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TRANSCRIPT
12/17/2018
© 2018 Technomic Inc.
Presentation
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Understanding Healthcare FoodserviceThe Hospital Segment
October 2018 #17667
Prepared for
© 2018 Technomic Inc.
Hospital Foodservice Market Overview
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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
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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%
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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
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Key Finding
Healthcare is one of the fastest growing areas in the foodservice industry
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• 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
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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
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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
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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
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11
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Key Finding
While patient satisfaction remains critical, budgetary/financial concerns are growing
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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
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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”
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Operators feeling pressure to achieve all missions
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37%44% 44% 48%
Hospitals
FSM Share of Sub-Segment Purchases
2010 2015 2016 2018
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Foodservice Management FirmsFSMs are slowly increasing as organizations look for efficiencies
In Hospitals
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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 Technomic Inc.
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
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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
© 2018 Technomic Inc.
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
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Key Finding
Offering made-to-order options is a top initiative
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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
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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
© 2018 Technomic Inc.
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
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Innovative Takeout
Capturing Grab and Go,Employee Retention
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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.)
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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
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Micromarkets beginning to emerge
Enhancing Guest Experience, All day Snack, Grab n Go, Labor Saving
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Menuing
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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
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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
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Ethnic Cuisine Needs Authenticity is now the norm
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60% of foodservice
occasions are global
cuisines
Pico de Gallo
JerkTzatziki
Ponzu
Tahini
Aioli
Tomato Cream
Chutney
Sriracha
Chimichurri
Bordelaise
Caribbean
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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)
© 2018 Technomic Inc.
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
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Guest Satisfaction, Waste Reduction
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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
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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
© 2018 Technomic Inc.
The Consumer “Health” Definition is Evolving
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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
© 2018 Technomic Inc.
The Foodservice Healthy-Tasty Spectrum
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Items in the “sweet spot” deliver perception of better health and taste
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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
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Guest Satisfaction, Improve Patient Outcomes
© 2018 Technomic Inc.
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.
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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
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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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© 2018 Technomic Inc.
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
Kathryn FennerPrincipal, Research & Consulting
312-876-0004 | [email protected] | technomic.com
Michael NapierSenior Research Analyst
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