St. Louis' SSM Health, BJC HealthCare launch joint venture to iron out the wrinkles of laundry service

Though it may sound benign, unexpected laundry service interruptions can leave a deep stain on hospital care delivery.

A high bar for sanitation and millions of pounds of linens per year means that any type of disruption could take a year or more before larger health systems are able to iron out all the wrinkles.

To keep their machines spinning, nonprofits SSM Health and BJC HealthCare announced this past week that they’ve launched a joint venture, St. Louis Healthcare Support Services, LLC, to own and operate a regional laundry facility in their home city of St. Louis.

The partners have already leased a 100,000-square-foot warehouse that BJC purchased in the city’s Soulard neighborhood and say they expect the facility to handle 35 million pounds of linens annually when it opens in mid-2025.

It will also bring 80 new benefits-eligible positions to the surrounding community, which executives said will improve economic health and health equity in an area that has historically been underserved.  

“We looked at a lot of options out there, but in the end we figured owning a building and owning the equipment really postured us in a way to deliver the best service to the organization while we still leverage the expertise of a company that knows how to run a laundry business,” Tom Harvieux, BJC’s vice president and chief supply officer, told Fierce Healthcare.

Harvieux and his counterpart at SSM, System Vice President and Chief Supply Chain Officer Michael Gray, said the organizations began discussing the project in late 2020 and early 2021.

Collaborating on their responses to the COVID-19 pandemic had strengthened the neighboring systems’ “longstanding relationship,” they said, and underscored the value of support service stability.

A hospital’s third-party laundry business, Harvieux explained, “could sell in a year and you don’t know who the new owner is. There are so many unknowns that we just wanted to eliminate the unknowns and manage this as a long-term service.

“There’s a lot of benefit to making sure that we are able to define where the building is at, where people are hired from, how we reinvest in the community,” he said.

Stability, community benefit will deliver ‘significant’ ROI

SSM and BJC assessed and refined their options through 2022 before solidifying their strategy and moving to acquire the building in early 2023, the executives said.

Such hybrid, collaborative arrangements are not unheard of. Michigan’s Henry Ford Health System, Michigan Medicine and Saint Joseph Mercy Health System announced a joint venture in 2019 to build and operate “a $48 million modern medical laundry service facility” with the capacity to clean 78 million pounds of linens per year. Harvieux also pointed to Health Systems Cooperative Laundries, a St. Paul, Minnesota-based co-op that lists 29 hospital members.

“It’s not uncommon, but most of those were created in the 70s, and a lot of those plants are becoming very aged and requiring recapitalization,” he said. “I’m not sure where they’re at on their trajectory, but it was a model that we did go out and visit other peer systems to learn more about how they were managing it, and the advantages and benefits of doing a model like this.”

SSM and BJC are aiming for sustainability and efficiency with the facility itself, which among other features will have water reclamation, health and energy reclamation and reused steam power — practices that have demonstrated millions of gallons of water savings for other health systems that upgraded their existing centralized laundry services.

“It’ll be a very efficient plant, and it was top of mind to make sure that we have a sustainable model to make that as efficient as possible,” Harvieux said. “We’ll look at alternative delivery trucks as they become available, but it is something the board has taken into serious consideration.”

The facility’s 35 million pounds-per-year target could potentially grow down the line, Gray said. Additional capacity could allow the partners to extend their business to other providers in the area, he said, with transportation and geographic logistics capping the volume at “maybe 50 million pounds.”

“We believe the cost control and the quality that we’ll be able to drive may be attractive to other health systems that could be in the geography—but we’re not building it relying upon that,” Gray said. “It’s really focused on our two health systems.”

SSM and BJC are set to equally fund the facility’s equipment and construction — initial investments they said were significant in terms of time, energy and capital but declined to put a number on.

Gray said the organizations will ensure that the operation is “cost-effective” and that securing stability and supporting the community would be enough to “make the return on the investment significant.”

Still, the executives acknowledged that laundry services can be better managed at scale. Such efficiencies have led to a jump in health system partnership models around the country focused on driving down healthcare costs in areas like career services, clinical engineering or lab services, they said.

Though Gray stressed that the systems “are not looking to grow anything else at the moment, we certainly have a relationship that if we wanted to talk about something like that, we could. But there’s nothing on the table."

‘Good healthcare starts with a job’

Housing the laundry facility within St. Louis was a “non-negotiable” even in the early days of discussions, Harvieux said.

Both systems are part of the St. Louis Anchor Action Network, a partnership of public and private sector organizations that aims to address inequities and systemic marginalization. The network focuses its efforts on intentional hiring, purchasing and community investments in 22 of the area’s impacted zip codes.

“We often say ‘good healthcare starts with a job,’” Hervieux said, “and creating economic development in the community and reinvesting with our purchasing and hiring dollars really make St. Louis and our larger community a better place to be.”

Alongside the 80 new benefits-eligible jobs, Gray noted that having ownership of the facility allows the systems to prioritize areas like worker safety and reduced carbon emissions that can also play into the health of a local community.

“Because being that we're anchored here, and we live here, we want to continue to be good stewards and good neighbors,” he said.

Now three years into the process, the executives said the laundry hybrid services model they’re building wouldn’t be possible without the BJC and SSM’s shared goals and stronger connection they’ve built in recent years.

“As counsel to others across the country: you have to have that relationship in order to build a model like this,” Gray said.