the hospital segment - anfponline.org · catering service –internal to facility vending non-cash...

12/17/2018

© 2018 Technomic Inc.

Presentation

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Understanding Healthcare FoodserviceThe Hospital Segment

October 2018 #17667

Prepared for


Hospital Foodservice Market Overview

2

© 2018 Technomic Inc. 3

Hospitals47%

Nursing Homes

26%

Senior Living27%

Healthcare SegmentsRetail Sales Equivalent

Hospitals Nursing Homes Senior Living

Hospitals $14.3 B

Healthcare Foodservice Sales2018

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Healthcare Foodservice Operator Purchases 2018

Senior Living 30%

Long-Term Care 27%

Hospitals43%

2018 Healthcare Operator PurchasesFood, All Beverage, Non-Food

Senior Living Long-Term Care Hospitals

Hospitals$6.6 B


Key Segment CharacteristicsHospitals

Projected**Hospitals in prisons, infirmaries in colleges, etc.Source: American Hospital Association (most recent data available)

5,810 5,756 5,7955,686

5,522

2000 2005 2009 2013 2016*

984 984 947 944902

2000 2005 2009 2013 2016*

Units (Facilities)

Beds (000)

2016 Units = 5,522*

For Profit 1,05319%

State/Local Government

1,00318%

Psychiatric, Long-term

Care Hospitals 4039%Federal

2134%

Other**10

<1%

Not-for-Profit2,84051%

Since 2000, the number of hospitals have decreased 5.0% and beds 8.3%


Average Unit Purchasing

Base: 150 (All respondents)Q: In 2017, approximately how much did your foodservice department purchase (not sell) in dollars each of the following categories within your operations? *Values exclude equipment purchases

Hospitals= $605K

Average Facility Purchases by Category (000s)Hospitals

Food $299

Beverages (All) $75

Disposable Packaging $40

Other Nonfoods* $190

Total Purchases $605

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Distribution Factors

Base: 150 (All respondents)Q: For each of the distributor-types listed below, approximately what percentage (%) of your total foodservice department purchases for food, beverages, supplies, chemicals and disposables come from each of the following sources?

30%

12%

13%

12%

11%

10%

9%

3%

Broadline foodservice distributor

Dairy or dairy distributor

Produce specialty distributor

Other product specialtydistributor

Meat specialty distributor

Club store/cash-and-carry

Online third party

Other source

Average Percent Share of Total Purchases

Hospitals are using multiple food or equipment distributors to service their operations

© 2018 Technomic Inc. 8© 2018 Technomic Inc.

Key Finding

Healthcare is one of the fastest growing areas in the foodservice industry


• Healthcare will continue to outpace overall foodservice growth

• Aging population

• More outpatient

Healthcare Foodservice GrowthForecasted Growth 4.2%

3.6%

2.8%

6.2%

Total Healthcare

Hospitals

Long Term Care

Senior Living

5 year CAGR (2013–2018)

Nominal GrowthCAGR 2018-2023

7

8

9

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Key Finding

The population is aging, and competition for patients is on the rise.

43.1

56

72.879.7

83.7

2012 2020 2030 2040 2050

Population Aged 65+ for the United States: 2012 to 2050

In Millions


Hospital Foodservice DynamicsHospitals serve a complex population,and foodservice serves many roles

Patient feeding must meet the needs of a diverse population

Hospital retail operations are challenged with balancing profitability with patient/staff/guest satisfaction


Foodservice Systems Offered

Base: 150 (All respondents)Q: Which of the following service systems or programs do you operate within the foodservice operation in your facility?

45%

43%

45%

24%

38%

33%

39%

33%

24%

27%

18%

22%

19%

1%

Patient tray service

Patient/resident room service

Cash-operations cafeteria

Dining room with waitstaff

Food or beverage cart/kiosk (has own cash register,…

Snack carts, snack stations (no cash register)

Catering service – internal to facility

Vending

Non-cash cafeteria (resident, patient, etc.)

Meals on wheels program

Convenience store or micro market

Limited-service restaurants (separate from cafeteria)

Catering service – external, outside of the facility

Other

Percent Offering

Hospitals

10

11

12

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Key Finding

While patient satisfaction remains critical, budgetary/financial concerns are growing


Hospitals Mission

Base: 150 (All hospital respondents)Q: Of the four points listed below, please rank these in order of importance relative to your foodservice department’s business objectives.*Operators ranking as “1” of 4

31%

31%

15%

23%

21%

64%

8%

7%

Improvepatient/resident/guest

outcomes through nutrition

Elevate and improvepatient/resident/guest

experience and satisfaction

Operate at lower cost

Generate revenue

Most Critical Mission

2018 2015

Fiscal concerns are beginning to eat away at more patient-centric concerns

Gaining ground

Gaining ground


Increase in Pressure on Foodservice Operation Related to Objective

Hospitals“Net Increase”

Elevate and improve patient/resident/ guest experience and satisfaction

65%

Improve patient/resident/guest outcomes through nutrition

65%

Operate at lower cost 60%

Generate revenue 62%

High Pressure

Base: 150 (All respondents)Q: Over the past 3 years, how would you say the pressure to meet or exceed these objectives has changed relative to your foodservice operations? Use a scale from 1 to 5 where 1 = pressure has decreased significantly and 5 = pressure has increased significantly.Note: “Net” = % indicating “increased pressure” – % indicating “decreased pressure”

15

Operators feeling pressure to achieve all missions

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14

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37%44% 44% 48%

Hospitals

FSM Share of Sub-Segment Purchases

2010 2015 2016 2018

16

Foodservice Management FirmsFSMs are slowly increasing as organizations look for efficiencies

In Hospitals


Key Finding

Labor is a constant struggle for healthcare operators

3.7%Unemployment

Bureau of Labor Statistics, 10-5-18

The biggest challenge will be the workforce. When the unemployment rate is so low, I find it’s really tough to find qualified candidates.” –Hospital


2018 2015

Rising food costs 65% 70%

Managing food costs 66% 77%

Shrinking budgets 67% 62%Recruiting qualified labor 74% 64%Retaining qualified labor 70% 66%

Rising labor costs 63% 52%

Improving product yield 57% 49%

Cost of healthcare legislation 60% 51%

More government regulation (local, state, national) 60% 56%

Finding new revenue streams 65% 53%

Increasing cash operations revenues 63% N/A

Maintaining food safety 75% N/A

Top Operator Concerns

Base: 150 (All respondents)Q: With regard to your foodservice department today, how concerning are each of the following factorsNote: N/A indicates a characteristic that was added for 2018, thus no data is present for 2015.

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Labor issues are increasing

● = Increase vs. 2015

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2018 2015

Satisfying patients/residents 76% 79%

Motivating healthier eating by patients/residents/guests 59% 55%

Keeping up with menu trends 59% 49%

Need to upgrade foodservice facility 66% 54%

Motivating healthy eating by facility staff/employees 61% 44%

Incorporating and maintaining appropriate sustainability efforts

61% N/A

Menuing good tasting, healthier foods 66% N/A

Improving presentation/appeal/appearance of food 64% N/A

Top Operator Concerns

Base: 150 (All hospital respondents)Q: With regard to your foodservice department today, how concerning are each of the following factorsNote: N/A indicates a characteristic that was added for 2018, thus no data is present for 2015.

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Greater concern over motivating healthy eating

● = Increase vs. 2015


Cafe 640 at Regions Hospital St. Paul, Minn.

Trend In Action

Source: Foodservice Director May 2017

Outside Comes In

While Cafe 640’s roof appears to feature skylights, they’re actually backlit photographs.

Upgrading Foodservice Facility, Enhancing the

Guest Experience


Trend in ActionEngaging the Community

Source: Foodservice Director May 2017

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Gathering Place at Sparrow Health System Lansing, Mich.

Gathering Place’s living wall was a gift from the Sparrow Hospital Guild, a women’s volunteer group.

Enhancing the Guest Experience

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Trend in ActionFrom Another Healthcare Segment

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Brookdale Senior LivingHeadquartered in Brentwood, TN

Enhancing Food Quality via Culinary Training

Enhancing the Resident Experience, Recruiting


Key Finding

Offering made-to-order options is a top initiative


Top 7 Current Initiatives

Base: 150 (All respondents)Q: To what extent are you implementing or considering the following initiatives.

61%

57%

55%

54%

51%

51%

49%

Offering on-the-go options

Made-from-scratch menu offerings

Made-to-order food options

Use of fully prepared items on themenu

All day snack availability

Customizable food stations

On-demand room service

% Implementing Initiative

We are doing this today

Hospitals

22

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Top 7 Future Initiatives

Base: 150 (All respondents)Q: To what extent are you implementing or considering the following initiatives.

35%

43%

36%

47%

55%

51%

39%

27%

31%

27%

25%

23%

28%

24%

25%

16%

14%

15%

16%

11%

15%

13%

10%

23%

13%

6%

10%

23%

Tablet ordering for patient feeding

Authentic ethnic offerings

Order and pay ahead for pick-up

Use of speed scratch items

Made-to-order food options

All day snack availability

Delivery service (does not includepatient feeding)

Likeliness to Implement Initiative

We are doing this todayWe plan to start in the next 12-18 monthsWe a considering implementing in the next few yearsWe are not doing this and are NOT likely to do this in the future

Hospitals


Trend in Action Eskenazi Health Hospital SystemIndianapolis

Pre-made family meals

Lee Health SystemFlorida

Portable vegan

Menno Haven Retirement CommunityChambersburg, Pa.

Grab n Go bistro

26

Innovative Takeout

Capturing Grab and Go,Employee Retention


Trend in Action

Leasing Retail Space

Northwestern Hospital

Chicago, IL

Northwestern Hospital recently closed its subsidized cafeteria and converted its operation to be 100% leased space with a variety of retail concepts to meet consumer needs (LYFE kitchen, Subway, Dunkin Donuts, Beatrice, etc.)

25

26

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Trend in Action

Source: Foodservice Director September 2017

[Micromarkets are] a great alternative to vending machines, because customers can take the product in hand, and it gives the customer more control.”

-Bernadette Ventura-Murphy, Texas-based Health Care Service Corporation

28

Micromarkets beginning to emerge

Enhancing Guest Experience, All day Snack, Grab n Go, Labor Saving


Menuing

29


Menu Rotation & Frequency

Base: 150 (All respondents); 377 (Respondents on a menu cycle)Q: Do you operate on a menu cycle basis?Q: What is the length of your menu cycle?

83%

88%

Hospitals

Percentage of Operators on Menu Cycle

2018 2015

Menu cycles on decline from 2015

Cycle FrequencyHospitals

Weekly 52%

Two weeks 13%

Three weeks 8%

Four weeks 11%

Five weeks 9%

Six weeks or more 14%

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Key Finding

Hospitals are looking to offer variety to their patients, as well as staff and visitors


Hospitals look to add variety

• Also seeking products that lower food costs

Meal Planning

Base:150 (All respondents)Q: How much do you agree or disagree with the following statements?

87%

83%

78%

75%

75%

61%

We are always looking for new foodand beverage products to add variety

to our menus

We are always looking for newrecipes and menu ideas to add

variety to our menus

We are always looking for lower-costversions of the products we buy

We are always looking for new foodand beverage products that can

lower our food costs

We are always looking for menuideas that will enable us to raise our

average check or transactionamounts in our cash operations

We rarely change the food andbeverage products we purchase or

use

Top 2 Box Agreementby Segment


Ethnic Cuisine Needs Authenticity is now the norm

33

60% of foodservice

occasions are global

cuisines

Pico de Gallo

JerkTzatziki

Ponzu

Tahini

Aioli

Tomato Cream

Chutney

Sriracha

Chimichurri

Bordelaise

Caribbean

31

32

33

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• Made to order

• Better for you

• Sustainable

Menu Development Drivers

Base: 105 (Those with cafeterias or retail cash operations) :Q: How important are each of the following food and beverage trends within your cafeteria or retail cash operations? Please use a scale from 1 to 5, where 1 not at all important, and 5 extremely important.

78%

77%

70%

70%

69%

68%

67%

67%

66%

66%

66%

66%

64%

64%

61%

61%

Made-to-order foods

Whole grains

Exhibition cooking/…

Waste reduction

Locally-sourced/produced

All-natural

Clean label

Authentic ethnic foods

Smaller food portions

Sustainable

Antibiotic-free

Animal welfare

Hormone-free

"Green" packaging

Organic

Waste composting

Characteristic Importance(Top 2 Box)


Trend in ActionExample from Another Healthcare Segment

Source: Foodservice Director March 2018

Benchmark Senior LivingHeadquartered in Waltham, MA

Smaller Portions

“I see…people who went through tough times with limited food, and they get upset if there’s too much food on a plate,”

-Senior Living

35

Guest Satisfaction, Waste Reduction


Key Finding

The use of pre-prepared products and speed-scratch is becoming commonplace

“The dilemma is do you spend more on qualified labor or do you buy food that requires less training? We try to balance that out by purchasing high-quality speed scratch.” –Hospital

34

35

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• In hospitals, reduced-sodium and whole grain equate with health.

• Disconnect: The consumer health definition has evolved

Effect of Labels on Perceived Healthfulness

Base: 450 (All respondents)Q: For each of the below attributes, please indicate whether or not you agree that items described with each term are healthier than items without the term.

75%

72%

72%

70%

69%

69%

69%

69%

67%

67%

66%

62%

62%

59%

59%

58%

57%

56%

Reduced-sodium

Whole-grain

Hormone-free

Antibiotic-free

High-fiber

No trans fat

No MSG

Reduced-fat

Reduced-sugar

Low or no saturated fat

No artificialcolors/flavors/preservatives

High-protein

Organic

All-natural

Plant-based

Free-range

Cage-free

Dairy-free

Percent of Operators Who Agree This Label Increases Perceived Healthfulness of Product

Agree

Perceptions of the hospital foodservice operator


The Consumer “Health” Definition is Evolving

38

Fresh is the New Healthy

Low calorie

Low fat

Low saturated fat

Not good tasting

Denial (What you can’t have)

Yesterday

Natural

Made-to-order

Wholesome

Better-for-me

“Clean”

Protein

Moderation

Fresh

Today


The Foodservice Healthy-Tasty Spectrum

39

Items in the “sweet spot” deliver perception of better health and taste

37

38

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Menu Trend in ActionIncorporate Health with Flavor

UCSF Medical Center San Francisco, CA● Debuted a burger patty made with a

blend of 30% mushrooms and 70% beef

Cooley Dickinson Health CareNorthampton, MA● Replaced ground beef with meat &

mushroom blend

Palomar Health Escondido, CA● Veggie burger made with quinoa

and black bean

40

Guest Satisfaction, Improve Patient Outcomes


Menu Trend In Action

California

Governor Jerry Brown just signed a bill in September 2018 (introduced by California state Sen. Nancy Skinner). The bill requires licensed institutions such as prisons, hospitals and nursing homes to offer plant-based meals. Making vegan meal options available to prisoners and patients will be beneficial to their health and help reduce greenhouse gases.

41

Plant-Based Foods

Boston Medical CenterBoston, MA

The medical center’s rooftop garden produced 15,000 pounds of food this season

Source:: Technomic Foodservice Digest October 2017, Foodservice Director, May 17, 2018

Patient Outcomes, Sustainability


The Whole Story

Healthcare foodservice is fundamentally changing.

Future success in healthcare depends on a combination of factors: Overcoming

operational challenges to effectively adapt commercial/consumer trends and

positively impact patient outcomes.

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Recommendations

1Understand heightened consumer expectations

2Think, act like a commercial restaurant as a means to compete and a path to patient satisfaction

3Labor will continue to challenge. Don’t wait to develop solutions

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Emily HallockManager

[email protected]

Kathryn FennerPrincipal, Research & Consulting

[email protected]

312-876-0004 | [email protected] | technomic.com

Michael NapierSenior Research Analyst

[email protected]

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the hospital segment - anfponline.org · catering service –internal to facility vending non-cash...

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