VA Health Care: Laundry Service Operations and Costs (Letter Report,
12/21/1999, GAO/HEHS-00-16).

Pursuant to a congressional request, GAO provided information on the
Department of Veteran Affairs' (VA) laundry support services, focusing
on: (1) the type and volume of laundry service VA provides; (2) how VA
provides laundry services; (3) the cost VA incurs; and (4) the revenue
VA generates from selling laundry services.

GAO noted that: (1) VA's 210 Health Care Delivery Locations (HCDL)
generated nearly 159 million pounds of laundry in fiscal year (FY) 1998;
(2) most of VA's laundry services involved the routine cleaning of
textiles, although some also included specialized work, such as
laundering operating room textiles and uniforms and making textile
repairs; (3) the amount of laundry that HCDLs used varied greatly among
locations, ranging from 116 pounds at a small outpatient clinic to
nearly 3 million pounds at a large health care facility; (4) 68 VA-owned
and VA-operated laundries processed 91 percent (145 million pounds) of
VA HCDLs' total laundry poundage; (5) laundries varied in the amount of
pounds processed, with the larger facilities serving multiple HCDLs; (6)
private vendors operating VA-owned laundries or vendor-owned laundries
processed about 9 percent (14 million pounds) of VA's laundry poundage;
(7) in FY 1998, VA spent about $78 million on laundry services; (8) of
this cost, 89 percent was for VA-operated laundries that employed a
total of 1,462 full-time-equivalent employees; (9) the other 11 percent
was for services that vendor-operated laundries provided; (10) VA's
average total cost per pound to process laundry was 50 cents, but VA's
unit costs varied from 23 cents to $1.04 per pound; (11) since 1982, VA
also incurred modernization costs totalling nearly $256 million for its
laundries; (12) 36 VA laundries also sold laundry service to 74 non-VA
customers, primarily other public agencies; (13) VA laundries processed
almost 11 million pounds for non-VA organizations in FY 1998, generating
nearly $4 million in gross revenue while incurring costs of about $3.7
million; (14) more than half of the non-VA customers were federal
facilities such as Department of Defense installations and federal
prisons; and (15) the others were state and local, private nonprofit,
and private for-profit organizations.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-00-16
     TITLE:  VA Health Care: Laundry Service Operations and Costs
      DATE:  12/21/1999
   SUBJECT:  Veterans hospitals
	     Health services administration
	     Veterans benefits
	     Patient care services
	     Cost analysis
IDENTIFIER:  VA Veterans Integrated Service Network

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Cover
================================================================ COVER

Report to the Chairman, Subcommittee on Oversight and Investigations,
Committee on Veterans' Affairs, House of Representatives

December 1999

VA HEALTH CARE - LAUNDRY SERVICE
OPERATIONS AND COSTS

GAO/HEHS-00-16

VA Laundry Service

(406167)

Abbreviations
=============================================================== ABBREV

  DOD - Department of Defense
  FTEE - full-time-equivalent employee
  HCDL - Health Care Delivery Location
  VA - Department of Veterans Affairs
  VISN - Veterans Integrated Service Network

Letter
=============================================================== LETTER

B-283006

December 21, 1999

The Honorable Terry Everett
Chairman
Subcommittee on Oversight and Investigations
Committee on Veterans' Affairs
House of Representatives

Dear Mr.  Chairman: 

The Department of Veterans Affairs (VA) health care system requires a
number of nonclinical services, such as food services, laundry, and
housekeeping, to support the delivery of clinical care.  About
one-third of VA's health budget is spent on support services. 
Because support services make up a large share of health care
operating expenses, one focus of health care systems in the 1990s was
on reinventing the way they provided support services within their
overall efforts to increase the efficiency of health care delivery. 
Health care systems have used a variety of methods to increase
efficiency, such as consolidating services, changing technology, and
outsourcing services. 

VA provides many of these support services to inpatients.  VA spent
approximately $8.4 billion on inpatient services--which included
clinical and support services--for about 650,000 inpatients admitted
to its facilities in fiscal year 1998.  VA provides inpatient health
care in 175 locations in its hospitals, nursing homes, and
domiciliaries.\1

You have expressed concern that VA may not have focused adequately on
increasing the efficiency of services that support its delivery of
patient care.  To address this concern, you asked us to develop a
body of work providing baseline data on major VA support services and
assessing options for increasing their efficiency.  This is the
second report in a series on VA support services; the first report
described VA food service operations.\2 As requested, this report
provides fiscal year 1998 baseline information on (1) the type and
volume of laundry service VA provides, (2) how VA provides laundry
services, (3) the cost VA incurs, and (4) the revenue VA generates
from selling laundry services.  We will examine options for
increasing the efficiency of VA laundry services in a subsequent
review. 

To perform our work, we interviewed VA headquarters officials,
conducted site visits with local VA officials and telephone
interviews with officials from all 22 Veterans Integrated Service
Networks (VISN), and surveyed VA officials who were associated with
laundry operations at local VA facilities.  Through this survey, we
identified 210 VA Health Care Delivery Locations (HCDL) that required
laundry service, including hospitals, nursing homes, domiciliaries,
outpatient clinics, or some combination of these types of facilities. 
See appendix I for a complete description of our scope and
methodology.  We performed our work between May 1999 and October 1999
in accordance with generally accepted government auditing standards. 

--------------------
\1 A VA domiciliary is a residential rehabilitation and health
maintenance center for veterans who do not require hospital or
nursing home care but are unable to live independently because of
medical or psychiatric disabilities. 

\2 VA Health Care:  Food Service Operations and Costs at Inpatient
Facilities (GAO/HEHS-00-17, Nov.  19, 1999). 

   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

VA's 210 HCDLs generated nearly 159 million pounds of laundry in
fiscal year 1998.  Most of VA's laundry services involved the routine
cleaning of textiles, although some also included specialized work,
such as laundering operating room textiles and uniforms and making
textile repairs.  The amount of laundry that HCDLs used varied
greatly among locations, ranging from 116 pounds at a small
outpatient clinic to nearly 3 million pounds at a large health care
facility. 

Sixty-eight VA-owned and VA-operated laundries processed 91 percent
(145 million pounds) of VA HCDLs' total laundry poundage.  Laundries
varied in the amount of pounds processed, with the larger facilities
serving multiple HCDLs.  Private vendors operating VA-owned laundries
or vendor-owned laundries processed about 9 percent (14 million
pounds) of VA's laundry poundage. 

In fiscal year 1998, VA spent about $78 million on laundry services. 
Of this cost, 89 percent was for VA-owned and VA-operated laundries
that employed a total of 1,462 full-time-equivalent employees (FTEE). 
The other 11 percent was for services that vendor-operated laundries
provided.  VA's average total cost per pound to process laundry was
50 cents, but VA's unit costs varied from 23 cents to $1.04 per
pound.  Since 1982, VA also incurred modernization costs totaling
nearly $256 million for its laundries. 

Thirty-six VA laundries also sold laundry service to 74 non-VA
customers, primarily other public agencies.  VA laundries processed
almost 11 million pounds for non-VA organizations in fiscal year
1998, generating nearly $4 million in gross revenue while incurring
costs of about $3.7 million.  More than half of the non-VA customers
were federal facilities such as Department of Defense (DOD)
installations and federal prisons.  The others were state and local,
private nonprofit, and private for-profit organizations. 

   BACKGROUND
------------------------------------------------------------ Letter :2

VA's health care delivery locations include hospitals, nursing homes,
domiciliaries, outpatient clinics, or some combination of these
facilities.  Overall, VA operates 172 hospitals, 131 nursing homes,
and 40 domiciliaries.  Over the past decade, VA has dramatically
decreased inpatient hospital care by about 58 percent, most of the
decline in the past 3 years.  At the same time, VA increased its
emphasis on outpatient care by establishing community-based clinics
and increasing outpatient care at its existing delivery locations. 
The downsizing of inpatient care has created additional pressures to
minimize the costs of support services because fewer patients need
these services in most locations.\3

As a support service, VA laundries provide clean laundry for VA
patients in a variety of settings.  The volume of services can be as
little as laundering an examination gown for an outpatient visit to a
VA clinic to laundering bedding for pre-operation, surgical,
recovery, and patient beds and all the necessary textiles surgical
staff use in an operating room for a patient undergoing surgery. 

In fiscal year 1996, VA consolidated the management of its inpatient
delivery locations into 22 VISNs.  These VISNs are responsible for
making basic budgetary, planning, and operating decisions to meet the
health care needs of veterans within specified geographic areas. 
VISNs vary in the extent to which they delegate or direct initiatives
regarding VA laundry operations at their HCDLs. 

--------------------
\3 See VA Health Care:  Challenges Facing VA in Developing an Asset
Realignment Process (GAO/T-HEHS-99-173, July 22, 1999). 

   VA'S LAUNDRY SERVICES ARE
   PRIMARILY FOR ROUTINE CLEANING
------------------------------------------------------------ Letter :3

Routine cleaning accounts for about 70 percent of VA's total laundry
services.  VA's 210 HCDLs require laundry services primarily for the
routine cleaning of such textiles as sheets, blankets, towels, and
pajamas.  They also require cleaning for specialized items such as
operating room textiles and uniforms.  In addition, laundry locations
need services to mend damaged textiles and replace buttons and
zippers. 

Routine cleaning among VA HCDLs ranged from 116 pounds at an
outpatient clinic in Lorain, Ohio, to 2.7 million pounds at a large
medical center in Houston, Texas.  The average amount of laundry
generated by HCDLs was about 757,000 pounds, with most HCDLs totaling
less than 1 million pounds, as shown in figure 1. 

   Figure 1:  Pounds of Laundry VA
   HCDLs Generated in Fiscal Year
   1998

   (See figure in printed
   edition.)

   VA-OPERATED LAUNDRIES SERVED
   MOST DELIVERY LOCATIONS
------------------------------------------------------------ Letter :4

In fiscal year 1998, 68 VA-owned and VA-operated laundries served
most of VA's HCDLs, but two other types of laundries also served
HCDLs.  VA owned 3 laundries whose space and equipment contractors
used to process laundry onsite, while 13 off-site contractor-owned
and contractor-operated laundries also processed laundry for HCDLs. 

      VA OWNS AND OPERATES 68
      LAUNDRIES
---------------------------------------------------------- Letter :4.1

The 68 VA-owned and VA-operated laundries provided 91 percent of VA's
laundry service in fiscal year 1998.  These laundries are widely
dispersed throughout the country (see figure 2). 

   Figure 2:  Locations of 68
   VA-Owned and VA-Operated
   Laundries in Fiscal Year 1998

   (See figure in printed
   edition.)

   (See figure in printed
   edition.)

Amounts of processed laundry ranged from about 270,000 pounds in
Grand Junction, Colorado, to approximately 11.4 million pounds in St. 
Albans, New York.  More than half of VA-operated laundries processed
2 million pounds or less (see figure 3). 

   Figure 3:  Pounds of Laundry
   Processed at VA-Owned and
   VA-Operated Laundries in Fiscal
   Year 1998

   (See figure in printed
   edition.)

Almost two-thirds of VA-owned and VA-operated laundries serve between
two and nine HCDLs.  Twenty-six VA-operated laundries serve a single
HCDL.  (See figure 4.)

   Figure 4:  Number of HCDLs
   VA-Owned and VA-Operated
   Laundries Served in Fiscal Year
   1998

   (See figure in printed
   edition.)

The laundry in St.  Albans, New York, is the largest that serves two
or more HCDLs.  In fiscal year 1998, the St.  Albans laundry served
all nine of the major health care facilities in VISN 3.  The farthest
that the St.  Albans facility transported laundry was the 65 miles to
Castlepoint, New York, the roundtrip driving time taking
approximately 3 hours. 

Several VA laundries that serve only one HCDL are hundreds of miles
away from any other HCDL.  For example, the HCDL nearest to
Albuquerque, New Mexico, is El Paso, Texas, and the distance between
the two is 263 miles. 

Most laundries that served one location processed less than 1 million
pounds of laundry in fiscal year 1998, whereas most laundries that
served more than one location processed more than 3 million pounds
(see figure 5). 

   Figure 5:  Pounds of Laundry
   Processed for Single HCDLs and
   Multiple HCDLs in Fiscal Year
   1998

   (See figure in printed
   edition.)

The size of VA laundry facilities varied from about 3,300 square feet
in Fort Harrison, Montana, to 71,000 square feet in Hines, Illinois. 
Of the 68 VA-owned and VA-operated laundries, 52 are located in a
separate structure near the main health care delivery building.  The
remaining 16 occupy space within the main health care building. 

VA-owned and VA-operated laundries employed 1,462 FTEEs in fiscal
year 1998.  All wage rate employees were represented by unions and
received hourly wages from $5.25 to $22.65.  The number of FTEEs
ranged from 4 at the laundry in Iron Mountain, Michigan, to 78 in St. 
Albans, New York.  The average number of FTEEs employed by
VA-operated laundries was 21. 

      VA OWNS THREE LAUNDRIES THAT
      CONTRACTORS OPERATED
---------------------------------------------------------- Letter :4.2

In fiscal year 1998, VA owned three laundries in which contractors
provided production labor and used VA's laundry facility and
equipment.  These laundries provided about 3.6 percent of VA's
service.  The one in Battle Creek, Michigan, was the largest,
processing a total of about 2.8 million pounds for four HCDLs.  The
laundries in Albany and Bath, New York, processed nearly 2.2 million
and about 729,000 pounds, respectively. 

      VA USED 13 LAUNDRIES THAT
      CONTRACTORS OWNED AND
      OPERATED
---------------------------------------------------------- Letter :4.3

VA contracted with 13 commercial laundries to provide laundry service
offsite for 21 HCDLs in fiscal year 1998.  These commercial laundries
provided about 5.8 percent of VA's laundry services.  The largest
amount of laundry processed by a contractor was in Palo Alto,
California--about 2.6 million pounds for five HCDLs.  The Anchorage,
Alaska, domiciliary had the smallest amount processed by a
contractor--nearly 19,000 pounds.  In fiscal year 1998, the HCDLs
that contracted out laundry services were located primarily in the
western part of the United States (see figure 6). 

   Figure 6:  Locations of the 21
   HCDLs That Contracted Out
   Laundry Services in Fiscal Year
   1998

   (See figure in printed
   edition.)

   (See figure in printed
   edition.)

   VA-OPERATED LAUNDRIES ACCOUNTED
   FOR THE MAJORITY OF COSTS
------------------------------------------------------------ Letter :5

In fiscal year 1998, VA spent about $78 million to meet its annual
operating costs for laundry services and employed a total of 1,497
FTEEs.  VA spent $70.4 million to provide services at laundries it
owns and operates with production costs--direct and administrative
labor, supplies, and utilities--accounting for the majority of VA's
laundry expenditures.  Additionally, VA spent $8 million at
contractor-operated laundries, including three that VA owned.  The
total cost per pound to process laundry at VA-operated laundries
ranged from 23 cents to $1.04 per pound, while the cost per pound at
contractor-operated laundries ranged from 36 cents to $1.01.  Since
1982, VA has incurred modernization costs totaling about $256 million
to equip, renovate, or construct new laundry facilities or do some
combination of these.  (See figure 7 for the percentage of costs
accounted for by the three types of laundries.)

   Figure 7:  Percentages of Total
   Laundry Costs by Type of
   Laundry in Fiscal Year 1998

   (See figure in printed
   edition.)

      VA'S COSTS TO OWN AND
      OPERATE 68 LAUNDRIES
---------------------------------------------------------- Letter :5.1

Annual operating costs for VA-owned and VA-operated laundries totaled
$70.4 million in fiscal year 1998.  Operating costs covered four
primary functions:  (1) production, (2) distribution, (3)
procurement, and (4) equipment maintenance and repair.  Production
accounted for the majority of operating costs.  (See figure 8.)

   Figure 8:  Percentages of
   Laundry Facility Operating
   Costs by Function in Fiscal
   Year 1998

   (See figure in printed
   edition.)

VA's production costs included all costs that were directly related
to processing laundry:  direct and administrative labor, supplies,
and utilities.  Production costs for VA-operated laundries totaled
almost $43 million.  Of this amount, direct labor accounted for 62
percent and involved 965 FTEEs. 

VA's laundry distribution costs totaled slightly more than $10.4
million, which consisted of external transportation and internal
distribution.  External transportation is the shipment of soiled
laundry from an HCDL to the laundry plant and the shipment of the
clean laundry back to the HCDL.  External transportation costs
include FTEEs' salaries, vehicle leases and purchases, fuel, and
vehicle maintenance and repair and totaled approximately $4.5 million
in 1998.  Internal distribution costs include the number of FTEEs
required to collect soiled laundry and distribute the clean laundry
within the HCDLs.  In total, 204 FTEEs distributed laundry at an
annual cost of $5.9 million. 

VA laundry service also incurs procurement costs primarily for
purchasing new textiles.  Procurement costs at VA-operated laundries
totaled nearly $12.9 million, of which 89 percent was spent to
purchase new textiles.  Thirty-nine FTEEs repaired damaged textiles
at a cost of $1.2 million. 

VA's equipment maintenance and repair costs totaled $4.2 million at
VA-operated laundries.  A total of 58 FTEEs maintained and repaired
VA's laundry equipment at an annual cost of nearly $2.4 million. 

The total cost per pound at VA-owned and VA-operated laundries ranged
from 23 cents in Buffalo, New York, to $1.04 in Big Springs, Texas. 
In fiscal year 1998, the Buffalo facility employed 14 direct labor
FTEEs to process nearly 3.4 million pounds of laundry, while the Big
Springs facility employed 6 direct labor FTEEs to process about
300,000 pounds.  The ratio of direct labor FTEEs to pounds processed
in a year was 1 to nearly 240,000 in Buffalo and 1 to about 50,000 in
Big Springs.  Overall, total costs averaged 50 cents per pound at
VA-operated facilities.  (See figure 9 for the total cost per pound
at VA-owned and VA-operated laundries.)\4

   Figure 9:  Laundry Costs per
   Pound at VA-Owned and
   VA-Operated Laundries in Fiscal
   Year 1998

   (See figure in printed
   edition.)

--------------------
\4 Appendixes II and III provide additional information regarding the
68 VA-owned and VA-operated laundries. 

      VA'S COSTS FOR THE THREE
      VA-OWNED AND
      CONTRACTOR-OPERATED
      LAUNDRIES
---------------------------------------------------------- Letter :5.2

In fiscal year 1998, three VA-owned and contractor-operated laundry
facilities in Battle Creek, Michigan, Albany, New York, and Bath, New
York, incurred total operating costs of about $2.7 million.  Of these
costs, approximately $1.3 million, slightly less than half, were
solely for laundry production the contractors performed.  VA spent
the remaining $1.4 million for oversight, supplies and utilities,
distribution of laundry, procurement of textiles, and maintenance and
repair of laundry equipment.  The total cost for laundry service was
36, 54, and 55 cents per pound in Albany, Bath, and Battle Creek,
respectively. 

The Battle Creek laundry, which provided laundry service for Battle
Creek, Ann Arbor, Detroit, and Saginaw, Michigan, HCDLs, had total
laundry operating costs of approximately $1.5 million to process 2.8
million pounds.  The Albany, New York, laundry facility, which
provided laundry service to the Albany HCDL only, incurred total
operating costs of approximately $795,000 to process 2.2 million
pounds.  The Bath, New York, laundry facility, which provided laundry
service only to the Bath HCDL, incurred total laundry operating costs
of approximately $392,000 to process almost 729,000 pounds. 

The Battle Creek laundry facility contracted with a nonprofit entity
to process its laundry while Albany and Bath contracted with
for-profit organizations.  All three contracts were based on a
negotiated price per pound.  The contract costs amounted to
approximately $453,000, $137,000, and $690,000 for the Albany, Bath,
and Battle Creek facilities, respectively. 

Since all three facilities process laundry onsite, VA incurred
additional operating costs for equipment maintenance and repair,
utilities, and procurement of textiles that the contractor did not
provide.  These costs amounted to $342,000, $254,000, and $840,000
for Albany, Bath, and Battle Creek, respectively.  VA incurred
slightly more than half of the total laundry costs.  All three
facilities retained a total of 10.4 FTEEs to provide services not
covered by their contracts. 

      VA'S COSTS FOR
      CONTRACTOR-PROVIDED LAUNDRY
      SERVICE
---------------------------------------------------------- Letter :5.3

In fiscal year 1998, 21 HCDLs purchased services from 13 commercial
laundries, paying about $3.4 million to contractors and incurring
almost $1.9 million in additional VA operating costs.  Contract costs
accounted for approximately two-thirds of total costs.  Services that
contractors provided varied widely.  For example, contractors
transported laundry to and from the facilities for 18 of the 21
HCDLs. 

Most contracts did not include a provision for contractors to
distribute laundry at the HCDL or to procure new textiles.  As a
result, VA provided these and other services at a total cost of about
$1.9 million.  VA staff engaged in these activities totaled about
25.3 FTEEs in 1998.  The total cost per pound for HCDLs served by
contractor-owned and contractor-operated laundries ranged from 39
cents per pound in San Francisco, California, to $1.01 per pound at
the Anchorage, Alaska, domiciliary.  Of the 21 HCDLs that contracted
out for laundry services, 11 had contracts that calculated laundry
costs by the pound.  Ten HCDLs entered into contracts in which
laundry costs were calculated from a fixed price, from a combination
of a fixed price and price per pound, or by the piece. 

      VA'S COSTS INCURRED FROM
      MODERNIZING ITS LAUNDRIES
---------------------------------------------------------- Letter :5.4

In addition to its annual operating costs, VA made significant
capital investments to modernize its laundries.  The laundry
modernization program that VA began in 1982 cost a total of $256
million.  Construction costs totaled $120 million, and equipment
costs amounted to $106 million.  Associated central office support
costs amounted to about $30 million.  Support that the central office
provided included managing project development, prioritizing funding,
providing equipment funding, preparing specifications, and serving as
project manager for the National Acquisition Center. 

In fiscal year 1998, Battle Creek's laundry, one of the more recent
projects, was modernized at a cost of $7.1 million dollars.  It cost
VA $1.9 million dollars to purchase and renovate the building where
the laundry is located and another $5.2 million for new equipment. 
According to Battle Creek officials, the useful life expectancy of
the equipment is about 15 years. 

   VA GENERATES REVENUE BY SELLING
   LAUNDRY SERVICE TO NON-VA
   CUSTOMERS
------------------------------------------------------------ Letter :6

In fiscal year 1998, 36 VA laundries sold laundry service to 74
non-VA customers.  (See appendix IV for summary information about the
36 VA laundries that sell service to non-VA customers.) Gross revenue
amounted to approximately $4 million, with processing costs totaling
$3.7 million, resulting in net revenue of about $300,000.  Gross
revenue generated by VA laundries varied from $255 in Fort Lyon,
Colorado, to $992,000 in Richmond, Virginia. 

At the 36 laundries that sold services in fiscal year 1998, 11.5
percent of pounds processed was for non-VA customers and 88.5 percent
was for VA customers.  VA sold laundry service to federal, state,
local, and private entities.  Of the 74 contracts with non-VA
customers, 13 involved competitive bids and 61 did not.  About half
of the 61 contracts that were not competitively bid were the result
of VA and DOD sharing agreements, and the rest combined other types
of arrangements.  Slightly more than half of these non-VA customers
were federal facilities such as DOD installations and federal
prisons, as figure 10 shows. 

   Figure 10:  Percentages of
   Non-VA Laundry Contracts in
   Fiscal Year 1998

   (See figure in printed
   edition.)

   AGENCY COMMENTS
------------------------------------------------------------ Letter :7

In a November 29, 1999, letter printed in appendix V, VA said that
our report provides an accurate description of laundry service
delivery in the Veterans Health Administration.  VA also provided
technical comments that we incorporated as appropriate. 

---------------------------------------------------------- Letter :7.1

As we arranged with your office, unless you publicly announce the
contents of this report earlier, we plan no further distribution of
it until 30 days after its date.  We will then send copies to the
Secretary of Veterans Affairs, interested congressional committees,
and others who are interested.  We will also make copies of the
report available to others upon request. 

If you have any questions about the report, please call me at (202)
512-7101 or Paul R.  Reynolds, Assistant Director, at (202) 512-7109. 
Other major contributors to this report were Jean N.  Harker, Senior
Evaluator; Michael Gorin, Evaluator; Richard Geiger, Evaluator; and
Susan Lawes, Senior Social Science Analyst. 

Sincerely yours,

Stephen P.  Backhus
Director, Veterans' Affairs and
 Military Health Care Issues

SCOPE AND METHODOLOGY
=========================================================== Appendix I

We focused our work on the Department of Veterans Affairs (VA)
laundry operations for fiscal year 1998 in order to provide baseline
information on (1) the type and volume of laundry service that VA
provides, (2) how VA provides laundry services, (3) the cost VA
incurs, and (4) the revenue VA generates from selling laundry
services. 

To obtain this information, we interviewed VA headquarters officials
in the Environmental Program Service and Facilities Management
Service.  We obtained documents from VA headquarters officials on
VA's textile care program, its laundry modernization efforts, the
locations of laundry facilities, and the different ownership
categories of laundries. 

We obtained information about specific locations through site visits,
interviews, a telephone survey, and a mail survey to VA officials who
were associated with laundry operations.  We also interviewed private
sector laundry contractors.  We visited and interviewed officials at
Richmond, Virginia, Battle Creek, Michigan, and Denver, Colorado, VA
laundry facilities.  We obtained relevant documents on the laundry
operations at these site visits.  We visited and interviewed a
laundry contractor for the Denver Health Care Delivery Location
(HCDL) and interviewed by telephone another laundry contractor for
the Palo Alto, San Francisco, and Martinez HCDLs in California. 

The telephone survey of officials from all 22 Veterans Integrated
Service Networks (VISN) identified health care delivery locations
that required laundry service.  From this information, we prepared
and sent a mail survey to 68 VA-owned and VA-operated laundries, 3
VA-owned and contractor-operated laundries, and 16 VA contract
specialists that represent the 21 HCDLs served by 13 contractor-owned
and contractor-operated laundries.  We obtained data from the survey
on the type and volume of laundry service VA provides, how VA
provides this service, the cost VA incurs, and the revenue VA
generates from selling laundry service.  We analyzed and summarized
data categories such as pounds processed, total costs, and revenue
generated for fiscal year 1998.  We compared data from the facilities
in order to establish high and low ranges.  We examined the data as
we received them and conducted followup telephone calls when we found
discrepancies and inconsistencies. 

We performed our review between May 1999 and October 1999 in
accordance with generally accepted government auditing standards. 

68 VA-OWNED AND VA-OPERATED
LAUNDRIES
========================================================== Appendix II

                                             Total pounds       Number of  Total cost per
Laundry                    State                processed    HCDLs served           pound
-------------------------  --------------  --------------  --------------  --------------
Albuquerque VAMC           N. Mex.                908,808               1           $0.67
                           La.                  1,527,241               3            0.69
 Alexandria VAMC
Asheville VAMC             N.C.                 1,082,075               1            0.59
Augusta VAMC               Ga.                  6,148,110               5            0.49
Bay Pines VAMC             Fla.                 3,644,281               2            0.37
Big Springs VAMC           Tex.                   299,539               1            1.04
Biloxi VAMC                Miss.                5,151,537               6            0.35
Boise VAMC                 Idaho                  451,824               1            0.52
Brockton VAMC              Mass.                6,560,796               9            0.42
Buffalo Division           N.Y.                 3,358,110               2            0.23
Canandaigua VAMC           N.Y.                 2,157,399               2            0.46
Clarksburg VAMC            W. Va.                 600,000               1            0.47
Cleveland HCS              Ohio                 1,761,996               7            1.00
Dallas VAMC                Tex.                 2,528,435               3            0.44
Dayton VAMC                Ohio                 3,161,183               4            0.48
Erie VAMC                  Pa.                    945,503               1            0.45
Fargo VAMROC               N. Dak.                740,325               1            0.44
Fayetteville VAMC          Ark.                   686,997               2            0.64
Fayetteville VAMC          N.C.                 2,058,096               1            0.39
Fort Harrison VAMROC       Mont.                  280,850               1            0.82
Fort Lyon HCS              Colo.                  572,041               1            0.58
Fort Meade VAMC            S. Dak.                950,381               2            0.41
Fresno HCS                 Calif.                 393,690               1            0.68
Grand Island VAMC          Nebr.                  627,174               2            0.38
Grand Junction VAMC        Colo.                  270,178               1            0.66
Hines VAH                  Ill.                 3,301,808               3            0.44
Houston VAMC               Tex.                 2,745,911               3            0.40
Huntington VAMC            W. Va.                 729,174               2            0.43
Iron Mountain VAMC         Mich.                  316,829               1            0.60
Kerrville VAMC             Tex.                 2,755,074               7            0.39
Knoxville Division         Iowa                 3,050,992               4            0.47
Lake City Division         Fla.                 2,708,491               6            0.31
Leavenworth VAMC           Kans.                2,808,612               4            0.46
Lebanon VAMC               Pa.                    857,788               2            0.68
Little Rock VAH            Ark.                 3,905,166               2            0.54
Louisville VAMC            Ky.                  1,537,487               2            0.60
Madison VAH                Wis.                 3,127,783               3            0.43
Marion Campus              Ind.                 2,662,157               3            0.36
Martinsburg VAMC           W. Va.               1,005,079               3            0.83
Milwaukee VAMC             Wis.                 3,973,525               3            0.44
Minneapolis VAMC           Minn.                2,716,965               1            0.52
Mountain Home VAMC         Tenn.                1,500,000               1            0.48
Mufreesboro VAMC           Tenn.                2,349,619               3            0.31
Northhampton VAMC          Mass.                1,580,020               2            0.36
Oklahoma City VAMC         Okla.                1,066,475               1            0.51
Perry Point VAMC           Md.                  5,162,798               4            0.57
Phoenix VAMC               Ariz.                2,722,388               3            0.45
Pittsburgh HCS             Pa.                  6,372,277               7            0.45
Portland VAMC              Oreg.                1,997,355               1            0.36
Reno VAMC                  Nev.                   532,223               1            0.64
Richmond VAMC              Va.                  5,176,184               2            0.46
Roseburg HCS               Oreg.                1,469,564               4            0.49
Salem VAMC                 Va.                  1,551,260               1            0.49
Salisbury VAMC             N.C.                 2,368,776               2            0.46
Salt Lake City VAMC        Utah                   965,588               1            0.46
San Juan VAMC              P. R.                2,465,373               3            0.26
Sheridan VAMC              Wyo.                   384,617               1            0.68
Sioux Falls VAMC           S. Dak.                997,103               1            0.27
Spokane VAMC               Wash.                  586,644               1            0.43
St. Albans Extended Care   N.Y,                11,353,047               9            0.37
 Center
St. Cloud VAMC             Minn.                1,083,939               1            0.54
St. Louis VAMC             Mo.                  3,305,727               4            0.61
Togus VAMROC               Maine                  971,172               1            0.41
Tuscaloosa VAMC            Ala.                 2,580,361               4            0.64
Waco VAMC                  Tex.                 2,897,905               4            0.31
Walla Walla VAMC           Wash.                  361,190               1            0.56
West Los Angeles VAMC      Calif.               5,160,816               6            0.51
West Palm Beach VAMC       Fla.                 3,838,411               5            0.25
-----------------------------------------------------------------------------------------

Appendix III VA LAUNDRY OPERATING
COSTS PER POUND BY FUNCTION
========================================================== Appendix II

                                                                                    Total
                                                                   Maintenanc   operating
                                           Distributi  Procuremen       e and    cost per
Laundry            State       Production          on           t      repair       pound
-----------------  ----------  ----------  ----------  ----------  ----------  ----------
Albuquerque VAMC   N. Mex.          $0.33       $0.15       $0.14       $0.04       $0.67
Alexandria VAMC    La.               0.37        0.24        0.07        0.01        0.69
Asheville VAMC     N.C.              0.36        0.11        0.09        0.04        0.59
Augusta VAMC       Ga.               0.26        0.06        0.13        0.04        0.49
Bay Pines VAMC     Fla.              0.20        0.04        0.12        0.01        0.37
Big Springs VAMC   Tex,              0.85        0.02        0.14        0.03        1.04
Biloxi VAMC        Miss.             0.24        0.04        0.05        0.02        0.35
Boise VAMC         Idaho             0.35        0.05        0.05        0.07        0.52
Brockton VAMC      Mass.             0.24        0.05        0.10        0.03        0.42
Buffalo Division   N.Y.              0.16        0.02        0.03        0.02        0.23
Canandaigua VAMC   N.Y.              0.32        0.06        0.05        0.02        0.46
Clarksburg VAMC    W. Va.            0.28        0.05        0.08        0.07        0.47
Cleveland HCS      Ohio              0.71        0.06        0.19        0.05        1.00
Dallas VAMC        Tex.              0.25        0.06        0.09        0.04        0.44
Dayton VAMC        Ohio              0.27        0.13        0.06        0.01        0.48
Erie VAMC          Pa.               0.34        0.04        0.05        0.02        0.45
Fargo VAMROC       N. Dak.           0.27        0.05        0.10        0.02        0.44
Fayetteville VAMC  Ark.              0.36        0.12        0.13        0.02        0.64
Fayetteville VAMC  N.C.              0.31        0.04        0.03        0.02        0.39
Fort Harrison      Mont.             0.51        0.10        0.17        0.03        0.82
 VAMROC
Fort Lyon HCS      Colo.             0.45        0.05        0.03        0.04        0.58
Fort Meade VAMC    S. Dak.           0.27        0.08        0.04        0.02        0.41
Fresno HCS         Calif.            0.46        0.06        0.17        0.00        0.68
Grand Island VAMC  Nebr.             0.30        0.05        0.02        0.01        0.38
Grand Junction     Colo.             0.45        0.07        0.10        0.03        0.66
 VAMC
Hines VAH          Ill.              0.24        0.03        0.10        0.06        0.44
Houston VAMC       Tex.              0.24        0.01        0.12        0.03        0.40
Huntington VAMC    W. Va.            0.32        0.04        0.06        0.01        0.43
Iron Mountain      Mich.             0.43        0.06        0.07        0.04        0.60
 VAMC
Kerrville VAMC     Tex.              0.27        0.04        0.07        0.02        0.39
Knoxville          Iowa              0.33        0.07        0.05        0.01        0.47
 Division
Lake City          Fla.              0.26        0.03        0.01        0.01        0.31
 Division
Leavenworth VAMC   Kans.             0.24        0.11        0.07        0.05        0.46
Lebanon VAMC       Pa.               0.44        0.12        0.11        0.02        0.68
Little Rock VAH    Ark.              0.29        0.13        0.10        0.01        0.54
Louisville VAMC    Ky.               0.38        0.09        0.11        0.02        0.60
Madison VAH        Wis.              0.26        0.07        0.09        0.01        0.43
Marion Campus      Ind.              0.21        0.08        0.03        0.03        0.36
Martinsburg VAMC   W. Va.            0.58        0.03        0.15        0.08        0.83
Milwaukee VAMC     Wis.              0.27        0.08        0.06        0.03        0.44
Minneapolis VAMC   Minn.             0.35        0.08        0.06        0.03        0.52
Mountain Home      Tenn.             0.32        0.07        0.07        0.02        0.48
 VAMC
Mufreesboro VAMC   Tenn.             0.18        0.07        0.04        0.01        0.31
Northhampton VAMC  Mass.             0.27        0.03        0.03        0.03        0.36
Oklahoma City      Okla.             0.27        0.13        0.10        0.01        0.51
 VAMC
Perry Point VAMC   Md.               0.32        0.06        0.10        0.09        0.57
Phoenix VAMC       Ariz.             0.32        0.04        0.06        0.03        0.45
Pittsburgh HCS     Pa.               0.30        0.05        0.09        0.01        0.45
Portland VAMC      Oreg.             0.22        0.02        0.10        0.02        0.36
Reno VAMC          Nev.              0.43        0.06        0.08        0.08        0.64
Richmond VAMC      Va.               0.25        0.09        0.09        0.02        0.46
Roseburg HCS       Oreg.             0.34        0.08        0.07        0.00        0.49
Salem VAMC         Va.               0.24        0.15        0.08        0.02        0.49
Salisbury VAMC     N.C.              0.25        0.07        0.11        0.03        0.46
Salt Lake City     Utah              0.26        0.13        0.07        0.00        0.46
 VAMC
San Juan VAMC      P. R.             0.22        0.03        0.00        0.00        0.26
Sheridan VAMC      Wyo.              0.47        0.06        0.11        0.04        0.68
Sioux Falls VAMC   S. Dak.           0.19        0.05        0.02        0.01        0.27
Spokane VAMC       Wash.             0.27        0.07        0.08        0.01        0.43
St. Albans         N.Y.              0.20        0.05        0.09        0.03        0.37
 Extended Care
 Center
St. Cloud VAMC     Minn.             0.32        0.12        0.08        0.01        0.54
St. Louis VAMC     Mo.               0.26        0.17        0.16        0.02        0.61
Togus VAMROC       Maine             0.26        0.06        0.07        0.02        0.41
Tuscaloosa VAMC    Ala.              0.41        0.11        0.10        0.02        0.64
Waco VAMC          Tex.              0.20        0.04        0.05        0.02        0.31
Walla Walla VAMC   Wash.             0.35        0.06        0.09        0.06        0.56
West Los Angeles   Calif.            0.29        0.08        0.10        0.03        0.51
 VAMC
West Palm Beach    Fla.              0.17        0.02        0.06        0.01        0.25
 VAMC
-----------------------------------------------------------------------------------------
Note:  Some functions do not add up to the total operating cost per
pound because of rounding. 

36 VA-OWNED AND VA-OPERATED
LAUNDRIES THAT SELL LAUNDRY
SERVICE TO NON-VA CUSTOMERS
========================================================== Appendix IV

                                                           Customer
                                               --------------------------------
                                       Number                  Privat
                                           of           State       e   Private
                                     agreemen  Federa      or  nonpro       for     Gross
Laundry                    State           ts       l   local     fit    profit   revenue
-------------------------  --------  --------  ------  ------  ------  --------  --------
Albuquerque VAMC           N. Mex.          1       X                             $40,583
Alexandria VAMC            La.              2      XX                              71,285
Biloxi VAMC                Miss.            5    XXXX       X                     295,182
Brockton VAMC              Mass.            2      XX                              59,429
Buffalo Division           N.Y.             2       X       X                     120,684
Dallas VAMC                Tex.             2      XX                              85,078
Erie VAMC                  Pa.              1               X                     141,900
Fargo VAMROC               N. Dak.          3       X                        XX    24,508
Fayetteville VAMC          Ark.             1                                 X     1,980
Fayetteville VAMC          N.C.             1       X                             338,639
Fort Harrison VAMROC       Mont.            1                                 X       476
Fort Lyon HCS              Colo.            1               X                         255
Fort Meade VAMC            S. Dak.          5      XX     XXX                      26,240
Grand Island VAMC          Nebr.            1               X                      12,298
Iron Mountain VAMC         Mich.            1               X                           0
Kerrville VAMC             Tex.             2               X       X               4,874
Knoxville Division         Iowa             1                                 X     4,397
Lake City Division         Fla.             1                                 X     2,784
Little Rock VAH            Ark.             6    XXXX      XX                     109,259
Madison VAH                Wis.             2               X                 X   384,555
Martinsburg VAMC           W. Va.           2      XX                               3,172
Milwaukee VAMC             Wis.             1       X                             142,054
Minneapolis VAMC           Minn.            1               X                     158,650
Mufreesboro VAMC           Tenn.            1               X                         510
Northampton VAMC           Mass.            4     XXX       X                     196,014
Perry Point VAMC           Md.              2      XX                             120,892
Phoenix VAMC               Ariz.            1               X                     143,259
Pittsburgh HCS             Pa.              1               X                      60,950
Richmond VAMC              Va.              4    XXXX                             991,790
Roseburg HCS               Oreg.            5      XX      XX                 X   123,969
Sioux Falls VAMC           S. Dak.          2       X       X                      61,242
Spokane VAMC               Wash.            2       X                         X    93,653
St. Albans Extended Care   N.Y.             3       X              XX              39,689
 Center
Togus VAMROC               Maine            1       X                               2,403
Tuscaloosa VAMC            Ala.             2      XX                              33,537
West Palm Beach VAMC       Fla.             1                       X              30,010
-----------------------------------------------------------------------------------------

(See figure in printed edition.)Appendix V
COMMENTS FROM THE DEPARTMENT OF
VETERANS AFFAIRS
========================================================== Appendix IV

*** End of document. ***