Organizations that set up in-house laundry operations generally make the decision without thoroughly identifying and accounting for total linen and laundry costs. This was the conclusion of Textile Cost Manual for the Hospitality Industry #71578, a 1991 study completed for the Textile Rental Services Association of America by Pannel, Kerr, Forster, Certified Public Accountants.1

If proper and clean linen is not provided, this can result in patient dissatisfaction. Almost all soiled linen (96.1%) possess some detectable bacteria.2

A study by association for the advancement of medical instrumentation found that reusable garment if laundered properly is 70% more effective in providing barrier precaution. Staff handling used linen is predisposed to risk and can be potential agent for environmental contamination.

Moreover, the evidence is emerging that hospitals outsourcing linen and laundry services are seeing improved linen utilization rates. For example, when the University of Nebraska Medical Center outsourced its linen services, it saw its pounds per adjusted patient day decrease. The savings were nearly $100,000 in the first year and the anticipated savings in the future is $250,000 per year.3

Further, innovations in laundry equipment have led to tremendous increases in efficiencies. Large tunnel washing systems, with the capacity to wash more than 3,000 pounds of textiles at one time, have significantly decreased water usage from three gallons per pound to less than 0.75 a pound today.3 These systems, along with chemical injection systems that precisely control the amount of chemicals injected into the washer, have allowed health care textile service companies to reduce the amount of chemicals they need to wash a pound of laundry. Water reuse and recycling systems are becoming more commonplace in professional laundries and are also helping to reduce the amount of water necessary for the wash process. Heat reclamation systems are allowing energy to be captured throughout the laundry process and returned to heat wash water.3

Approach to Costing

Cost is the sacrifice incurred in an economic activity to achieve a specific objective, such as to consume, exchange, or produce. Cost is incurred when, in order to achieve its objectives, an organization acquires resources, transforms them in some manner, and delivers units of products or services to its customer.

Elements of costing are4:

  • Manpower

    • Direct manpower, also known as process labor, productive labor, etc., is one which actively or directly takes part in the production of a commodity.

    • Indirect manpower is the labor employed for carrying out of tasks incidental to the goods produced or services provided.

  • Material/Resources

    1. Direct material: The material which becomes an integral part of a finished product and which can be conveniently assigned to specific physical unit is termed as direct material.

    2. Indirect material: This is the material which cannot be conveniently and wholly allocated to a specific cost center. The material, i.e., used for purposes ancillary to the business and which cannot be conveniently assigned to specific physical units is termed as indirect material. Consumable stores, printing and stationery material, etc., are some of the examples of indirect material.

  • Expenses

    • Direct expenses: are those that can be wholly and directly allocated to the goods produced or to the service rendered, e.g., cost of buying the equipment.

    • Indirect expenses: For example, water or electricity charges which cannot be directly allocated to the expenses incurred are indirect expenses.


Study Setting

The study was conducted at the Laundry of All India Institute of Medical Sciences (AIIMS), New Delhi, and Dr RP Centre for Ophthalmic Sciences at AIIMS, New Delhi.

Study Design

Descriptive, cross-sectional, retrospective, record-based study.

Study Period

The period of study was 1 month from March 1, 2016 to March 31, 2016.

Inclusion Criteria

The laundry services at AIIMS including the outsourced services have been included in this study. Both infected and noninfected linen have been considered together for calculation of cost per kg of linen.

Exclusion Criteria

  • Cost of the land was excluded from the study.

  • Minor costs on stationery, etc., were excluded.

Data Collection

The data collection was done in the following phases:

  • The process of laundry services from receipt in wards to delivery to the wards was considered for the study. The operational aspects were studied and data collected for enabling calculation of the cost of the process.

  • The data were collected during the month of March 2016.

  • Key informants included laundry manager and the engineering representatives, medical store personnel from whom various details of cost heads and operational aspects were found.

  • The engineering section was approached to acquire the Central Public Works Department (CPWD) rates in order to calculate the cost of laundry building and boiler room.

  • Details of rate contract of outsourcing were also perused.

Cost Ascertainment Process

The cost centers (cost heads) were identified and data pertaining to each were collected under the following heads. The traditional method of costing was used for cost estimates as follows.

Building Cost

Depreciation cost of building: The land being that of the government, cost of land was not considered. Replacement cost method was used to arrive at the current construction cost, based on current CPWD construction rates (CPWD manual).5 The area was physically calculated on ground. Life of the building being assumed as 100 years and the annual depreciation is estimated to be 1%.

Maintenance of building: The maintenance rate of the building as per engineering department as on 10.11.89 was Rs. 15/sqm. The cost index was Rs. 5,104/sqm (CPWD memorandum dated 23.02.15)6 with base of 100 on 01.01.79. The annual maintenance cost was calculated on this basis.

Since the laundry was not air conditioned, no cost has been apportioned to the same.

Cost of Equipment, Fixtures, and Fittings

Depreciation of equipment, fixtures, and fittings: The inventory of the equipment purchased from the supplier firm was generated from the stores section along with cost incurred. Depreciation was computed based on the useful life of the product. An inventory list of electrical fixtures was generated with the help of the electrical engineering in-charge of the area and depreciation computed using straight line method, i.e., the cost of the asset was divided by the useful life, to arrive at the annual cost to the department.

Maintenance: The cost of maintenance of the equipment was already part of the contract drawn and was the responsibility of the vendor.

Cost of Electricity

The direct electricity consumption was calculated using the wattage system as the submeters were not installed. The total wattage and number of working hours have been taken to work out the electricity consumption cost.

Manpower cost

This was determined based on the pay commission as gross monthly salary. Other indirect manpower cost, e.g., that of the staff of the medical stores department, was not considered, being negligible.

Other Cost Heads

  • Cost of outsourcing

  • Cost of diesel

  • Water Cost

Costing unit: Cost/kg of dirty linen


Outsourcing Details

As a result of the decision taken by the hospital, the laundry services were outsourced, following a tendering process in November 2009. Six firms took part in the open tendering process and one of them was selected as per the rates quoted and specifications of tender document. Since January 2010, laundry services of AIIMS have been partially outsourced.


For the ease of analysis and costing, the various cost heads have been described along with the description of the infrastructure, equipment, manpower, and consumables. The equipment, however, was considered to depreciate at the rate of 10%.

Facility Cost

Facilities cost consists of the cost of the space utilized and the cost of electricity to operate the equipment.

Building Cost

Total area of laundry complex = 611.7 sqm

Total area of boiler room = 43.7 sqm.

The CPWD building cost index April 2015 with 01/10/12 (as base 100) issued by director general (DG) CPWD is 104. The building cost for 1 sqm area calculated after incorporating this cost index and after discussion with the engineering department5 was Rs. 37,465.

Area of laundry + area of boiler in sqmCPWD rate per sqmTotal building costAnnual building cost of laundry (1%)
655.4Rs. 37,465Rs. 24,554,561Rs. 245,545

There are three passenger lifts, the cost of which was apportioned as 32 lakh, each based on plinth area rates. So, the total cost of lifts was Rs. 96 lakh.

Chartered Institution of Building Service Engineers (CIBSE) has a lift cycle that indicates the life span of a lift as 15 years. Based on this, the annual cost of lift came to be Rs. 6.4 lakh.

So, the net monthly cost of lift was apportioned as Rs. 53,333.

Building Maintenance Cost

  • The cost index was Rs. 5,104/sqm (CPWD memorandum dated 23.02.15),6 with base of 100 on 01.01.12. The annual maintenance cost required to maintain the building was:

Area of manifoldMaintenance per sqmAnnual maintenance cost
655.4 sqmRs. 5,104Rs. 3,345,162

The annual maintenance cost of lifts at laundry was Rs. 594,000.5

So, the monthly maintenance cost of lifts was apportioned as Rs. 49,500.

  • Electricity cost of equipment and fixtures: The electricity cost has been worked out based on Rs. 10 per unit* (NDMC rates). The following formulae were used after consultation with the electrical engineering in-charge:

    1. 1 kW = 1 unit

    2. 1 Horsepower (HP) = 0.76 kW

As there was no separate submeter to measure the consumption of electricity at the laundry, the total wattage and number of working hours was taken to work out electricity consumption cost.


Machine Details

Washer extractor: There were 13 washer extractors in the laundry section. The washer extractors were used to wash and rinse the cloths. There were six washer extractors of capacity 100 kg; six washer extractors were of capacity 50 kg; and one washer extractor was of capacity 25 kg. Thus, the total capacity was 925 kg/cycle time.

Hydro extractor: There were nine hydro extractors in the laundry section. The hydro extractors were used for the removal of water from the linen mechanically. There were total nine hydro extractors of capacity 50 kg each. So, total capacity was 450 kg/cycle time.

Tumbler dryer: There were 12 tumbler dryers in the laundry section. The tumbler dryers were of capacity 50 kg each. The tumbler dryers were used for drying the washed and hydro extracted linen. Two energy sources were available for drying linen in tumbler dryer – steam and electricity. Therefore, the total capacity was 600 kg/cycle time.

Calendar dryer: There were two calendar dryers in the laundry section. The calendar dryers were used to press and final finishing of linen. The calendar dryer utilizes steam as energy source to press the linen which could then be finally used in the hospital.

Other equipments were:

  • Boilers—electric as well as diesel

  • Steam presses

  • Water softening plant

  • Director general set

Process Description

Laundry Steps with Time

Sl. no.Laundry stepsQuantityTime takenTemperature
 1RinsingWater400 L5 minutes43°C
 2WashingChemicalsOpal500 gm40 minutes60–75°C
 3100S100 mL
 4OX-bleach500 mL
 5Legro300 mL
 6Whitener400 mL
 7Hypo washHypo500 mL10 minutes39°C
 8ShowerJohnson Diversey/Washing powderAs per required10 minutes36.2°C
 9RinsingNormal water400 L5 minutes33°C
10Neel washNeel250 mL5 minutes32°C
11Hydro15 minutes
12Drying40 minutes
13Total125 minutes


To analyze average weight of the linen, different linen items processed in the laundry department and their respective weight have been taken. The historical data was obtained retrospectively to see the baseline.

Weight trials were undertaken to crosscheck the weights of different linen. The average weight per linen was evaluated based on number of pieces processed of different type of linen and their respective weight. The details are as follows:

Different Type of Linen Pieces received at Laundry per Month and Their Average Weight

Sl. no.DescriptionQty. per monthWeight per pieceTotal weight
2Draw sheet28,3280.3239,149.9
3Patient coat18,9170.2154,067.2
4Patient pyjama17,0370.213,577.8
5Women skirt3,5660.21748.9
6Women jacket3,1550.215678.3
 7Pillow cover18,4930.1152,126.7
 8Turkish towel7820.475371.5
 9Hand towel1,0340.15155.1
10OT towel100,8840.12212,307.8
11DL wrapper33,3370.2678,901.0
12Screen cover60.724.3
13OT gown28,0570.54715,347.2
15Surgical shirt20,9380.14252,983.7
16Surgical pyjama20,1580.173,426.9
17Surgical frock8,4070.2852,396.0
18Patient sheets2,6320.203534.3
19Abdominal sheet3,9010.722,808.7
20Trolley cover13,2020.1872,468.8
22Syringe capper8,2770.086711.8
24Baby frock3,9100.03117.3
25Children coat1,0700.114122.0
26Children pyjama4200.11146.6
27Door panel990.022.0
28Baby sheet1,9510.132257.5
29Couch cover1290.7292.9
30DL bags20.10.2
Average weight/piece0.298 kg

Different Types of Linen Pieces received from Dr RP Centre and Their Average Weight

Sl. no.ItemsTotal monthly linen (no.)Avg weight (kg)Total weight (kg)
 2Draw sheet3730.323120.48
 3Patient gown3,0950.215665.43
 4Patient pyjama2,9040.210609.84
 7Pillow cover4,2900.115493.35
 8Bath towels870.47541.33
 9Hand towel4310.15064.65
10OT towel17,9310.1222,187.58
11DL wrapper8,5980.2672,295.67
13Surgeon gown9,2590.5475,064.67
16Dr Kurta5,9560.142845.75
17Dr Pyjama5,8090.170987.53
18Surgeon’s frock5,3260.2851,517.91
24Trolley cover2,5980.187485.83
25Child coat5610.11463.95
26Child pyjama3760.11141.74

Monthly Average Linen processed

Monthly linen processing for one year was evaluated using retrospective data based on monthly linen processed and average weight evaluated in an earlier table.

MonthAverage monthly qty. in piecesAverage weight/pieceMonthly total weight (kg)Working daysAverage weight/day

Average daily washing load: 4,632 kg

Average monthly washing load: 120,419 kg; i.e., 120.4 ton

Monthly Average Payment to the Outsourced Agency

MonthMonthly payment to outsourced agency

Average payment to the outsourced agency/month: Rs. 2,605,488 per month

Rs. 31,265,860 per annum

The payment made to the outsourced agency covers the scope of work outsourced. The payment covers the following cost:

  • Manpower

  • Material

  • Equipment maintenance expenses

  • Water treatment expenses

In addition to the payment made to the outsourcing agency, AIIMS incurs cost of:

  • Electricity

  • Water

  • Generator

  • Boilers

  • Manpower expenses (other than supplied by outsourced agency)

  • Building maintenance


Boiler Fuel and Electricity Consumption

The boiler house has one oil fired boiler and two electricity operated boilers. This was operated as per requirement to meet the steam demand of the laundry unit. The general operational details of the boiler are as follows:

  • Operating pressure: 4 kg/cm2

  • Operating temperature: 130 to 140°C

  • Boiler steam capacity: 500 kg/hour

  • Boiler make: INDCON

  • Electric boiler model: ES20

  • Electric boiler make: COLLIN WALKER

  • Electric boiler rating: 215 kW

The pressure at steam header was around 3 kg/cm2 and at the machine end it was approx.1 to 1.5 kg/cm2.

All three boilers were operated to cater steam demand of laundry. To evaluate fuel consumption in steam boiler trials have been taken and based on that it has been found the average fuel consumption per day in boiler was approximately 80 to 85 liters/day (diesel).

To evaluate the energy input of electrical boilers three phase power analyzer was used to record power consumption of electric boiler. All relevant electrical parameters like voltage, current, harmonics, kW and kVA power and power factor were recorded. The details are as follows.

Load Profile of Other Utilities

The details of the electrical load profile of other equipment and utilities are as follows:

Utility1. Compressor388.39.985.7780.857
2. Submersible Pump-1401.310.936.890.629
3. Submersible Pump-2401.18.5175.1980.876
4. Filling pump-1402.512.57.3480.861
5. Filling pump-2398.111.066.8570.897
6. Filling pump-3401.712.337.7730.905
Lighting1. Lighting15

Total Load of Other Utilities: 54.5 kW

Laundry Machines Power Consumption

The power consumption of all the machinery process like washer extractors, tumbler dryers, hydro extractor, and calendars was evaluated respectively. The details are as follows:

TypeEquipment nameNosLoad/equipmentAverage load (kW)Power factor (liters/day)Load (kVA)
Utility1.Electric boiler22064120.85484.71
2.Diesel boiler188
3.Submersible pump-
4.Submersible pump-
5.Overhead tank pump37.4322.290.8526.22
Rest utilities1.Ceiling fans310.072.170.852.55
2.Exhaust fans210.255.250.856.18
Equipment1.Washer extractor132.33300.8535.29
2.Hydro extractor91.66150.8517.65
3.Tumbler dryer1228.33400.85400

Capital Cost of Equipment and Machinery Depreciation Cost

The cost of the equipment have been taken from an unpublished study done in the year 2011 to 2012.

  • The cost of equipment with maintenance cost was Rs. 74 lakhs.

  • The boilers have been installed at a capital cost of Rs. 3,000,000.

  • The panels have been installed in new laundry at a cost of Rs. 3,600,000.

  • Total approximate machinery cost = Rs. 14,000,000.

*The lifespan of equipment was taken as 10 years, thus depreciation of 10% was calculated on per annum basis.

Machinery Depreciation Cost

  • Approximate machinery cost: Rs. 14,000,000

  • Estimated life: 10 years

  • Depreciation per year @10%: Rs. 1,400,000

  • Monthly depreciation: Rs. 116,667

Manpower Cost

Overall manpower cost borne by AIIMS toward laundry is given below:

Sl. no.CategoryNo.Pay/month/in Rs.Total
1Laundry manager150,00050,000
2Laundry supervisor146,00046,000
3Assistant laundry supervisor335,000105,000
6*Laundry attendant3225,000800,000
7*Sanitary attendant525,000125,000
8*Sulabh volunteers2810,000280,000
*Used for distributing washed linen to all the hospital areas as well as to collect dirty linen from these areas daily

Water Cost

Average monthly water bill of AIIMS for the months of Aug, Sep, and Oct 2016
Sl. no.Source of supplyWater consumption (in Kiloliters)Cost/month (in Rs.)
1Delhi Jal Board54,1604,638,555

The cost of water was apportioned to laundry @ 2%, i.e., Rs. 94,860 per month.

Overall Cost of Laundry per kg of Linen

Overall expenses of laundry/kg of linen have been evaluated based on the following details:

  • Average weight/linen

  • Average monthly production

  • Electrical load profile of utilities

  • Electrical load profile of machineries

  • Fuel consumption in boiler

  • Contractual expense

  • Maintenance expense

  • Softener expense

  • Manpower expense (AIIMS)

The details of overall cost of laundry/kg of linen were as follows:

Total Monthly Cost

Sl. no.Equipment nameNos.Load/equipmentAverage load (kW)Power factorLoad (kVA)Running hoursAvg. days/monthUnit costCost/month
I.Electricity cost
1Electric boiler22064120.85484.71926101,134,221
2Washer extractor132.33300.8535.299261082,579
3Hydro extractor91.66150.8517.659261041,301
4Tumbler dryer1228.33400.8540092610936,000
6Ceiling fans310.072.170.852.551220106,120
7Wall fans210.255.250.856.1812201014,832
8Submersible pump-,667
9Submersible pump-,094
10Overhead tank pump37.4322.290.8526.222261013,634
II.Oil cost
12Diesel boiler188liter/day2656/liter128,128
III.Consumable cost
IV.Depreciation cost
13Machinery depreciation cost116,667
V.Maintenance cost
14Boiler maintenance cost326370,000
VI.Building cost
15Building cost (including lifts)73,795
16Building maintenance cost (including lifts)328,264
VII.Manpower cost
17Manpower cost (AIIMS)1,510,000
VIII.Outsourcing cost
18Outsourcing expenditure2,605,488
IX.Water cost94,860
Total expense per month7,555,198
Average annual linen purchase at Dr RP Centre
Linen itemsYear 2013–14Year 2014–15Year 2015–16Average annual quantityRate per piece (in Rs.)Average annual cost (in Rs.)
Draw sheet005001678914,833
Patient kurta2,0001,0002,0001,667198330,000
Patient pyjama2,0001,0002,0001,667180300,000
Pillow cover1,0001,0002,0001,33386.03114,707
Eye towel7,5007,1009,0007,867105.6830,720
DL wrapper2,1001,0002,0001,700189321,300
Surgeon gown2,0004,1004,5003,533252890,400
Dr Kurta2,0001,1001,5001,53397.08148,856
Dr Pyjama2,0001,1001,5001,533152233,067
Surgeons frock1,5001,0001,0001,167199232,167
Trolley cover1,5001,0002,0001,500185277,500
Child kurta50050050050098.0149,005
Child pyjama50050050050098.0149,005
Average annual cost5,032,626
Cost of laundry per kg
Laundry monthly expense7,555,198Rs.
Average monthly output of washed linen120,419kg
Cost of washing linen per kg63Rs.
Cost of linen processing for Dr RP Centre
Monthly linen washed in RP Centre22,465kg
Monthly laundry expenditure in RP Centre(a) 1,415,295Rs.
Linen procurement expenditure per month(b) 419,386Rs.
Total (a + b)1,834,681Rs.
Cost/kg (with inclusion of linen cost)82Rs.


The laundry system at the AIIMS follows the outsourced system wherein the linen, machinery, electricity, water, and space was provided to the vendor by the Institute.

It was observed that the current system of laundry management entails a number of costs, such as cost of space, electricity, water, linen, and supervisory manpower designated for the laundry. In addition, other costs which are borne by the Institute in the current system are linen procurement-related costs, storage costs, both at the central and the ward level. Further, a lot of nursing manpower was being utilized only for linen management in the hospital which could have been used for other patient care services. Yet, the quality of wash and linen being supplied remains uncertain in terms of microbial load it may carry postwash and cross-contamination occurring during the various laundry process from collection of dirty linen to supply of clean linen to the user areas. The above statement can be corroborated from the fact that a large quantity of linen was getting condemned on a regular basis prior to its expected useful life.

Internationally, laundry services in health care are expected to conform to a few standards, such as RABC (EU), BS-EN, HLAC (USA), DHS, etc. These standards dictate not only the linen quality, but also the wash processes to be followed in order to ensure efficient and effective washing expected in a hospital. In the current scenario, where patients are becoming increasingly aware of their rights and responsibilities in a hospital and the law tightening its noose on health care institutions for every lapse in service, it is time to accept and develop systems which shall enable us to follow such international standards to provide the best quality of linen and a linen safe environment to our patients.

Financial Implications

Financial Implications in the Existing Model

In the existing model, the vendor was responsible for following services:

  • Operating the laundry machines

  • Collecting and distributing linen

  • Ironing of linen

  • Repairing of linen

  • Repair and maintenance of laundry machines

  • Provision of manpower

  • Provision of materials

In this model, linen, space, machinery, electricity, steam, and water were provided by the Institute.

The Vendor was being paid Rs. 2,605,488 per month, which is equivalent to Rs. 31,265,856 Annually

Linen was procured and provided by the Institute.

Expenditure incurred in procuring linen per year at Dr RP Centre = Rs. 50,32,626

In addition to the direct expenditure being incurred on linen, cost was also being incurred on procurement, storage, as well as condemnation of linen, which if calculated would be significant.

In addition to the cost calculated earlier, a few indirect costs which had not been taken into considerations but if calculated would have been significant were as follows:

  • Procurement

  • Linen inventory management costs

  • Water costs

Financial Implications of the Proposed Model

The rate quoted by a leading vendor to supply washed, sterilized linen to the hospital: Rs. 55 per kg. Since the expenditure incurred per kg at Dr RP Centre is Rs. 82, so, there can be a saving of around Rs. 27 per kg. It would mean saving of around Rs. 606,555 per month and Rs. 7,278,660 per annum. So, it was recommended that rental linen management services could be hired for Dr RP Centre after taking care of functional, operational, and strategic contingency.

In the proposed system, the vendor shall be responsible for purchasing, washing, sterilizing, collecting, distributing, and mending any linen required by the hospital. The vendor shall also be responsible for condemning and replacing linen as and when the need arises. Further, a feedback about the existing rental linen management services in the National Capital Region of Delhi was also collected to gauge the plausibility of transitioning to such a system.

Feedback about the available Rental Linen Management Services from various hospitals in national capital Region of Delhi:

Sl. no.HospitalFeedback (written verbatim)
1A 1,000 bedded corporate hospitalUninterrupted supply of high-quality disinfected linen, professional approach
2A 600 bedded missionary hospitalMeets high standards for its services in all respects in a very professional manner; highly appreciated by all the stakeholders in the hospital, namely patients, staff, and management; have no reservation in recommending its services to other hospitals
3A 300 bedded private hospitalUninterrupted and smooth supply of consistently high-quality disinfected linen; professional approach and high-quality has played a key role in enhancing patient satisfaction and has added value to services provided by hospital
4A 150 bedded trust hospitalServices provided by them are to our most satisfaction and the work done by them is commendable
Conflicts of interest

*Average unit cost including DG sets

Source of support: Nil

Conflict of interest: None