It Was 30 Years Ago (Part II)
Thirty years after FM’s first issue, onsite foodservice continues to play a key role in the missions of host institutions.
Last month, I reviewed some of the trend forecasts we made about some onsite segments in our 25th anniversary issue back in October 1997. This column completes that review with a look at healthcare .
Hospitals. Five years ago, the managed care revolution was well underway and many of its implications were clear. Consolidation in acute care was occurring rapidly, reducing the number of hospitals and beds. While the pace of merger activity has slowed as the number of merger opportunities has shrunk, the fallout continues.
Managed care cost capitation has meant continued demands for department downsizing, a dramatic shift to outpatient services and a much "sicker" hospital population. Medicare and Medicaid reimbursement cutbacks are now major factors in most hospital P&Ls, and the truly "private pay" patient is almost an endangered species.
We observed in 1997 that the increasingly rapid turnover in many hospital administrations was becoming a major problem, causing abrupt shifts in institutional strategy, plans and financial decision-making and complicating long-term decision making. Regrettably, that situation has not improved much.
One result of the drive to greater healthcare efficiencies in the 1990s had already been a move to give many hospital FSDs greater authority as multi-department managers. We correctly saw that the same forces, especially in the context of the new regional health networks, would lead many to make FSDs multi-unit managers, with responsibility for operations in multiple facilities. Also as we expected, more facilities have also adopted central production and cook-chill models since then.
Management companies saw their penetration of the hospital segment slow significantly over the past five years, partly because cost pressures made it harder to keep these accounts profitable. The growing financial sophistication of many independent operators has also made it more difficult to argue that oustsourcing foodservices is in the institution’s best interests.
Our prediction that non-patient feeding would grow to become the biggest part of hospital foodservice production and a major revenue generator for some operations was really a "no-brainer" at the time–it was already happening.
In the intervening five years, still more hospitals have moved to a retail-oriented foodservice model in both their servery stations and in the grab-and-go convenience options they make available to visitors and employees. Even as more central bulk production takes place, hospital food today is better prepared, presented and merchandised than ever before.
Also, in 1997 we pointed to the impact OBRA regulations would have in terms of making measured patient and resident satisfaction a key factor in the quality measurement of many institutions. Today that emphasis is taking on growing importance in many hospitals and has already become a driving force in senior dining.
Senior dining. Foodservice in nursing homes, assisted living facilities and continuing care retirement communities has long been one of the more stable segments to forecast because it tracks so closely to demographics. But it too has undergone some fairly dramatic shifts in the last five years.
Nursing homes in particular have been seriously challenged by federal and state reimbursement policies, and foodservices in those facilities that rely heavily on reimbursement have been stressed accordingly.
Much consolidation has occurred and much more will, especially as regulatory oversight is broadened to include smaller operations that had previously been exempt. This has been accelerated by the trend toward "all in one" campuses that offer a full range of services.
Greater regulatory oversight emphasis on resident satisfaction has largely been a positive factor for foodservice, which can have a major impact on this area. This has become a major selling point for management companies seeking senior dining contracts and remains a major reason why many institutions argue that foodservice is becoming an ever more important part of the core business.
Dining options at such facilities have broadened to match. Today it is increasingly common to find senior dining directors who oversee foodservice that matches the full range of resident needs, from country club dining to specialized services in memory loss units.
The long-awaited boom in CCRC populations is finally approaching as baby boomers enter their retirement years. The result has been a micro-segmentation of retirement center options. Indeed, over the next 20 years, we can anticipate even more options, as well as the use of foodservice as a highly marketable competitive difference for such communities.