The next big thing: Selling to hospitals

By: Lynn Byczynski

You might think that a hospital menu would be the last place to look for farm-fresh produce, organic meats, and local artisan cheeses. The very phrase “hospital food” has long been synonymous with bland, over-processed meals.
But in the past few years, enthusiasm for local food has been spreading through the health care industry, and hospitals are increasingly receptive to the idea of buying from local farms. Some hospitals have even made local food a linchpin of their sustainability efforts, and have grown their local food purchases into hundreds of thousands of dollars per year.
Hospitals certainly are big food buyers. The average U.S. hospital serves more than a million meals a year. In addition to meals served to patients, hospitals also have cafeterias for employees and visitors, and many make the food for Meals on Wheels programs. Catering is often a significant revenue stream for hospital food service. And, thanks to a new appreciation of the relationship between wellness and good food, hospitals are often eager to host farmers markets in their lobbies or parking lots.

In other words, there are opportunities for farms big and small to get involved with local hospitals. In this article, you’ll read about three hospitals that are purchasing significant amounts of local food. The lessons they have learned may help you decide if you want to be involved when this trend comes to your town.

Eau Claire, Wisconsin
When Sacred Heart Hospital administrators decided in 2007 to make local food part of the hospital’s mission, they started with what seemed like a realistic goal: 10 percent of their food budget — about $200,000 — would go to local farms. Yet in the first year, Rick Beckler, director of hospitality services, met with frustration. He couldn’t find local growers who wanted to sell to the hospital, at least not in the volume and with the consistency he needed. At a conference in 2008, Beckler stood before a roomful of farmers and announced, “I have more than $200,000 to spend on local food. Do any of you want a piece of that action?” Then he walked out of the room.

Beckler had caught the attention of some farmers who did want a piece of the action, including Pam Herdrich, whose day job is as coordinator of the River Country Resources Conservation and Development Council. Meetings ensued between the hospital, the RC&D and several farmers to talk about the barriers the hospital had encountered. They concluded that they needed to form a cooperative that could aggregate food from many farms, do the marketing, and deliver the products to institutional buyers. The Producers & Buyers Co-op was formed in 2009, and in 2010, Sacred Heart Hospital met its goal of buying $200,000 of local food. This year, that target has been increased to 15 percent of the food budget, or $345,000. The coop is now selling to three hospitals and other institutions.

Beckler said that the biggest issue in developing the local food program was building trust with growers. “We learned early on that a small producer has very little wiggle room financially,” he said. “If you tell them to raise chickens for you, and then don’t buy them, it may put them out of business.”

Pricing is another issue for small farmers, many of whom feel they can’t sell at the rock-bottom prices institutions normally pay to big distributors. Beckler said the hospital agreed to pay higher prices, up to 25% higher in some cases, for local food. “We knew it was going to cost us more money, but we wanted to keep our local dollars local,” he said. “And when you look at the per-portion cost increase, you’re talking nickels, dimes and quarters.”
For example, he said he used to pay $3 a pound for cheddar cheese from the wholesaler. Now he buys organic cheddar for $5 to $7 a pound from a business 20 miles from the hospital.

Food safety is a concern for institutional buyers, so the cooperative created its own standards for all the products it buys from local farmers. Produce growers are required to follow Good Agricultural Practices (GAPs), though they are not required to be third-party GAPs certified. Beckler says that several farms have extended their growing season year-round by building hoophouses and heating greenhouses. In the middle of winter, he’s got a steady supply of local salad greens and spinach. Farmers have also changed production practices to ensure a consistent supply.
“I buy four bushels of tomatoes a week,” he said, “and at first no one could supply them. But now they grow them so they have them ripening every week. This has turned out to be like that movie where the farmer built the baseball field – ‘If you build it, they will come.’ I tell other hospitals now ‘If you commit, they will come and provide the product you need.’”

Charlottesville, Virginia
When the University of Virginia Hospital decided to provide more healthful food to patients, staff and visitors, it turned to Local Food Hub, a nonprofit organization that works to sustain family farms by providing tangible services to farmers. Among those services: a warehouse, rental refrigerated space, distribution, and accounting. Local Food Hub works with small family farms within 60 miles of Charlottesville. It sells to more than 50 locations in addition to the UVA Hospital, including 45 public schools, summer camps, grocery stores, and restaurants.

Richard Bean of Double H Farm in Wingina, VA, sells most of his produce at farmers markets and to his own restaurant accounts. He sells a few thousand dollars a year to Local Food Hub. But he’s a big fan of the organization.
“So many growers are intimidated by selling,” he said. “That’s never been our problem; our problem is growing enough because demand is so tremendous. But Local Food Hub has done a really good job.”

One of the things he likes best is that the group meets with growers in the winter to come to an understanding about what it will buy from them, and to give an idea of the price. It’s not a contract, but it does help farmers plan.
Alan Moore, director of sales for Local Food Hub, says he tries to “give a boundary around prices” early in the season. “What we find is it’s difficult for a small producer to develop a business plan around the wholesale market when the price could be $15 one day and $5 the next. We’re working to level out pricing a little so it enables growers to have a floor that’s a little bit higher than they could get elsewhere,” Moore said.

Still, the organization encourages growers to develop other outlets such as farmers markets and CSAs so they are not dependent on wholesale prices. He says that none of the “partner producers” grow solely for Local Food Hub.
Moore described some of the big issues growers face in selling to hospitals. Above all, the hospital needs to know you can supply a consistent amount on a frequent basis. It prefers to have food delivered three to four times a week, rather than just once. With some products such as lettuce the hospital uses so much volume that it prefers to buy pre-washed, pre-cut lettuce from the wholesaler rather than buying head lettuce from local growers. It doesn’t buy much specialty produce, but is a big consumersof the basics. To provide an idea of the volume required, he cites these weekly quantities: 50-60 cases tomatoes; 500-600 pounds potatoes; 8-10 bushels apples; 100-160 pounds squash; 40-50 pounds spring mix; 200 pounds bell peppers; 25-30 flats of strawberries.
At the start, Local Food Hub looked at the hospital’s menus to find places where local produce could be integrated easily. There were many opportunities, and now the hospital is the organization’s largest customer.

Northern California
Kaiser-Permanente Medical Center in Oakland started the first-ever hospital farmers market in 2003 and the health care provider’s support for local food has increased every year since. Now there are farmers markets at 35 hospitals in four states. Local produce is on the menu at 21 hospitals in northern California; in 2009, local produce to those hospitals totaled 73 tons. And the organization is partnering with CSAs and produce box businesses to use their hospitals as pickup places, so that employees can enjoy the benefits of fresh produce.

Other hospitals have followed suit. In Santa Rosa, Memorial Hospital serves local food in patient meals and sponsors a farmers market.

Deborah Walton, a market farmer nearby, set up a market stand in the hospital lobby once a week from 11 a.m. to 2 p.m. She sold fresh produce and herbal products that visitors could purchase as gifts for patients.
“We didn’t make a huge amount of money, but I really enjoyed it because people were so grateful to have us there,” she said.

When she had produce that didn’t sell, the hospital kitchen bought it. After two years, the hospital decided to operate its own farmers market, buying from local farmers. A sister hospital in another town set up a farmers market in its cafeteria, and Deborah now stocks that market. Again, the kitchen buys whatever is left over, paying the farmers market prices.

“There really is no down side to it,” she said. “The sales are lower than at farmers market, but it’s definitely good P.R.”

Resources
The organization Health Care Without Harm, www.noharm.org, has a good list of resources pertaining to healthy food in hospitals. Kaiser Permanente publications about local food can be found at http://xnet.kp.org/newscenter/aboutkp/green/factsheets/healthyfood.html. Organizations mentioned in this article all have websites.