A fresh approach - Producers and Buyers Cooperative

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Modern Healthcare, November 2, 2009

A fresh approach

Wisconsin hospital gives a big boost to local farm co-op as facilities nationwide look to nearby sources in search of a higher-quality food supply

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By Gregg Blesch
Posted: November 2, 2009 - 5:59 am EDT
Darrel Lorch is a good-natured grouser, and that's how he starts when he recounts how it has been to help out with a new cooperative set up to allow small local farms to sell food to Sacred Heart Hospital in Eau Claire, Wis.—and eventually other hospitals, nursing homes and schools.

“Of course, my first response really was, ‘Oh my God, do you think we can do this?' ” Lorch says, steering his truck up a steep incline on his farm to get a look at one of his herds. “I said, ‘Well, we'll give it shot,' ” he recalls. “The last two years have been very, very complicated at Lorch raises cattle in Blair, Wis., about 50 miles south of Sacred Heart, which pledged to spend $200,000 a year on local food. But just because Sacred Heart wanted to buy didn't mean the small-scale producers and processors could immediately deliver what the 223-bed hospital needed in the right volumes, forms, packaging and flow.

Lorch rattles through a number of hurdles that have been solved or potentially solved over the course of many meetings in Eau Claire. The list includes administrative and legal hoops, insufficient processing and distribution infrastructure, and communication between a buyer and sellers not accustomed to doing business together.

By the time Lorch parks his pickup back at the farmhouse he lets on that, even though he has yet to be paid a dime for chairing the ad hoc board of what has become officially incorporated as the Producers & Buyers Co-op, he thinks it's working, that it's good for everyone involved and that it will grow. “I believe in one thing,” Lorch says. “If something's going to happen, somebody is going to have to pick up the ball and run with it. If no one does anything, the ball will lie there and rot.”

Bypassing the industrial food-supply chain is no small feat, and the challenges Lorch cites might easily knock the wind out of good intentions. That system allows hospitals and other institutions to order exactly what they want in any quantity, size, shape and packaging and have a truck drop it off the next day. The scale and speed of the production, processing and distribution make the prices and convenience impossible to match.

View a photo album showing some of the key players in the Producers & Buyers Co-op But it's also a system that Sacred Heart CEO Stephen Ronstrom blames for much of the chronic illness driving healthcare costs, meanwhile sending the hospital's money around the country and beyond to truck in food that can be grown and raised better by people in the hospital's own community.

“If you start digging into it some more, you see we don't have the financial incentive at this time,” Ronstrom says. The local food the hospital buys on average costs 15% more than what it would get through its group purchasing organization. But, he adds, “I think five years from now this will be mainstream, and I think the crisis in our healthcare costs is going to drive this.”

With a directive from Ronstrom to buy local food, Sacred Heart Hospitality Services Director Rick Beckler says he fumbled around for a while to figure out how to do it—he couldn't just show up at a farmers market and buy 1,500 pounds of ground beef—so in January 2008 he attended an agriculture and food conference at the Eau Claire convention center and, as he tells it, stood up and said: “I'm committing $200,000 to buy local food, from Sacred Heart Hospital. Do any of you in this room want a piece of that action and want to work with me?”

The money (10% of the hospital's food budget) drew a partnership with the River Country Resource Conservation and Development Council, a not-for-profit organization that works on projects that support sustainable resources and communities, including watershed restoration and promoting farming practices that reduce soil erosion. With a foundation laid with Sacred Heart's money and cooperation, River Country believed a co-op could sell to other institutions and create a new market for food that's locally raised according to principles the organization believes yield better food and are good for the land and animals.

The idea soon won a $40,000 grant from the Wisconsin Agriculture, Trade & Consumer Protection Department. As of September, Sacred Heart was buying most of its beef through the co-op, as well as half its pork and more than a third of its chicken. Recently the co-op signed up its second buyer, 102-bed St. Joseph's Hospital in nearby Chippewa Falls, Wis., which like Sacred Heart is part of Hospital Sisters Health System, a 13-hospital system based in Springfield, Ill. The two hospitals make up the system's western Wisconsin division, of which Ronstrom is president.

Concept catches on

Other hospitals across the country are making a point to buy high-quality food from local farmers. It's happening a few hours from Eau Claire in Madison, Wis., a community that has become an epicenter of a burgeoning eat-local movement. The Badgerland Produce Co-op Auction allows institutions, including 338-bed St. Mary's Hospital in Madison, to purchase large volumes of fresh produce aggregated from local growers.

In Vermont, 47-bed Brattleboro (Vt.) Memorial Hospital and 420-bed Fletcher Allen Health
Care in Burlington are participating in the Vermont Fresh Network, a not-for-profit group that
builds partnerships between farmers and chefs, mostly at restaurants.

But Sacred Heart and its partners in the co-op are building their own model from scratch and
learning and adjusting as they go.

“We're multistakeholder,” says Mary Anderson, a resource specialist for River Country, who has taken a lead on sorting out the product flow. “We've got buyers and sellers sitting at the same table, which is a hard thing to do because you're speaking farm language and you're speaking institutional-buyer language. It's like having someone speaking Spanish and someone from Russia trying to communicate.”

Walking through Sacred Heart's cafeteria, Beckler runs into Mary Price, a part-time speech therapist at the hospital whose small farm, Out to Pasture Beef in Fall Creek, Wis., has sold two cattle to the hospital through the co-op. She and her husband raise cattle—“Angus and Galloway, 100% grass-fed,” she says—on a scale that ordinarily would be much too small to sell to institutions.

That's a hurdle solved by the co-op model, Beckler says. Producers are pooled, and working by trial and error they've made strides figuring out the right flow of deliveries and a schedule of slaughter dates to make the deliveries possible.

“We as an organization want to buy local, but if somebody grew 20 tomatoes in their backyard and they want to sell it to Sacred Heart—run up to the door and say, ‘Here's 20 tomatoes'—or somebody walks his cow in the front lobby, it's too cumbersome to manage,” Beckler says.

Distributing fruits and vegetables creates a need for refrigerated trucks not at the co-op's disposal (a member has been trucking the frozen meat to the hospital). And the limits on the availability of fresh produce with the Wisconsin growing season, along with the demands on a kitchen staff preparing as many as 2,600 meals a day, means Sacred Heart and future institutional buyers need a processor that right now doesn't exist in the area.

Going whole hog—with beef

To start fast without getting bogged down—even before the co-op formally took shape—Sacred Heart started buying whole cattle and then whole hogs and whole chickens, rather than insist on buying just the cuts and parts that are affordable and most useful in the hospital's menu, such as large orders of stew meat and ground beef. The animals are slaughtered and butchered at local processors, then delivered by freezer truck. Little by little, Beckler worked with Anderson and the coalescing co-op on cuts, sizes and packaging that make things easier on the hospital's kitchen staff.

The co-op has signed up seven small meat processors, four of which handle beef. The smallest is Indee Meat & Locker Service in Independence, Wis., population 1,250, give or “The buyer needs to understand that things in the small-scale world are different,” says Anderson, who arranged a visit to Indee, as well as two farms, including Lorch's. At Indee, animals are slaughtered on Thursdays, one at a time. Industry giants Cargill, Tyson Foods and JBS—which together account for two-thirds of U.S. beef production—slaughter thousands of cattle a day in single plants.

Velma Gallagher, the matriarch of the family-owned meat processor, says she and her husband bought the facility 56 years ago. From the street, the business she, her son and daughter still run half a century later looks like a modest-size house. Quite a few of the cattle that come through Indee now end up in meals served to the patients and staff at Sacred Heart. “We've already processed 44 beef for the hospital co-op, and we have No. 45 hanging in the cooler,” says Gallagher's daughter, LouAnn Rebarchek.

Volunteering to show how the slaughtering happens, Gallagher gets up from a desk by the front door and hustles through the cutting room, the slaughter room, and into a dark space at the back of the building.

“The beef come in here,” she says, pointing to a large sliding door at the back of the room aglow in dim yellow light.

The animals move through a series of wood-plank stock pens and finally through a gate into the knocking pen, where they're stunned, falling and rolling under a heavy revolving grate and onto the slaughter-room floor. Her son, Randy Gallagher, and the hired staff—increased for slaughter days to two men from one—then attach shackles to the animal and hoist it toward the ceiling, drain its blood into a barrel, and then lower it into a cradle to complete the skinning and remove the innards, preparing for the carcass to be halved, quartered and moved on gambrels into the cooler.

Throughout the process a state inspector makes sure nothing touches the floor and checks the glands and organs for disease or contamination. The beef and packaging bear the inspector's stamp.

At the hospital, Beckler repeats several times that the meat is inspected just like meat bought through any large-scale food supplier, clearly sensitive to the possibility that someone might fear that the food the hospital buys from small producers and processors is less safe. In fact, the hospital sees better food safety and security as benefits of the project. During a salmonella outbreak in 2008, he says, it took investigators several months to track the infections in 43 states through U.S. distributors and finally to jalapeno and serrano peppers grown in Mexico.

Sacred Heart, in contrast, knows that each tube of ground beef came from a single animal and knows where and how that animal was raised. Beckler also notes that the hospital's local food supply would remain stable in the event of an epidemic or catastrophe that interrupted interstate commerce.

Producers and processors that sign up for the co-op promise to employ growing practices and animal husbandry that's good for the land, good for the animals and good for the people who eat the food. The buyers, in turn, agree to pay a price that reflects the cost of producing food that lives up to those standards plus a small profit. Buyers also agree to be flexible if certain products or quantities aren't available when they want them, filling the gaps through other suppliers.

The standards include that livestock must have access to fresh air, space and pasture. “We have certain guidelines for our members—how they raise their animals, how they feed them,” Lorch says. “They basically are certifying they're not feeding animal parts. They're not feeding hormones; they're not using implants,” he explains, referring to the common practice of implanting growth hormones at the base of the ear in beef cattle. “They're not feeding continuous antibiotics, and any of this type of thing the industry does today.”

Growers declare that they only use pesticides and herbicides approved by the U.S. Department of Agriculture for organic crops, although they aren't required to be certified as organic. They're also required to follow USDA guidelines intended to mitigate the risk of food-borne illness.

Farmers and processors applying to sell through the co-op pay a $50 fee to cover the cost of a visit “to more or less inspect their premises and to see if they're doing what they say they're doing,” Lorch says.

At Deutsch Family Farm in Arcadia, Wis., hogs spend some of their time outside on a pasture and otherwise in pens with deep beds of straw that allow them to root around, as is their nature, compared with the conventional practice of raising hogs on slotted concrete floors over manure pits. Jim and Alison Deutsch raise about 200 pigs a year. She's now sending one to be processed for Sacred Heart once every three weeks. Their chickens—they're raising a brood of 125 right now, all for Sacred Heart—have access to an ample yard, where they can feast on the grass.
Careful planning required The scale of operations like the Deutsches' requires careful planning and communication between them and the co-op and Sacred Heart, which has needed some remedial education on the way animals are raised and turned into food products that arrive in tidy packages.

“I always have my year's schedule of how many pigs I'll have when. I have locker dates for every six months out,” Alison Deutsch says. “You can't call me one day and expect the meat to be there the next.”

And in spite of the best planning and communication, some things are unpredictable. Some of those chickens happily pecking around in the yard might get picked off by hawks and owls, and crops are vulnerable to seasonal variations and weather events. But the co-op is trying to make the experience at least somewhat closer to that sort of convenience for institutional buyers, and Sacred Heart made itself the guinea pig.

“We should have had those product specs upfront with the producers, the growers, the processors and ourselves,” Beckler says. “We weren't sure how this was going to fly because we had to get the co-op incorporated, we had to get other pieces in line,” he says, such as liability insurance policies. Each producer must carry $1 million in coverage at a minimum.

In the walk-in freezer at Sacred Heart, chef Randall Lathrop picks up a 2½-pound tube of frozen ground beef bought through the co-op and says he's working on getting 5-pound tubes, which are easier for the kitchen staff to work with. Likewise he wants beef patties that are individually frozen rather than frozen together and separated by paper.

“Pork, too, we're working on getting our sausages, breakfast sausages,” Lathrop says. “They're all with the casing tied together, so it takes an employee to clip, clip, clip, clip, clip. They're working on a way they're going to have them pre-done for us. So it's a growth period.” And, he adds, the co-op is solving issues that most likely would surface with other institutions willing to become buyers.

There was no chicken processor in the area, so the chickens raised in western Wisconsin have been sent to facilities in Minnesota and Iowa until recently. Partly in response to and with the help of the co-op, a farmer established a small poultry plant in Dorchester, Wis.

Now co-op members are exploring ways the meat producers can sell high-end cuts retail at markets or out of meat cases at the processors, making it possible for Sacred Heart, St. Joseph and future institutional buyers to get their large quantities of ground beef and stew meet without also having to buy the expensive prime cuts. So in September they had what they called “the parts meeting,” where they began to sort out how it would work. “Our ultimate goal is to have the institutional buyers have the flexibility to call and say this is what I want, and they don't have to worry about the rest of it,” River Country's Anderson says.

“We're building that middle infrastructure of processing that's not there. The ox is slow and the earth is patient, and we take it one day at a time and we try to do lots and lots of communication, because there's education that's needed at all levels.”

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