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Behind the List with Peter J. Castagna Jr. of Hospital Central Services Inc. & Affiliates

Keys to success: Listening, service and response

Peter J. Castagna Jr., president and CEO of Hospital Central Services Inc. & Affiliates, says that the company has had to adapt services to align with changing priorities and challenges resulting from health care mergers and acquisitions. - (Photo / Christopher Holland)

From rapidly changing laws in health care to evolving medical supply companies and beyond, nothing is constant.

Many companies throughout the Greater Lehigh Valley are designed to provide services, supplies and other health care-related items and services to hospitals, doctors, pharmaceutical companies and more. It’s a great opportunity for these businesses.

One company that has been prominent in the region is Hospital Central Services Inc. & Affiliates in Allentown.

Here to answer this week’s “Behind the List” questions is Peter J. Castagna Jr., president and CEO of the company.

Click here for an inside look at HCSC.

Lehigh Valley Business: How long has Hospital Central Services Inc. & Affiliates been operating in the region and what are its primary services?

Peter J. Castagna Jr.: The founding of Hospital Central Services Inc. & Affiliates dates back to 1964, when the Greater Lehigh Hospital and Health Planning Council was incorporated with goals to provide adequate hospital and related facilities in the Lehigh Valley area, develop plans for providing improved patient care, education and research at these organizations and coordinate the development plans of the hospitals and related health facilities in the Lehigh Valley area to avoid costly duplication of programs and services.

Hospital Central Services Corp. was then incorporated in 1967 to meet the laundry and linen needs of the nonprofit hospitals in the Lehigh Valley. The first plant began operations in Allentown in 1970 and has expanded to include operations in Asbury Park, N.J., Baltimore, Md., and Kingston, Pa.

Today, the HCSC laundry division provides linen rental services to over 130 hospitals and 1,000 ambulatory care centers in the mid-Atlantic region. Miller-Keystone Blood Center then began operations in 1971 under the HCSC and now serves the daily blood needs for the communities and hospitals in 12 Pennsylvania and New Jersey counties.

LVB: What have been some of the biggest challenges that Hospital Central Services Inc. & Affiliates has encountered throughout its years in business? How did it overcome these challenges and continue to prosper?

Castagna Jr.: Since HCSC is essentially an extension of our owner hospitals and other health care customers, their challenges are also our challenges. The Affordable Care Act and market consolidation that has recently accelerated has continued to increase cost pressures while also requiring impeccable customer service.

Our customers are larger and much more complex. For example, two decades ago, Miller-Keystone served 22 individual community hospitals in the region. Today, we still serve the same number of facilities, however they roll up to only five health care organizations, with Lehigh Valley Health Network and St. Luke’s University Health Network being the largest of the five.

These systems also own or operate hundreds of ambulatory care centers and physician offices.

We continue to believe that the key to success begins with listening to our customers and providing unparalleled service and response.

Our board members include an outstanding group of hospital executives and community leaders that provide direct guidance and advice to our management team and have complete visibility into the companies’ financials. This operating model has successfully served HCSC, and we need to ensure that we take full advantage of the board’s experience and expertise going forward to enhance our services and innovate to meet the market’s evolving needs.

LVB: Health care is the leading industry in the Greater Lehigh Valley and is projected to continue growing year-over-year. How does that position Hospital Central Services Inc. & Affiliates for growth and other opportunity?

Castagna Jr.: We share that view with regards to the growth and prominence of health care excellence in the region and over the past three years have decided to build on our historical position in the community and renew our commitment with two major investments.

It began with a $12 million expansion and automation of our Allentown laundry operation, which was completed last year, and has continued with the build-out of our new ambulatory care staging and distribution facility located in an industrial park behind the airport [Lehigh Valley International Airport] that will begin operations by the end of this year.

HCSC was founded in the Lehigh Valley and it will continue as our base of operations for all of our businesses.

In addition, Miller-Keystone Blood Center’s manufacturing and distribution operations based in Bethlehem is currently planning on expanding our collections base into Bucks, Chester and Montgomery counties in Pennsylvania and Mercer County in New Jersey early next year.

LVB: How does Hospital Central Services Inc. & Affiliates directly stimulate the local economy? How does it get involved with the local community?

Castagna Jr.: HCSC and its affiliates employ over 1,000 employees with the majority being based in the Lehigh Valley and surrounding communities. Through the expansion of our Allentown facility and new ambulatory care business, our workforce will continue to grow and be a vital part of the local economy.

Miller-Keystone Blood Center also plays a vital cog in the health of our community, ensuring that there is a continuous and safe supply of blood available to those in need. The Lehigh Valley has a strong and long-term committed donor base, with over 50,000 active blood donors.

In addition, over 800 companies, schools, community and faith-based organizations in the region run 2,100 blood drives with Miller-Keystone each year. The blood we collect stays here in the community, improving and saving lives of patients in our hospitals.

LVB: Recently there have been a lot of mergers and acquisitions among health care providers in the Greater Lehigh Valley. Does this have a direct impact on Hospital Central Services Inc. & Affiliates? If so, how does the company align itself to these changes, and what strategies does it implement to stay ahead of the rapidly evolving industry?

Castagna Jr.: Health care mergers and acquisitions have a direct impact on our business. As these systems become larger in breadth and depth, HCSC has had to adapt our services to align with their changing priorities and challenges.

In order to accomplish this, we actively engage with executives and leaders at these providers to assist in making informed decisions and reinvesting in the business.

For instance, three years ago, with the support of the HCSC cooperative board, HCSC founded our ambulatory care division to provide linen rental services to physician offices, surgery centers and other nonacute sites of care. St. Luke’s University and Lehigh Valley Health Networks have been actively engaged in acquiring and building these ambulatory care sites, so we were able to tap into their expertise and create this business with their needs in mind.

LVB: What does the future look like for Hospital Central Services Inc. & Affiliates?

Castagna Jr.: Health care has always been a dynamic and innovative industry, and in order for HCSC to continue to provide value and succeed, we also need to keep pace.

This region of the country is recognized as being at the forefront of health care. We are fortunate to have an impressive list of owner/customers including LVHN and SLUHN right here in the community, along with other prestigious organizations such as Geisinger Health System, Reading Health System [now Tower Health], Thomas Jefferson University Hospital, RWJ/Barnabas Health, Atlantic Health System, Penn State Hershey Medical Center, WellSpan and many others.

We often speak about the importance of “following the customer,” and now, more than ever, that is an ever-changing, yet critical, theme.

Christopher Holland
Christopher Holland is a researcher for Lehigh Valley Business and blogs on arts and entertainment in the region.

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