Connecting Sustainable Farmers to Emerging Health Care Markets
In collaboration with three hospital systems and numerous farmers, IATP identified barriers to and opportunities for hospitals and hospital systems to become a growing market for sustainable farmers and ranchers. While significant barriers certainly do exist, we identified numerous strategies farmers and hospitals can use to increase hospital purchases of local and sustainable food, and there is evidence of strong interest on both sides. We produced educational resources for both our specific hospital partners and more broadly applicable tools that can be used by any hospital, hospital system or farmer interested in accessing this growing market.
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.
In 2013, much of the work performed involved close collaboration with our three hospital partners, 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. We worked with staff members of each of these institutions to identify, gather and analyze relevant purchasing data, and to develop detailed plans for each of the partners to increase their purchases of local, sustainable food.
We conducted a follow-up survey of producers who we had surveyed in 2012. This survey was used to capture any significant changes in responses to the 2012 survey, including experiences and interest in selling to hospitals, as well as, to gather additional information on marketing approaches, production volumes, experience with sales to hospitals with contract food service, experience selling their products via distributors, and more. We also conducted an updated version of the 2012 survey to capture additional information from producers who had not completed the survey in 2012.
The advisory committee for the project also continued its bi-monthly calls. In 2013, the team learned about models of distribution in Wisconsin lessons from the closure of the Producer and Buyers Co-op in northwestern Wisconsin; and the operations of the Fifth Season Co-op. The committee also held “wrap up” discussions about lingering concerns, next steps and opportunities, and gave input on drafts of the final reports and tool kit. The group also had two in-person gatherings, one in May for learning and discussion, and a December 2013 final wrap-up meeting.
With input from both the hospital partners and advisory committee members, we also made substantial progress in creating public-facing resource materials to communicate the lessons learned from our work. Three key resources (to be finalized in early 2014) include a farmer-focused report, a hospital-focused report, and a tool kit aimed at both farmers and hospitals that can be used to implement the suggestions from the reports.
The following some of the key conclusions from the project:
There is ample evidence that hospitals throughout the north central region—Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin—are interested in buying food and beverages produced by sustainable farmers/producers.
In addition, hospitals have the potential to yield many benefits for themselves, their patients and staff, and rural communities both near and far including but not limited to:
- Increased patient and employee satisfaction
- Improved public image
- Reduced farm worker exposure to health-threatening chemicals
- Improved rural water quality
- Improved soil health
- Reduced use of antibiotics for routine, nontherapeutic agricultural purposes
- Improved economic health for rural communities
This long-term potential market is significant. In the near-term however, the potential market is much smaller. How much smaller depends on many of the factors, but especially the following:
- Whether a hospital has made and strictly adheres to a percentage-based purchasing commitment that limits or discourages non-prime vendor purchases.
- Whether a hospital uses a food service contractor who prohibits direct purchase of products from farms or has onerous requirements for becoming an approved vendor that effectively bar most interested sustainable farmers/producers from selling to a hospital with contractor-managed food service.
- The percentage of a hospital’s food and beverage budget that is spent on highly processed and pre-made convenience items and beverages such as coffee, tea, juice, soda, etc.
Given the current realities of the hospital market, farmers/producers are encouraged to take several steps to increase their potential to make sales to hospitals in the near-term, including but not limited to:
- Targeting potential hospital customers based on the best fit between a farm’s production capacity and the size of the institution. For example, keeping in mind that about 50 percent of north central region hospitals are in rural areas. Most of those hospitals have 25 staffed beds or less and even lower numbers of actual patients throughout the year.
- Being proactive about addressing potential food safety concerns. Know the local, state, and federal rules and regulations for sales in-state and across state lines and even go beyond regulatory requirements, as feasible, to increase hospital confidence in products, e.g., developing an on-farm food safety plan or, if selling fresh produce, completing a USDA Good Agricultural Practices (GAPs) training program and maintaining a copy of the certificate of completion.
- Being proactive in education and marketing to hospitals. Assure that the farm/operation website and other marketing resources include information on steps taken to address food safety, such as training, food safety plans, how and where food items are processed, e.g., state-inspected plant, USDA-inspected plant, licensed commercial kitchen; include information on any products the farm/operation is particularly interested in selling to hospitals and who they should contact to set up a meeting and/or farm tour; highlight low-prep and food-prep neutral items that can be more easily incorporated into hospital food service and keep their need for additional labor, equipment, etc.
In 2014, we will conclude the project by finalizing the public-facing reports and resources, holding two informational webinars to share the results of our project, and hosting a final gathering of project participants and advisory committee members.
Impacts and Contributions/Outcomes
In 2013, the primary impact of the project has been on direct participants. Both the farmer and hospital participants report increased knowledge about farm-to-hospital sales and procurement. We expect to see the greatest impact on sales volumes in the months and years following the release of our public-facing resource materials. A number of our producers on the Advisory Committee have expanded their Farm to School efforts. For example, one is now currently working with a group of people from the University of Wisconsin at River Falls on developing a local Food Hub that will include hospitals and other commercial instructions in Western Wisconsin.
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