Strategic Value Analysis In Healthcare

I’m going to discuss a new term and concept this week that I call the “Supply Chain Continuum” (or linkage between your cost drivers that blend together seamlessly to encompass your total supply chain), and how there is a huge GAP in this continuum at most hospitals and IDN’s today! I will explain how this GAP can be filled with an engineering approach to supply chain management that has passed the test of time to get the job done. So, if you are looking to move to the next level of supply chain savings at your hospital or IDN, this is an article you don’t want to miss. In fact, you might want to e-mail this article to your executive management team to capture their attention on this unfilled savings GAP that they should know about.

Remember, you have everything to save and nothing to lose with our “award winning” Strategic Value Analysis® System as your weapon of choice in your battle to manage and control your supply chain expenses.

Most Hospitals And IDNs Have A Huge GAP In Their Supply Chain Continuum That Can Only Be Filled With A Engineering Approach To Supply Chain Management

The supply chain continuum (or linage between your cost drivers that blend together seamlessly to encompass your total supply chain) has a huge GAP in it at most hospitals and IDNs! For the most part, hospitals and IDNs have filled in their price and standardization GAPS over the last few years, but only a few lean thinking healthcare organizations have filled in their “utilization” GAP. As I see it, this is the biggest unfilled supply chain savings opportunity available to healthcare organizations today.

Based on our extensive studies hospitals and IDNs have less than .005% savings left from their pricing strategies and tactics, 1% savings left in their standardization of physician preference items (all other commodities have been standardized in my opinion), and 6% to 9% savings available to them when they finally attack their “utilization misalignments”, which then completes the Supply Chain Continuum.

With these statistics in mind, where does your hospital or IDN fall on the Supply Chain Continuum Scale? If your answer is that you are still fighting the battle with price and standardization only, then I would give you a rating of five on the Supply Chain Continuum Scale because to get to a ten, or perfect score, you need to refocus your cost cutting efforts to your “utilization misalignments” categories before you can ever begin to raise this score significantly in my eyes.

An Engineering Approach to Supply Chain Management Is the Answer

With this said, you are not going to be able to dig and drill down into your supply chain to make saving happen in your “utilization misalignments” as quickly and easily as you have in your price and standardization categories. Many of these price and standardization savings were “no brainers” to start with, you jumped onto a new GPO contract and quickly achieved price and standardization savings without even breaking a sweat. This is unlike the extensive planning, organization, leadership and ENGINEERING approach that are required to achieve even the smallest “utilization misalignment” savings for your hospital or IDN.

Value Analysis Is the Technique of Choice for Engineers

The ENGINEERING approach I’m talking about is “value analysis (also known as value engineering)”, which has a 62 year history of being utilized by all of the Fortune 500 companies and most of our foreign competition – starting with Japan – to drive out all of the waste and inefficiency on the demand side of their supply chain. Before the philosophies, principles and practices of Total Quality Management, Zero Defects, Just-in-Time, Six Sigma and Lean Thinking, were on everyone’s radar screen, VALUE ANALYSIS had been the technique of choice of engineers to streamline and reinvent their products, services, technologies and total supply chain. “Value analysis” is still the first line of defense for manufacturing organizations like General Electric, Honda, HP, Boeing and Toyota to keep pace with their domestic and foreign competition.

Value Analysis: Scientific and Time Tested to Get the Job Done

If you are looking for new strategies, tactics and techniques to increase your Supply Chain Continuum Scale Rating, look no further than the scientifically and time tested “value analysis” methodology to raise your score before you look anywhere else to get the job done.

In my 27 years as a healthcare consultant I have seen money-saving and quality improvement fads, crazes and trends come and go, but based on my own empirical experience, value analysis has passed the test of time and has earned the right to be called the “weapon of choice in your battle to manage and control your supply chain expenses”.

Find Out Where Your Supply Utilization Savings Are In Your Organization!

Complete our "no-charge, no obligation" online Supply Chain Performance Survey

Click Here to View the Survey

It will measure and identify your supply chain savings potential, and you will get your results within five short days!

What is the difference between your term of “utilization misalignments” and my term “consumption” misalignments? M.B.

“Utilization misalignments” (or the inefficient and wasteful consumption, misuse, misappropriate or mishandling of the millions of dollars of products, services, and technologies you purchase annually) has a similar connotation and association to the term “consumption” (you can see that I use this term in my definition too). In my opinion, “utilization misalignments” fit into a broader category of misuse, misappropriate or mishandling of products, services and technologies than ”consumption” does.

For example, you might consume too many trash bags because they are of poor quality and break easily, but the trash bags can also be too big for your trash cans (misappropriate), or two are placed in every trash can (mishandling), or thrown out before the trash cans are filled (mishandling) too.

So in the final analysis, your term of “consumption” is in fact appropriate to describe some of the waste and inefficiency in a healthcare organizations’ supply chain. I’m just broadening this term “consumption” to include all areas of misuse, misappropriate or mishandling of products, services and technologies with my term “utilization misalignments” to try to identify all areas that could be termed waste and inefficiency that might be overlooked.

P.S. If anyone else has a burning question that you would like me to answer, please call or e-mail me and I would be delighted to answer it.

Your Toner and Ink Cartridge Cost Are Sky Rocketing: What Are Your Doing About It – Beyond Price!

12% to 15% Can Easily Be Saved On Your Toner And Ink Cartridges If You Look Beyond Price For Savings

The interesting thing about supply chain management is that the targets of opportunity for savings are constantly changing – year-to-year. The commodities that we used to be worried about (contrast media, stents, pacemakers, etc.) a few years ago, don’t even take out your worry beads to worry about them any longer. But that doesn’t mean that there aren’t new challenges for you to start worrying about anew. In this category I would place TONER AND INK CARTRIDGES.

Most of us are now effectively controlling the cost of our toner and ink cartridges, but how about their “utilization” cost, which I just talked about in the MAILBOX section of this newsletter. Our studies have shown that copiers, faxes and printers’ proliferation in healthcare organizations have EXPLODED over the last five years and now is the time to get the “utilization effect” of this explosion under control at a savings of 12% to 15% or more for your hospital, utilizing the strategies, tactics and techniques of value analysis. Here are three ideas to reduce the utilization cost of your toner and ink cartridges:

1. Add fax chips to your computers and mandate that all of your employees send and receive their faxes via their computer. This will eliminate most of your fax toner (and paper) cost, especially the 10 or more unsolicited sales faxes that are coming through (you can filter these out too) each of your fax machines daily throughout your hospital.

2. Have all of your printers default on the “draft” copy print option vs. color print option and you will save thousands of dollars a year on your toner and ink printer cartridge cost, because must employees don’t need “first quality” copies for most of the jobs they are doing. Most of us are printing out e-mails or attachments anyway – aren’t we?

3. Investigate with your printer company how to convert all of your current printers to combination fax, copy, and scan printers and centralize them in convenient locations around your hospital. The reason for making this recommendation is that EVERYONE DOESN’T NEED A PRINTER AT THEIR DESK, nor do they need all of the features that they now have. By cutting down on the number of printers your hospital has, you also will cut down on the copy proliferation too! Industry studies have shown that the savings can be as high as 20%.

These are just a few savings ideas that you can use while performing your own value studies into the “utilization effect” of your toner and printer cartridges utilization at your own healthcare organizations. I know you will find even more savings ideas when you get out from behind your desk and understand what’s happening with all the toner and ink cartridges you have been buying unnecessarily.

NO COST Tele-Seminar (1-Hour) September 13th at 11:00am Healthcare Supply Chain Leadership Strategies for Superior Performance ($99 value)

Then join two of the leading authorities in healthcare supply value analysis and supply chain management, Brian Hitchcock, Vice President, QMRG, QHR Resources, Brentwood, TN and Robert T. Yokl, President and CEO, Strategic Value Analysis in Healthcare on Tuesday, September 13th at 11: 00 AM Eastern on the phone and learn:

All you need is a telephone. We'll email your phone number for the Tele-Seminar. The Tele-Seminar is FREE! Robert normally speaks for about 40 minutes and then will open the line for any question you have about benchmarking for peak performance.

"Savings Beyond Price" - Click Here to Subscribe and to get your NO COST Copy of our Special Report "Your Targeted Blueprint for Supply Chain Management Success"