STRATEGIC VALUE ANALYSIS^TM NEWSLETTER

(Part 3 of 6)

  

In my introductory article on the 5 mission critical value analysis elements that are the essentials for moving you to the next level of non-salary savings performance (figure 1), I mentioned that HCP’s informal surveys estimated that only 12% of our nations’ hospitals and systems have team-based value analysis or ad-hoc teams, while the rest of our industry is doing something else or nothing at all to manage and control their non-salary expenses. 

 

Figure 1: 5 Value Analysis Mission Critical Elements 

Team-Based

Technology Driven

Customer Centric

Strategic Planning     Driven

Value-Based

When we refine this 12% grouping even further we find that hospitals or systems that are, in fact and in practice, employing value teams to reduce their non-salary expenses the number becomes much smaller – about 5% by my estimate.  From my empirical experience, these enlightened hospitals and systems are going in the right direction with their value analysis programs. This is why I call the second critical value analysis element – TEAM-BASED.  A Team-based value analysis structure insures that your value analysis program will be more productive, proactive, risk-taking customer-driven, accountable and will divide responsibilities amongst their members more than any other organizational structures I have observed in my 30 years as a value analysis practitioner.

 

Why Other Organizational Structures Don’t Meet The Test?

Typically, I see three non-salary program organizational models being prevalent in healthcare today (figure 2), with product evaluation and value analysis committees leading the pack.  From my observations, when I have measured the effectiveness of these committee models they tend to be passive, reactive, under-utilized, risk adverse, group thinking and GPO driven.

In the final analysis, they never meet their FULL POTENTIAL as “Savings Engines”, but instead are time wasters and actually hold back many savings reductions as opposed to making savings happen – year-in-and-year out.

Figure 2 : Non-Salary Programs Models

Team-Based 5%

Value Analysis Committee 22%

Products Evaluation Committee 35%

 

 

 

 

 

 

 

 

 

  Team-Based Architectures Make Savings And Quality Gains Happen

For the last decade or so healthcare organizations have utilized quality improve-ment teams, with great success, to streamline their processes, yet few hospitals and systems have utilized value teams to generate the dramatic non-salary savings that they require in the 21^st century. The reason is that they don't realize how powerful self-managed Value Teams can be in generating dramatic savings for their healthcare organizations. However, these savings won't happen unless you adopt and employ a new savings model that wasn't taught by Deming, Juran or Crosby, because their focus was on quality improvement!  If your healthcare organization is looking to achieve ambitious, dramatic improvements in reducing and controlling your non-salary expenses or to climb to new levels of performance, you need to embrace the Team-Based Model, which can energize your cost management initiatives and make these savings happen. 

Supply/value chain management in the 21^st century means developing new tools, technologies and savings models to drive out all of your healthcare organization's non-value added costs, while at the same time improving the quality of the pro-ducts, services and technologies that you are providing your customers.  To accomplish this objective you must streamline and reinvent your non-salary cost management processes utilizing the POWER OF YOUR OWN EMPLOYEES (IN TEAMS) TO MAKE THESE SAVINGS HAPPEN.