What’s Cooking in Our Hospital Kitchens?

What’s cooking in our hospital kitchens? Not much if Compass Group has anything to do with it.

Compass Group has convinced the now-disbanded crown entity, Health Benefits Ltd, that outsourcing hospital food services to them nationwide will result in substantial savings for inadequately funded District Health Boards. Health Benefits Ltd in turn put pressure on District Health Boards to outsource to Compass Group. And apparently charged them for the privilege of doing so. For example Southern District Health Board will have to pay $230,000 towards the cost of developing the proposal even if it decides not to outsource.

Why? Because providing outsourced food services for largely publicly-funded institutions is Compass Group’s core business world wide. It’s how they make their money. They want to grow their business and make more money. Their 2014 annual report is titled “Creating Opportunities for Growth”. Creating shareholder value is listed as a key priority.

Auckland District Health Boards have already jumped on board. Southern District Health Board is to vote on whether to outsource to Compass on May 7th. Pressure is being put on other boards nationwide. Compass argues savings can only be maximized if every health board outsources to them.

How do they do it? The main costs are labour and food. They bulk buy at lower prices and centralize food production, then transport it largely pre-prepared and frozen around the country. The result is job losses at local and national level, and smaller food producers being locked out of the market, again at local and national level.

Whether their predicted $190 million savings over 15 years will ever eventuate is a moot point. Compass wants 15 year contracts with DHBs. Competition will have been eliminated. And how Compass economists can accurately predict the costs of providing food services over the next 15 years (for both themselves and the District Health Boards if they continued to provide them in house, for comparison) is anyone’s guess.

Words are cheap if you are not going to be held accountable. Compass Group will not and cannot be held accountable. Aside from board members with short memories, Investor State Dispute Settlement provisions in our trade treaties will see to that. Corporate profits for overseas companies will take precedence over local District Health Board’s stretched budgets.

All the markers are there to indicate outsourcing to Compass will actually increase costs to District Health Boards and to the wider community through Compass’s need to deliver increasing profits in an uncompetitive environment, job losses in kitchens, and loss of opportunities for smaller locally owned and operated suppliers. It is an ideological position marketed as a sound economic decision.