The University Record, June 19, 2000

Health System outsources Hospitals Cafeteria, catering services

By Jane R. Elgass

Health System officials have decided to outsource the Hospitals cafeteria (above) and catering operations to Aramark Corp. A transition plan is in place and Aramark will assume full responsibility in the fall. Photo by Paul Jaronski, U-M Photo Services
The Hospitals and Health Centers announced June 9 that its cafeteria and catering operations will be outsourced to Aramark Corp. Aramark will manage and operate the Hospitals Cafeteria, two Java Coast coffee carts and the Hospitals catering functions. A transition plan is in place and the cafeteria and catering functions will be open during this phase. Aramark will assume full responsibility in September. The Wendy’s adjacent to the University Hospital cafeteria will remain in place.

Fifty-eight staff members in Food and Nutrition Services will be affected, and Health Systems officials said there are placement plans available for them. “Our commitment to employee placement is firm,” said Michael Harrison, Health System director of public relations and marketing communications. “With the many job openings across the University, we fully expect to be successful in identifying employment options for any displaced employee.”

Aramark is a worldwide company with food service establishments in many health care and other facilities nationwide.

The move is among a number of actions being taken by the Health System to achieve $35 million in budget cuts during fiscal year 2001, which begins July 1. The reductions are in addition to 4 percent across-the-board cuts made in fiscal year 2000.

The budget cuts, prompted by, among other things, decreased revenue from Medicare, Medicaid and other insurance payers, were announced in early May.

At that time, Larry Warren, executive director of the Hospitals and Health Centers, noted: “We cannot escape the reality that our costs are too high. We must bring them down in line with our local and national peers. We must continue to grow in strategic ways to be responsive to the communities we serve. Our patients and their families deserve no less than our very best.”

Gilbert S. Omenn, executive vice president for medical affairs, noted in May that the Health System has “done well to stay in the black the past several years, while so many other academic and community hospitals were laying off large numbers of staff and still incurring big deficits. However, just to keep our noses above the water line, we must improve our performance by nearly $40 million each year, by obtaining greater net revenue from increased activity and better collection rates, and by decreasing expenditures per unit of service. That will be true for as far into the future as we can imagine.”

Each unit of the Health System’s hospitals, health centers and administrative departments received a summary of its expenditures and a target budget that indicated a percentage for reductions in its operations. They were asked to make recommendations on ways to enhance revenue as well as ways to cut expenditures.

The Health System also announced the closing of its Novi Health Center in the next 60–90 days as part of plans by Ambulatory Care Services to reassess the size and scope of its outpatient network. The closure is not related to the budget cuts.

“The goal is to bolster our primary and specialty care presence in key markets,” explained Harrison. “Plans are in place to inform our patients who will be affected by these changes to apprise them of their health care options.”