Connecting Sustainable Farmers to Emerging Health Care Markets

Connecting Sustainable Farmers to Emerging Health Care Markets

Summary

The Institute for Agriculture and Trade Policy (IATP) is in the midst of a project titled Connecting Sustainable Farmers to Emerging Health Care Markets. The outcome of this project will be that hospitals and hospital systems will become a growing market for sustainable farmers and ranchers—a market that is both significant in size and straightforward for farmers and ranchers to access. The short term goal of the project is to increase knowledge among hospitals and health care purchasing officials and among farmers about the most successful steps for both groups to take to build this market, leading to intermediate-term increased sales of sustainable, local food to hospitals.

Hospitals and hospital systems represent a sizable potential market for sustainable farmers, and interest in increasing purchases of local, sustainably produced food among hospitals and hospital systems is growing. However, limited hospital resources and the complexity of food purchase contracts and agreements at many hospitals have prevented farmers from accessing this market in any significant way to date.

During 2012, we secured participation from three hospital partners (which represent a spectrum of hospital food service systems), conducted an initial survey of producers and hospitals, and established an advisory committee including farmers, hospital staff and local food experts. The advisory committee has engaged in extensive shared learning activities; we’ve begun the process of assembling and analyzing data that will lead to individualized “road maps” for each of our hospital partners; and we’ve begun designing more broadly applicable resource materials.

Objectives/Performance Targets

The long-term outcome of this project will be that hospitals and hospital systems will become a growing market for sustainable farmers and ranchers—a market that is both significant in size and straightforward for farmers and ranchers to access. (This is also means that in the long term, hospitals will be able to structure their food sourcing contracts in a way that allows them to maximize their purchases of local, sustainably produced food.)

This project will contribute to this outcome in the short term by increasing knowledge among hospitals and health care purchasing officials about steps they need to take to increase their purchases of local, sustainably produced food (including changes that may need to be made to purchasing contracts and agreements), and at the same time increasing knowledge among farmers about how to access the hospital market and create a fair, sustainable and successful purchasing relationship.

The intermediate outcome of this project will be that hospitals increase their purchases of sustainable, local food, and that farmers will increase their sales to hospitals. Because of the complex nature of food sourcing contracts, we anticipate that in some cases increased sales achieved in the intermediate term may be limited by these agreements. Thus, an additional important intermediate outcome will be that hospital participants will begin to take steps as necessary toward adapting their purchasing guidelines and contracts to allow for increased purchases of local, sustainable food. (This may include taking steps to adapt current contracts, but more likely will be in the form of planning how they will change the next round or renewal of the contracts.)

The audience for the project will be two-fold. First, local farmers who produce food sustainably will use our information and resources to learn about and access a sizable new potential market. Second, hospitals will use our information and resources to more easily and effectively meet their internal goals for increasing the sustainability of their food purchasing.

Accomplishments/Milestones

We have secured the participation of three hospital systems. These systems include the St. Cloud VA Medical Center in St. Cloud, Minn., Fairview Health Services headquartered in Minneapolis, Minn. and Hudson Hospitals and Clinics in Hudson, Wis.

Together, these three hospital systems had $5.4 billion in combined food and beverage purchasing in 2011. Because one of the challenges of farmer sales to hospitals is the diversity of management systems and types of hospitals, it’s important to note that the three hospital systems also reflect a wide range of hospital management systems. Among these three systems we have an academic institution, an independent community hospital and a federal facility. We have single-facility systems and a multi-facility system. We have individual hospitals with anywhere from 25 to 1100 beds. We have facilities in urban, suburban and rural locations. We have facilities with completely self-operated food systems, others with completely contract-based food systems, and some with a combination of self-operated and contracted food service. We also have varied levels of existing experience with local food procurement: Hudson Clinics has signed the “Healthy Food in Health Care Pledge” and has done some local purchasing; Fairview hosts numerous CSA drop sites; and the St. Cloud VA Medical Center’s existing diet guidelines encourage the use of fresh, seasonal produce.

We’ve also established an advisory committee. In addition to IATP staff, the committee includes six farmer members, two staff members from each of the three participating hospital systems, and two local food experts, Collie Graddick from the Minnesota Department of Agriculture and Teresa Engel from the Wisconsin Department of Agriculture. The farmer members are from Minnesota and Wisconsin, and include fruit and vegetable growers and livestock and dairy producers, representing a variety of experience levels in farm-to-institution and farm-to-hospital sales.

The advisory committee has met bi-monthly and undertaken shared learning activities, often involving guest experts, to explore hospital demand for local and/or sustainable food, delivery methods and models, as well as opportunities and challenges of direct procurement with hospitals. As much as possible, the advisory committee has explored actual case studies of successful and unsuccessful hospital/farmer direct procurement experiences from around the region and the country. The committee heard from two National VA Hospital Leaders from the east and west coast—including the creator of the VA Healthy Diet Guidelines—about their success in direct procurement; they engaged in a discussion around the lessons learned from unsuccessful food co-ops from one of the best and last remaining co-op development specialist within USDA Rural Development; they asked thoughtful questions of an association that connects growers, processors, distributors and markets to build equity and trust in a new local food economy; and they have learned from a multi-stakeholder cooperative of producers, processors, distributors and buyers about their successful cooperation with the healthcare industry in Wisconsin from the point of view of both the Hospital’s Administrative Director of Nutrition and the Operations Manager of the Co-op.

Initial surveys of both producers and staff from the participating hospitals were conducted in early 2012. Separate surveys were used for producers and hospitals. We secured 30 responses from producers in Minnesota and Wisconsin. Encouragingly, the producer survey revealed high levels of interest from producers in selling to hospitals.

While an exhaustive reporting of the information we’ve gathered to date is beyond the scope of this report (and will be better captured in the resource materials we are producing as part of this project), some key lessons identified to date include:

• The importance of longer range (i.e. five-year time frame) planning.
  The importance of aggregation and distribution.
  This significant success of a co-op approach for coordination.
  The need for traceability and verification.
  The challenge of ensuring adequate volume.
  The potential benefits of preservation techniques and use of seconds.

Based on the information we’ve gathered to date, we’ve begun to prepare individualized road maps for each of the hospital system participants. These road maps will include both general information (for example, farmer directories, eco-label guides and distributor information) and very specific information based on each hospital system’s past purchasing, survey results and future needs.

The advisory committee will continue to meet in 2013, including two in-person gatherings. In addition, the road maps and more general resources will be finalized and released in 2013.

Impacts and Contributions/Outcomes

To date, the primary impacts of the project have been on direct participants. Both the farmer and hospital participants report increased knowledge about farm-to-hospital sales and procurement. We anticipate that we may begin seeing implementation of increased sales in 2013 after the completion of the tailored road maps for our hospital participants. In addition, the more generally applicable resources will also become available in 2013.

Collaborators: