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JULY 18, 2003

Value Analysis: What Really Works

by Robert T. Yokl, President

“Value Analysis Is A Management Discipline That Has Survived The Test Of Time, But Few Healthcare Organizations Know What Really Works.”

Over the last two decades HCP has studied the best value analysis strategies, tactics and techniques that leading edge healthcare organizations have adopted to reduce their cost and improve their quality. We would now like to share with you six of the best practices that we have observed that really work:

1.                 Committed Culture

The first and foremost requirement for a successful value management program is to obtain your hospital or system’s cultural commitment to root out all waste and inefficiency in their supply/value chain utilizing the value methodology to do so.  This cultural commitment can be achieved by: (i) demonstrating through benchmarking how much savings can be achieved by your hospital or system adopting a value-based selection/evaluation system, (ii) educating top management and middle-management on the benefits that can be derived by focusing their cost and quality efforts on value vs. price and (iii) rewarding value-based performance with recognition and monetary rewards.

2.                 Strategic By Design

“It was once said that “activity without planning is a waste of time and energy”, but healthcare organizations continue to throw together value analysis committees and teams without the right people, right processes or without looking at the right things.  On the other hand, best practice hospitals have a “formal” strategic value analysis planning process to systematically design their value management program after appraising their strengths and weaknesses.

3.                 Exceptional Leadership

Successful value management programs start with exceptional leadership from the top down who encourage, support and nurture their value teams to be the best they can be.  They also inspire their value teams through recognition and incentive programs to make the necessary behavioral changes that are required to break through all barriers that would hold back their ultimate success.

4.                 Flawless Execution

Any hospital or system can decide to have a value management program, but only a few know how to execute flawlessly the value-based strategies, tactics and techniques that are required to be a winner.  To do so, a hospital or system needs to re-invent their products, services and technologies so that they consistently meet their customer’s requirements – and not overshoot the target by trying to delight their customers – which is an impossible goal.

5.                 Team-Based Structure

Committee based value management programs are inherently passive, action-adverse and too homogenous to be effective vehicles to make positive change, whereas, team-based value management programs are dynamic, action-oriented, heterogeneous and structured for change. When deciding on your value management structure always opt for a team-based architecture to insure that you have the right energy and force to made positive change continuously.

6.                 Outstanding Talent

Most value team’s membership is represented by department heads and managers with politically correct titles (director of nursing, director of operating room, SPD manager, purchasing manager, etc.) that look good on paper, but are they the most talented department heads and managers in your healthcare organization?  At best practice hospitals and system’s, value team members’ criteria is  based on the talent or competencies (analytical thinker, organized, reliable, enthusiastic, etc.) require for value team membership.  It’s just like selecting members of a baseball team.  Would you select the most talented players for your team or only the players that “look good” on the playing field?

The knowledge of what really works with value analysis is just the starting point if you want to reach the “Superior Performance Stage” (see White Paper on HCP’s Website) with your value management program.  You must first put these best management practices into action, starting with a Strategic Value Analysis Plan™ to uncover your current program’s strengths and weaknesses, then enhance your strengths or rectify your weaknesses to meet your current challenges.

This planning process should be an annual ritual, so you can start where you are now with your value management program and re-invent it along the way, since a Strategic Value Analysis Plan™ is a living document that changes as disruptions surface or new and better technologies become evident that require your value management program to take new directions to stay current, relevant and performance oriented.

About the Author

Robert T. Yokl, President, The HCP Group, Ltd., has over 35 years of experience as a consultant and manager in the field of Supply Value Chain Management and is one of the country's leading healthcare experts in value analysis, value engineering, Non Salary Expense Reduction and materials management. He is the developer and program leader of the award winning Certified Value Analysis Practitioner Training Program™. Mr. Yokl is also the developer of the healthcare industry's leading ValueNetCentral™ Value Analysis Software. Over the past two decades he has trained thousands of healthcare managers in his patented Strategic Value Analysis™ and Team-Based Project Management™ processes and has assisted scores of organizations in developing their own value management programs. He has published six books, videos and audios on supply/value chain management. His latest book being, “ Strategic Value Analysis™: The #1 Smart Strategy for Taking Cost Out of a Healthcare Organizations’ Healthcare Supply Value Chain”.

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