While some members of city council have been critical of Health Sciences North's decision to award its linen contract to an out of town firm, it seems the city budget will actually save money as a result.
Last October, HSN announced it had a contract with Hamilton-based Mohawk Hospital Linen Services to clean its laundry. The move is expected to save $500,000 a year, but as a result, 38 people employed with Sudbury Hospital Services — some who have been with the company more than 25 years — will lose their jobs when the decision takes effect next month.
Ward 2 Coun. Michael Vagnini criticized the move at a city council meeting in January. He brought forward a motion calling for staff to conduct an economic impact study of the cuts and for a letter to be sent to the province calling on them to change course.
"Many of (the workers) are here tonight,” Vagnini said at the time. "We're talking about people who are constituents in each of our wards, who have homes ... If this goes through, they will possibly have to consider where they are with their homes and possibly could have to put them up for sale."
The city gives the hospital $1 million a year, Vagnini said, roughly equal to the income being lost by the layoffs. And it will only save the hospital a small fraction of its budget.
"Is that worth the impact on these families?" he asked.
That report is now ready and will be presented at the Feb. 28 city council meeting. It estimates that the loss of the 38 unionized jobs and a decrease in spending will have a gross economic impact of close to $6.5 million a year.
Read the full report here.
However, another item on the agenda Feb. 28 deals with laundry services for the city's paramedics, which used to be done at HSN by the same workers. The report recommends the city follow the hospital's lead and award the contract to Mohawk, as well.
The city would save as much as $40,000 by switching to Mohawk, the report said, money that could go back into the EMS budget.
“Securing linen laundering services from (Mohawk) would continue a more than 20-year history of using the same vendor as HSN,” the staff report says. “Our service has established an excellent co-operative working relationship with our hospital that has yielded significant benefits and is essential for our service to maintain a constant supply of linen for our patients.”
No savings would be found by tendering the contract, the report says, because the city would have to set up a new laundry system at the hospital, which would be too expensive.
And staying with Sudbury Hospital Services, the local company that lost the HSN contract, would mean cost increases of $35,000 a year. Having the paramedics take it on themselves would mean hiring staff and costs as high as $170,000.
In an interview Wednesday, Mayor Brian Bigger said he didn't think it was “awkward” for the city to be critical of the decision on the one hand, while benefiting financially on the other.
"There's no intent to be awkward here,” Bigger said. “The reality is, the linen services, though the hospital and with our EMS services, are very closely connected. The services are provided though HSN. It would not make sense for us to separate service providers."
And while some councillors were unhappy with HSN, the mayor said he didn't think the economic impact study was critical of the decision.
"It really was to give an indication to the public that, yes, we're doing all that we can do to encourage investment in our community and continue with the development of jobs,” Bigger said. "I'm not thinking that developing a report that provides information is being critical. I think it's just understanding the implications of these changes in our community. It was important for the councillor to bring this information forward and we supported him in that.
"The motion is quite clear. We'll provide the information that we have and that's been provided by HSN back to the people who will make the decisions on how they moved forward."
