- Created on Sunday, 02 June 2002 12:58
- Written by Ron Weinstein
As President of Laundry Today I hope you enjoy reading the publication. I particularly enjoy interactions with our readers from letters they send expressing their opinions on industry happenings or issues which concern them. I rarely take the opportunity to express my opinion, however today I find myself in a position of wanting to speak out regarding hospital consolidation and purchasing groups.I have watched the business of independent sellers of institutional textiles evaporate as hospitals consolidated and purchasing groups were awarded the shrinking number of linen contracts. I reasoned that this change was yet another business reality where the big guys get bigger and the small independents disappear since large companies can afford to sell products at a lower price.
However, I am far from convinced that hospitals actually save money by purchasing everything from one general purchasing group. If fact, there are “small guys” who can compete with prices that large purchasing groups offer.
So why are hospitals going the route of purchasing groups when in most instances hospitals are committed to purchasing 80 - 90 percent of their needs from one group - effectively eliminating any competition?
I believe the large “rebate” checks that hospitals receive are an added attraction to a general purchasing contract. But the truth is-the rebate checks are not gifts. These hospitals are only receiving their own money back from overpayment on supplies that they were contracted to purchase at a higher price from large purchasing groups which they could have purchased elsewhere for a lower price.
And here’s another fact to consider, hospitals who think that buying groups are the answer to their prayers have reduced their purchasing staffs leaving themselves with little expertise to oversee their buying groups or to make sure they can’t get better deals on their own. So how can any of these hospitals know if they are really saving money?
After reading the expose pieces published in The New York Times I think the time has come for congress to investigate the financial links between hospital buying groups and suppliers. There is room for more than four textile firms serving the health care industry. But more importantly, the ability to compete fairly for business and a business’ ability to chose a supplier with the “best price” are quickly becoming traditions of the past. Is that something we as a society can afford to lose?
President, Laundry Today
Quick Rinse - News From Around The World
Ecolab Acquires Dober Chemical’S Textile Care Business
ST. PAUL, Minn. — Ecolab Inc. a leader in cleaning, sanitizing, food safety and infection prevention products and services announced it has purchased the commercial laundry division of Dober Chemical Corporation. The acquisition includes Dober’s laundry chemical and waste water treatment and Ultrax dispensing businesses as well as an exclusive partnership to market and provide key components of its Spindle monitoring software.
“Dober is respected throughout the industry for its innovative monitoring technology, product chemistry and commitment to service – qualities that complement our own strengths at Ecolab,” said Brian Henke, vice president and general manager, Ecolab Textile Care North America. “As we expand our North American commercial laundry business, innovation and service excellence will continue to be our top priority as we partner with our customers to deliver unsurpassed value to run their operations more efficiently, sustainably and cost effectively.”
“Ecolab and Dober share the same customercentric approach to service and innovative technology,” said John Dobrez, president Dober Chemical Corp. “This is an exciting development because it builds on the strengths of both companies to move the industry forward.”
Through this agreement, Spindle Technologies,a division of Dober, is forming a strategic alliance with Ecolab Textile Care in an exclusive licensing agreement for its ChemWatch Software technology and the OPTRAX Utility Module.
“There will be no movement of people as they currently all operate remotely,” said Henke. “The Dober leadership team is very skilled and respected in the industry. We plan to have them as part of the team moving forward. During the transition, both businesses will operate as usual and we do not expect there to be any changes in the service the customers are used to receiving.”