Cleveland Clinic laundry cooperative draws interest from other systems
Cleveland Clinic was seeing a decline in the cleanliness of the 18 million pounds of linens it had laundered annually. Supply chain managers there were scrambling because they were receiving as little as half the clean linens they needed for patients.
After exploring alternatives to continue using industry giant Sodexo, which was scaling back its healthcare laundry business, the Cleveland Clinic last year came up with an unprecedented solution: awarding a competitively bid contract to Evergreen Cooperative Laundry, a not-for-profit, worker-owned company, to handle all the laundry for 36 care sites including its main hospital. The twin goals were to improve the quality and reliability of laundry services and provide good-paying jobs with benefits to local residents.
The health system bought the old Sodexo facility on Cleveland’s east side Collinwood neighborhood and invested about $22 million renovating it, according to Gerard O’Neill, CEO of American Laundry Systems, who consulted on the facility’s overhaul.
The initiative is part of a growing national movement by hospital systems to use their purchasing power as anchor institutions to build wealth in their surrounding communities, thus improving overall health and well-being.
Now Cleveland Clinic says it’s getting a nearly 100% “fill rate” on its clean linen. Evergreen has tripled its full-time laundry staff to nearly 150, more than half of whom are ex-convicts who otherwise would have a hard time finding good-paying jobs with benefits. And Evergreen says its Cleveland Clinic division in Collinwood has been profitable since the partnership started in early 2018, with the worker-owners receiving profit-sharing bonuses.
“We could have run our own laundry, but it’s not our expertise,” said Simrit Sandhu, Cleveland Clinic’s supply chain chief. “This was the best way to ensure quality and care for the community, too.”
The partners now want to expand to serve other customers, given that Cleveland Clinic uses only a little more than half the facility’s annual capacity. And there is talk of offering more services, including fresh produce from the cooperative’s hydroponic greenhouse for the health system’s food service.
Evergreen CEO John McMicken said he gets frequent calls and visits from other health system representatives. Some want Evergreen to work with them to launch a worker-owned cooperative laundry in their markets.
This was the best way to ensure quality and care for the community, too.”
Simrit Sandhu, executive director, supply chain management department Cleveland Clinic
One interested group is a coalition of Chicago systems that are collaborating to strengthen their surrounding communities economically. It includes Rush University Medical Center, Lurie Children’s Hospital, Amita Health, Cook County Health, Sinai Health System, and the University of Illinois Hospital.
Interest in the model grows at least partly out of changes in the commercial laundry industry that have led to capacity shortages in some markets, according to Joseph Ricci, CEO of TRSA, an industry trade group. He noted that private equity investors have acquired many laundry companies. But he said it is too early to tell if the Cleveland model will be productive and profitable.
Evergreen employees already see the cooperative as a success. Many have taken advantage of their company’s home-ownership program, which allows workers voted in as owners to buy a three-bedroom home with a mortgage of $400 or less per month, paid off within five years.
They also receive checking and savings accounts—often their first ever—financial literacy and management training, and access to a small-dollar loan program as an alternative to predatory payday loans.
Tymika Thomas started at Evergreen in 2017 after serving five years in prison for robbery. Thomas, who’s 44 and takes care of her five children and three grandchildren, started on the production line but was soon promoted to supervisor of the surgical pack department. She said top positions pay $14 to $16 an hour.