Three Michigan health systems are banding together to construct a $48 million medical laundry service center in the Northwest Goldberg neighborhood in Detroit.
Henry Ford Health System; Michigan Medicine, the University of Michigan's healthcare arm; and St. Joseph Mercy Health System, owned by Livonia-based Trinity Health, have stitched together a joint venture to build the facility, according to a Monday news release.
Construction is set to begin this spring, the release said.
The center will be operated by Detroit-based not-for-profit Metropolitan Detroit Area Hospital Services Inc., which has also run a joint laundry facility for the health systems on Oakman Boulevard on Detroit's west side, the release said.
The fate of that laundry center is undetermined at this time, Henry Ford spokesman David Olejarz confirmed in an email. The health system will likely auction off the equipment, sell and repurpose the property, he said.
All three health systems are members of MDAHS, which was established in the 1970s, the release said. Michigan Medicine joined the cooperative arrangement in February. Henry Ford, Trinity Health and Michigan Medicine will enter long-term linen supply agreements with the not-for-profit, committing to pay monthly debt service charges to the not-for-profit, according to a UM document.
"This is a win-win for Henry Ford, Michigan Medicine and St. Joe's, the city of Detroit and state of Michigan," Bob Riney, Henry Ford's president of healthcare operations and COO, said in the release. "By sharing a centralized laundry service, our partnership demonstrates how health care institutions can work together to achieve efficiencies and spur economic renewal. We're committed to doing our part to continue to reinvest in Detroit and the communities we serve throughout southeast Michigan."
The center, scheduled to be operational by spring next year, has the capacity to accommodate 78 million pounds of healthcare linens annually, the release said, and is estimated to produce "significant savings."
The new center will feature a sustainable design that includes recycled materials, eco-friendly cleaning products, as well as a wastewater heat reclamation system to minimize natural gas consumption, the release said.
The general contractor for the project is Lansing-based Granger Construction and Toronto-based IBI Group's Southfield team is the architecture firm, according to Olejarz.
The laundry portion will fill out 40% of the center, and Henry Ford will maintain ownership of the rest for future use. It will employ 180 workers, 100 of whom will be new hires. A total of 70 employees working at the current laundry center operated by MDAHS will be moved to the new location.
It costs approximately $8.5 million each year to operate UM's laundry facility on Hubbard Road, spokeswoman Mary Masson said in an email. That center processes nearly 11 million pounds of laundry each year, Tony Denton, senior vice president and COO of the U-M Health System for Michigan Medicine, said in the release.
Michigan Medicine expects to save between $400,000 and $500,000 per year, Masson said. Updating or construction of a new laundry center was estimated to cost up to $22 million, she added.
Each member of MDAHS will pay its share depending on its pro rata volume of laundry serviced. Michigan Medicine anticipates it will take up no less than 30% of the new laundry center's volume, Masson said.
St. Joe's, which spends close to $5 million each year on laundry, expects to save $200,000 per year through the collaboration, spokeswoman Laura Blodgett told Crain's.
"This kind of collaboration among health systems is a great example of how sharing services can reduce the cost of health care while improving the patient experience with high quality service," Rob Casalou, president and CEO, Trinity Health Michigan Region, said in the release. "We are excited to build one of the largest shared healthcare laundry facilities in the country here in Detroit, together with our fellow health systems."
The 105,000-square-foot center will sit on 10 acres of industrial property at 1150 Elijah McCoy Drive in Detroit, which was acquired by Henry Ford in 2017, the release said.
City records show the property was purchased from Caraco Pharmaceutical Labs Ltd. for $5.85 million in June 2017. The drugmaker closed its facility in June 2014, Crain's reported.
Talks surrounding the collaboration stretch back to 2016 as a result of outdated equipment and high costs associated with constructing a medical laundry facility alone. Michigan Medicine's board of regents approved the switch to the Detroit facility in February, the release said.
"Three health systems to build $48M medical laundry center in Detroit" originally appeared in Crain's Detroit Business.