Core versus non-core business at Barwon Health

It seems that the only news coming out of Geelong these days is businesses closing their doors – and a recent piece from the ABC was just another story about job losses – this time at the Geelong Hospital.

Geelong Hospital

The story starts off:

Regional Victoria’s largest health service, Barwon Health will close its in-house laundry, LinenCare, costing nearly 100 jobs, staff were notified on Friday morning.

Barwon Health blamed the age of the facility for the closure:

In a statement, Barwon Health spokesman Perry Muncaster said the organisation could not justify the $11 million needed to upgrade and modernise the facility in order to continue operations.

“The reality is that it is very hard for a health service like ours to justify millions of dollars of investment in the laundry ahead of clinical facilities and equipment,” he said.

Barwon Health has operated LinenCare since 1965 and cleans around 51 tons of laundry per week.

And claimed that running a laundry was not their core business.

“However, following an exhaustive review of options, we are confident that closing LinenCare is the most responsible decision in the circumstances, particularly given our core commitment to deliver the best possible health services for the people of Geelong.”

The article then mentions that the laundry service will be outsourced to Ballarat Health Services.

In case you didn’t know, the Ballarat Health Services’ core business is also providing health services – it is the equivalent of Barwon Health, but one hour up the Midland Highway!

It seems a little odd for an organisation to be divesting itself of a function due to it being ‘non core’, only to outsource it to another organisation which is in exactly the same position.


Eureka Linen Service is the business unit of Ballarat Health Services that Barwon Health are outsourcing their laundry to – by the looks of it, they have already branched out to serve other health providers, and upgraded their facility to reduce water usage.

Each week the plant processes 44 tonnes of linen (the equivalent of one tonne for each staff member) and believes it can achieve greater tonnages while saving water.

Eureka Linen provides a linen service to Ballarat Health Services and generates a surplus income for BHS from supplying linen to other health care and hospitality facilities.
Eureka Linen currently services facilities between Birchip (in Victoria’s Mallee region) and Melbourne.

In early 2008 a water filtration plant was installed at Eureka Linen which has the capacity to save 70 per cent of the water used annually.

Eureka Linen is currently one of the Ballarat regions top 10 water users but the addition of the $243,000 Eco Nova filtration plant will give the service the capacity to recycle and reuse up to three quarters of the water currently used.

This seems to suggest that a “shared services” model for non-core hospital services would be an effective way to reduce costs and achieve efficencies.

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5 Responses to “Core versus non-core business at Barwon Health”

  1. Andrew says:

    Why is it so hard for linen services to be done in house. Some big washers and dryers and a few, not very many, workers.

  2. Tim Chuma says:

    Surely someone could take over running the laundry as a private concern? Has happened elsewhere.

    • Marcus Wong says:

      If the equipment was efficient, then a private operation might buy it out – then again, if it was, the hospital would be less likely to close it down in the first place.

  3. mich says:

    I hope that water recycling filter is good with viruses.

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