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 (see Key Project-Related Definitions section of this report). Seventy percent of respondents to the Institute for Agriculture and Trade Policy (IATP) 2012 Sustainable Agriculture Research and Education (SARE) project Health Care Collaborator Food Service Survey believe that the purchase and use of sustainable foods is in line with the mission of their hospital.
In 2011, SARE project health care collaborators—Fairview Health Services, Hudson Hospital & Clinics, and Nutrition and Food Services (NFS), and the patient side at the VA Medical Center in St. Cloud, Minnesota spent $6.7 million dollars on food and beverages. The purchases included approximately 800,000 pounds of whole and fresh pre-processed produce, 481,000 pounds of fresh and frozen beef, pork and poultry, 64,000 pounds of cheese, 54,000 pounds of yogurt, 51,000 pounds of cottage cheese, butter, sour cream and cream cheese, 104,000 pounds of liquid eggs, 192,000 shell eggs, and 91,000 gallons of fluid milk. These eight facilities spent similar amounts in 2012.
Veterans Health Administration (VHA) Healthy Diet Guidelines support VA hospital/medical center purchase of sustainable food and beverages, and federal procurement guidelines generally encourage support of small businesses, including farms. The 37 VA hospitals/medical centers in the north central region alone spend an estimated $29.4 million or more each year on food and beverages.
In addition, 136 north central region hospitals have demonstrated their interest in supporting sustainable farmers/producers by signing the Healthy Food in Health Care (HFHC) Pledge and/or taking the Healthier Hospitals Initiative (HHI) Healthier Food Challenge. Combined, these hospitals spent an estimated $74.8 to $220.6 million on food and beverages in 2012, and averaged between $106.3 and $146.5 million, depending on whether staffed beds or average daily census is used.
Together, the 1,493 registered community hospitals, including HFHC Pledge signers and HHI Healthier Food Challenge participants, and VA hospitals/medical centers in the north central U.S. spend an estimated $718 million to 1.3 billion each year on food and beverages.
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/issues described in Section 2 of this report, 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.
Despite all this and given the current average annual sales of many of the farmers/producers interested in selling to the hospitals in their community, this information should not prevent interested sustainable farmers/producers from working to access this market. Instead, these 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 their size and the farm/operation’s size/current production capacity—keeping in mind that about 50 percent of north central region hospitals are in rural areas and 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: Knowing the local, state, and federal rules and regulations for sales in-state and across state lines and going 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: Assuring 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; highlighting 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.
Interested sustainable farmers/producers can use the IATP Sustainable Farm to Hospital Toolkit resources created through this project to help them better understand and access this market. These resources are available at www.iatp.org/farm-to-hospital.
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