Strategic Value Analysis In Healthcare

Millions Of Dollars Are Wasted Annually On Technology Purchases Because Of Poor Quality Decision Making Systems!

I estimate that billions of dollars are spent annually on technology purchases at healthcare organizations throughout the U.S., while concurrently millions of dollars are wasted because of poor quality decision making systems to do so. Generally, these high impact decisions to buy digital mammography, bariatic beds or new laboratory information system are made behind closed doors between your hospital’s administration and their clinicians and department heads based on who has the most power, influence or is the best persuader. The decision is not always based on their actual functional requirements, efficacy or relative value to the organization.

TECHNOLOGY VALUE TEAM CASE STUDY: THEN AND NOW

Prior to one of our clients establishing a technology value team at our direction, the president of this hospital, his CEO and his chief accountant would make all of the decisions on their $2 million technology budget annually with some input from their clinicians and department heads. They alone decided who got what, when and how, without truly understanding the requisitioner’s functional requirements, nuances or impact of their decisions on other department heads and managers! This closed door decision making system was slow, painful, time consuming, risk adverse, fraught with errors and savings neutral.

Once this hospital adopted the technology value team concept to make all of its technology purchase decisions, the hospital saved, on average, 17.5% annually on its technology budget – beyond price. Their value-based decision making process was faster, better, more cost effective and responsive to department heads needs and desires than the prior closed door system. For example, a savings of $150,000 was achieved when, after a functional analysis conducted by one of the team’s project managers, they couldn’t value justify a $156,923 purchase of upgrades for the hospital’s laboratory information system. And $37,982.15 was saved on upgrades on the hospital’s pharmacy information system by restructuring the hospital’s medication administration process. $7,926.35 was saved on purchases of PCs after a functional analysis found that 95% of the hospital’s staff only needs Microsoft basic software on their PCs vs. every program that Microsoft has to offer.

QUALITY OF DECISIONS APPROACH SIX SIGMA LEVELS

The goal of Six Sigma is to reduce defects while at the same time improving customer satisfaction, which is consistent with the technology value team concept. In fact, I have personally observed the quality of technology value team’s decisions on replacement of bariatic beds, buying new compression sleeve’s system and harmonic scalpels approach Six Sigma levels by utilizing the value methodology.

If you are looking for new savings streams (that I talked about in last week’s E-Zine) to increase you savings yield, you need to get moving ON THE NEXT BIG THING in supply chain management -- technology value teams -- to raise your savings performance --- now!

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I’m A Value Analysis Director for a 12 hospital system that is struggling who has two questions for you. First, What is the Ratio of a Value Analysis Coordinator to the number of hospitals that they can manage effectively? Second, What is the salary range you would estimate for these positions? S.P.

To answer your questions in order; our experience has shown that a value analysis coordinator can effectively manage three to five hospital’s value analysis programs. Second, the salary range for the position of value analysis coordinator, manager or director (there are numerous titles in use today, but still fall under the category of value analysis coordinator) can range from $75,000 to $125,000, depending on the size hospital or hospitals that this individual is responsible for.

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.

Equipment Rental Agreements Paid For Per Test, Per Set Or Per Use Should Be Your Last Option

We are finding that 90% of all healthcare organizations we work with have some equipment that is rented on a per test, per set or per use bases that is costing these organizations 25% to 27% more than purchasing this equipment outright. I know the reason most give to us on why these rental purchases are being made is the lack of capital to purchase this equipment outright. However, pure equipment lease agreements are being financed in the “middle teens” by hospitals, and if you bundle your equipment purchases, the cost to you can be as low as 6% to 9%. So, with these financing options available to us, why do we continue to embrace equipment rental agreements that are costing us a 25% to 27% premium?

On this call you'll get a new perspective on Savings Beyond Price in a way that gives you an advanced set of tools and tactics that creates partnerships with your clinicians and allows you to achieve more of your savings goals BEYOND PRICE!

Are your supply chain initiatives on life support?
Has all the ripe fruit been picked from your vineyard?
Has your savings stalled or fizzed out altogether?

Then join the leading authority in healthcare supply value analysis Robert T. Yokl on Wednesday, July 27 at 2: 00 PM Eastern, 1:00PM Central Time 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 NO COST TO YOU! Robert normally speaks for about 40 minutes and then will open the line for any question you'll have about savings beyond price™. We will give you detailed instructions once the program begins.

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