscal Year 1998
Figure 4: Number of HCDLs VA-Owned and VA-Operated                        9
  Laundries Served in Fiscal Year 1998
Figure 5: Pounds of Laundry Processed for Single HCDLs and               10
  Multiple HCDLs in Fiscal Year 1998
Figure 6: Locations of the 21 HCDLs That Contracted Out                  12
  Laundry Services in Fiscal Year 1998
Figure 7: Percentages of Total Laundry Costs by Type of Laundry          14
  in Fiscal Year 1998
Figure 8: Percentages of Laundry Facility Operating Costs by             15
  Function in Fiscal Year 1998
Figure 9: Laundry Costs per Pound at VA-Owned and                        17
  VA-Operated Laundries in Fiscal Year 1998
Figure 10: Percentages of Non-VA Laundry Contracts in Fiscal             20
  Year 1998




Abbreviations

DOD        Department of Defense
FTEE       full-time-equivalent employee
HCDL       Health Care Delivery Location
VA         Department of Veterans Affairs
VISN       Veterans Integrated Service Network


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Appendix I

Scope and Methodology


             We focused our work on the Department of Veterans Affairs (VA) laundry
             operations for fiscal year 1998 in order to provide baseline information on
             (1) the type and volume of laundry service that VA provides, (2) how VA
             provides laundry services, (3) the cost VA incurs, and (4) the revenue VA
             generates from selling laundry services.

             To obtain this information, we interviewed VA headquarters officials in the
             Environmental Program Service and Facilities Management Service. We
             obtained documents from VA headquarters officials on VA’s textile care
             program, its laundry modernization efforts, the locations of laundry
             facilities, and the different ownership categories of laundries.

             We obtained information about specific locations through site visits,
             interviews, a telephone survey, and a mail survey to VA officials who were
             associated with laundry operations. We also interviewed private sector
             laundry contractors. We visited and interviewed officials at Richmond,
             Virginia, Battle Creek, Michigan, and Denver, Colorado, VA laundry
             facilities. We obtained relevant documents on the laundry operations at
             these site visits. We visited and interviewed a laundry contractor for the
             Denver Health Care Delivery Location (HCDL) and interviewed by
             telephone another laundry contractor for the Palo Alto, San Francisco, and
             Martinez HCDLs in California.

             The telephone survey of officials from all 22 Veterans Integrated Service
             Networks (VISN) identified health care delivery locations that required
             laundry service. From this information, we prepared and sent a mail
             survey to 68 VA-owned and VA-operated laundries, 3 VA-owned and
             contractor-operated laundries, and 16 VA contract specialists that
             represent the 21 HCDLs served by 13 contractor-owned and
             contractor-operated laundries. We obtained data from the survey on the
             type and volume of laundry service VA provides, how VA provides this
             service, the cost VA incurs, and the revenue VA generates from selling
             laundry service. We analyzed and summarized data categories such as
             pounds processed, total costs, and revenue generated for fiscal year 1998.
             We compared data from the facilities in order to establish high and low
             ranges. We examined the data as we received them and conducted
             followup telephone calls when we found discrepancies and
             inconsistencies.

             We performed our review between May 1999 and October 1999 in
             accordance with generally accepted government auditing standards.




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Appendix II

68 VA-Owned and VA-Operated Laundries



                                        Total pounds   Number of HCDLs
Laundry                State              processed              served Total cost per pound
Albuquerque VAMC       N. Mex.               908,808                  1                 $0.67
                       La.
Alexandria VAMC                            1,527,241                  3                   0.69
Asheville VAMC         N.C.                1,082,075                  1                   0.59
Augusta VAMC           Ga.                 6,148,110                  5                   0.49
Bay Pines VAMC         Fla.                3,644,281                  2                   0.37
Big Springs VAMC       Tex.                  299,539                  1                   1.04
Biloxi VAMC            Miss.               5,151,537                  6                   0.35
Boise VAMC             Idaho                 451,824                  1                   0.52
Brockton VAMC          Mass.               6,560,796                  9                   0.42
Buffalo Division       N.Y.                3,358,110                  2                   0.23
Canandaigua VAMC       N.Y.                2,157,399                  2                   0.46
Clarksburg VAMC        W. Va.                600,000                  1                   0.47
Cleveland HCS          Ohio                1,761,996                  7                   1.00
Dallas VAMC            Tex.                2,528,435                  3                   0.44
Dayton VAMC            Ohio                3,161,183                  4                   0.48
Erie VAMC              Pa.                   945,503                  1                   0.45
Fargo VAMROC           N. Dak.               740,325                  1                   0.44
Fayetteville VAMC      Ark.                  686,997                  2                   0.64
Fayetteville VAMC      N.C.                2,058,096                  1                   0.39
Fort Harrison VAMROC   Mont.                 280,850                  1                   0.82
Fort Lyon HCS          Colo.                 572,041                  1                   0.58
Fort Meade VAMC        S. Dak.               950,381                  2                   0.41
Fresno HCS             Calif.                393,690                  1                   0.68
Grand Island VAMC      Nebr.                 627,174                  2                   0.38
Grand Junction VAMC    Colo.                 270,178                  1                   0.66
Hines VAH              Ill.                3,301,808                  3                   0.44
Houston VAMC           Tex.                2,745,911                  3                   0.40
Huntington VAMC        W. Va.                729,174                  2                   0.43
Iron Mountain VAMC     Mich.                 316,829                  1                   0.60
Kerrville VAMC         Tex.                2,755,074                  7                   0.39
Knoxville Division     Iowa                3,050,992                  4                   0.47
Lake City Division     Fla.                2,708,491                  6                   0.31
Leavenworth VAMC       Kans.               2,808,612                  4                   0.46
Lebanon VAMC           Pa.                   857,788                  2                   0.68
Little Rock VAH        Ark.                3,905,166                  2                   0.54
Louisville VAMC        Ky.                 1,537,487                  2                   0.60
                                                                                   (continued)



                              Page 25                        GAO/HEHS-00-16 VA Laundry Service
                                         Appendix II
                                         68 VA-Owned and VA-Operated Laundries




                                                                  Total pounds    Number of HCDLs
Laundry                           State                             processed               served Total cost per pound
Madison VAH                       Wis.                                3,127,783                  3                   0.43
Marion Campus                     Ind.                                2,662,157                  3                   0.36
Martinsburg VAMC                  W. Va.                              1,005,079                  3                   0.83
Milwaukee VAMC                    Wis.                                3,973,525                  3                   0.44
Minneapolis VAMC                  Minn.                               2,716,965                  1                   0.52
Mountain Home VAMC                Tenn.                               1,500,000                  1                   0.48
Mufreesboro VAMC                  Tenn.                               2,349,619                  3                   0.31
Northhampton VAMC                 Mass.                               1,580,020                  2                   0.36
Oklahoma City VAMC                Okla.                               1,066,475                  1                   0.51
Perry Point VAMC                  Md.                                 5,162,798                  4                   0.57
Phoenix VAMC                      Ariz.                               2,722,388                  3                   0.45
Pittsburgh HCS                    Pa.                                 6,372,277                  7                   0.45
Portland VAMC                     Oreg.                               1,997,355                  1                   0.36
Reno VAMC                         Nev.                                  532,223                  1                   0.64
Richmond VAMC                     Va.                                 5,176,184                  2                   0.46
Roseburg HCS                      Oreg.                               1,469,564                  4                   0.49
Salem VAMC                        Va.                                 1,551,260                  1                   0.49
Salisbury VAMC                    N.C.                                2,368,776                  2                   0.46
Salt Lake City VAMC               Utah                                  965,588                  1                   0.46
San Juan VAMC                     P. R.                               2,465,373                  3                   0.26
Sheridan VAMC                     Wyo.                                  384,617                  1                   0.68
Sioux Falls VAMC                  S. Dak.                               997,103                  1                   0.27
Spokane VAMC                      Wash.                                 586,644                  1                   0.43
St. Albans Extended Care Center   N.Y,                               11,353,047                  9                   0.37
St. Cloud VAMC                    Minn.                               1,083,939                  1                   0.54
St. Louis VAMC                    Mo.                                 3,305,727                  4                   0.61
Togus VAMROC                      Maine                                 971,172                  1                   0.41
Tuscaloosa VAMC                   Ala.                                2,580,361                  4                   0.64
Waco VAMC                         Tex.                                2,897,905                  4                   0.31
Walla Walla VAMC                  Wash.                                 361,190                  1                   0.56
West Los Angeles VAMC             Calif.                              5,160,816                  6                   0.51
West Palm Beach VAMC              Fla.                                3,838,411                  5                   0.25




                                         Page 26                                        GAO/HEHS-00-16 VA Laundry Service
Appendix III

VA Laundry Operating Costs Per Pound by
Function


                                                                                Maintenance Total operating
Laundry                State          Production   Distribution   Procurement     and repair cost per pound
Albuquerque VAMC       N. Mex.             $0.33         $0.15          $0.14          $0.04           $0.67
Alexandria VAMC        La.                  0.37          0.24           0.07           0.01             0.69
Asheville VAMC         N.C.                 0.36          0.11           0.09           0.04             0.59
Augusta VAMC           Ga.                  0.26          0.06           0.13           0.04             0.49
Bay Pines VAMC         Fla.                 0.20          0.04           0.12           0.01             0.37
Big Springs VAMC       Tex,                 0.85          0.02           0.14           0.03             1.04
Biloxi VAMC            Miss.                0.24          0.04           0.05           0.02             0.35
Boise VAMC             Idaho                0.35          0.05           0.05           0.07             0.52
Brockton VAMC          Mass.                0.24          0.05           0.10           0.03             0.42
Buffalo Division       N.Y.                 0.16          0.02           0.03           0.02             0.23
Canandaigua VAMC       N.Y.                 0.32          0.06           0.05           0.02             0.46
Clarksburg VAMC        W. Va.               0.28          0.05           0.08           0.07             0.47
Cleveland HCS          Ohio                 0.71          0.06           0.19           0.05             1.00
Dallas VAMC            Tex.                 0.25          0.06           0.09           0.04             0.44
Dayton VAMC            Ohio                 0.27          0.13           0.06           0.01             0.48
Erie VAMC              Pa.                  0.34          0.04           0.05           0.02             0.45
Fargo VAMROC           N. Dak.              0.27          0.05           0.10           0.02             0.44
Fayetteville VAMC      Ark.                 0.36          0.12           0.13           0.02             0.64
Fayetteville VAMC      N.C.                 0.31          0.04           0.03           0.02             0.39
Fort Harrison VAMROC   Mont.                0.51          0.10           0.17           0.03             0.82
Fort Lyon HCS          Colo.                0.45          0.05           0.03           0.04             0.58
Fort Meade VAMC        S. Dak.              0.27          0.08           0.04           0.02             0.41
Fresno HCS             Calif.               0.46          0.06           0.17           0.00             0.68
Grand Island VAMC      Nebr.                0.30          0.05           0.02           0.01             0.38
Grand Junction VAMC    Colo.                0.45          0.07           0.10           0.03             0.66
Hines VAH              Ill.                 0.24          0.03           0.10           0.06             0.44
Houston VAMC           Tex.                 0.24          0.01           0.12           0.03             0.40
Huntington VAMC        W. Va.               0.32          0.04           0.06           0.01             0.43
Iron Mountain VAMC     Mich.                0.43          0.06           0.07           0.04             0.60
Kerrville VAMC         Tex.                 0.27          0.04           0.07           0.02             0.39
Knoxville Division     Iowa                 0.33          0.07           0.05           0.01             0.47
Lake City Division     Fla.                 0.26          0.03           0.01           0.01             0.31
Leavenworth VAMC       Kans.                0.24          0.11           0.07           0.05             0.46
Lebanon VAMC           Pa.                  0.44          0.12           0.11           0.02             0.68
Little Rock VAH        Ark.                 0.29          0.13           0.10           0.01             0.54
Louisville VAMC        Ky.                  0.38          0.09           0.11           0.02             0.60
Madison VAH            Wis.                 0.26          0.07           0.09           0.01             0.43
                                                                                                  (continued)


                                 Page 27                                    GAO/HEHS-00-16 VA Laundry Service
                                     Appendix III
                                     VA Laundry Operating Costs Per Pound by
                                     Function




                                                                                                    Maintenance Total operating
Laundry                    State           Production         Distribution      Procurement           and repair cost per pound
Marion Campus              Ind.                    0.21                0.08                0.03               0.03                   0.36
Martinsburg VAMC           W. Va.                  0.58                0.03                0.15               0.08                   0.83
Milwaukee VAMC             Wis.                    0.27                0.08                0.06               0.03                   0.44
Minneapolis VAMC           Minn.                   0.35                0.08                0.06               0.03                   0.52
Mountain Home VAMC         Tenn.                   0.32                0.07                0.07               0.02                   0.48
Mufreesboro VAMC           Tenn.                   0.18                0.07                0.04               0.01                   0.31
Northhampton VAMC          Mass.                   0.27                0.03                0.03               0.03                   0.36
Oklahoma City VAMC         Okla.                   0.27                0.13                0.10               0.01                   0.51
Perry Point VAMC           Md.                     0.32                0.06                0.10               0.09                   0.57
Phoenix VAMC               Ariz.                   0.32                0.04                0.06               0.03                   0.45
Pittsburgh HCS             Pa.                     0.30                0.05                0.09               0.01                   0.45
Portland VAMC              Oreg.                   0.22                0.02                0.10               0.02                   0.36
Reno VAMC                  Nev.                    0.43                0.06                0.08               0.08                   0.64
Richmond VAMC              Va.                     0.25                0.09                0.09               0.02                   0.46
Roseburg HCS               Oreg.                   0.34                0.08                0.07               0.00                   0.49
Salem VAMC                 Va.                     0.24                0.15                0.08               0.02                   0.49
Salisbury VAMC             N.C.                    0.25                0.07                0.11               0.03                   0.46
Salt Lake City VAMC        Utah                    0.26                0.13                0.07               0.00                   0.46
San Juan VAMC              P. R.                   0.22                0.03                0.00               0.00                   0.26
Sheridan VAMC              Wyo.                    0.47                0.06                0.11               0.04                   0.68
Sioux Falls VAMC           S. Dak.                 0.19                0.05                0.02               0.01                   0.27
Spokane VAMC               Wash.                   0.27                0.07                0.08               0.01                   0.43
St. Albans Extended Care   N.Y.
Center                                             0.20                0.05                0.09               0.03                   0.37
St. Cloud VAMC             Minn.                   0.32                0.12                0.08               0.01                   0.54
St. Louis VAMC             Mo.                     0.26                0.17                0.16               0.02                   0.61
Togus VAMROC               Maine                   0.26                0.06                0.07               0.02                   0.41
Tuscaloosa VAMC            Ala.                    0.41                0.11                0.10               0.02                   0.64
Waco VAMC                  Tex.                    0.20                0.04                0.05               0.02                   0.31
Walla Walla VAMC           Wash.                   0.35                0.06                0.09               0.06                   0.56
West Los Angeles VAMC      Calif.                  0.29                0.08                0.10               0.03                   0.51
West Palm Beach VAMC       Fla.                    0.17                0.02                0.06               0.01                   0.25

                                     Note: Some functions do not add up to the total operating cost per pound because of rounding.




                                     Page 28                                                   GAO/HEHS-00-16 VA Laundry Service
Appendix IV

36 VA-Owned and VA-Operated Laundries
That Sell Laundry Service to Non-VA
Customers

                                                                              Customer
                                                    Number of             State or   Private   Private for       Gross
Laundry                           State            agreements   Federal      local nonprofit        profit     revenue
Albuquerque VAMC                  N. Mex.                   1        X                                         $40,583
Alexandria VAMC                   La.                       2       XX                                          71,285
Biloxi VAMC                       Miss.                     5     XXXX          X                              295,182
Brockton VAMC                     Mass.                     2       XX                                          59,429
Buffalo Division                  N.Y.                      2        X          X                              120,684
Dallas VAMC                       Tex.                      2       XX                                          85,078
Erie VAMC                         Pa.                       1                   X                              141,900
Fargo VAMROC                      N. Dak.                   3        X                                 XX       24,508
Fayetteville VAMC                 Ark.                      1                                           X        1,980
Fayetteville VAMC                 N.C.                      1        X                                         338,639
Fort Harrison VAMROC              Mont.                     1                                           X          476
Fort Lyon HCS                     Colo.                     1                   X                                  255
Fort Meade VAMC                   S. Dak.                   5       XX       XXX                                26,240
Grand Island VAMC                 Nebr.                     1                   X                               12,298
Iron Mountain VAMC                Mich.                     1                   X                                    0
Kerrville VAMC                    Tex.                      2                   X         X                      4,874
Knoxville Division                Iowa                      1                                           X        4,397
Lake City Division                Fla.                      1                                           X        2,784
Little Rock VAH                   Ark.                      6     XXXX        XX                               109,259
Madison VAH                       Wis.                      2                   X                       X      384,555
Martinsburg VAMC                  W. Va.                    2       XX                                           3,172
Milwaukee VAMC                    Wis.                      1        X                                         142,054
Minneapolis VAMC                  Minn.                     1                   X                              158,650
Mufreesboro VAMC                  Tenn.                     1                   X                                  510
Northampton VAMC                  Mass.                     4      XXX          X                              196,014
Perry Point VAMC                  Md.                       2       XX                                         120,892
Phoenix VAMC                      Ariz.                     1                   X                              143,259
Pittsburgh HCS                    Pa.                       1                   X                               60,950
Richmond VAMC                     Va.                       4     XXXX                                         991,790
Roseburg HCS                      Oreg.                     5       XX        XX                        X      123,969
Sioux Falls VAMC                  S. Dak.                   2        X          X                               61,242
Spokane VAMC                      Wash.                     2        X                                  X       93,653
St. Albans Extended Care Center   N.Y.                      3        X                   XX                     39,689
Togus VAMROC                      Maine                     1        X                                           2,403
Tuscaloosa VAMC                   Ala.                      2       XX                                          33,537
West Palm Beach VAMC              Fla.                      1                             X                     30,010




                                         Page 29                                      GAO/HEHS-00-16 VA Laundry Service
Appendix V

Comments From the Department of
Veterans Affairs




(406167)     Page 30         GAO/HEHS-00-16 VA Laundry Service
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