Strategic Value Analysis In Healthcare

What are you waiting for…

My informal surveys are telling me that only a small percentage of hospitals, systems and IDNs are attacking their utilization misalignments where 67% of new supply savings reside. So why are most healthcare organization’s still focused only on price savings where only 1%, 2% or 3% -- at most -- is still obtainable?

The answer is that utilization savings aren’t quick and easy savings to achieve, so everyone is ignoring them at their own peril. However, now that the secret is out that price savings alone won’t meet your hospital, systems or IDNs supply savings goals each year what are you waiting for?

To attack your utilization misalignments you will need new skills, tools and techniques that won’t be uncovered by bidding, or negotiations and they won’t be found in your GPO contract portfolios. You will need advanced value analysis training and new technologies to make these savings happen for your healthcare organizations.

To give you an idea of what I’m talking about we now have a video clip from our training program. In this clip you will see the kind of course content that you will need to learn to attack your utilization misalignments!

Your Partner in Supply Chain Savings,

Fueling Your Savings Engine is One of the Most Important Aspects of Any Value Analysis Program

Value teams are the best savings strategy that any hospitals can employ. It gives you the vehicle you need to functionally analyze your products, services and technologies and develop lower cost alternatives, while maintaining your high quality and keeping customers happy in the process. Unfortunately, most hospitals that develop their committee/team based programs fail to realize that their teams’ performance is only as good as the fuel you give them to run their SAVINGS ENGINE. For example, if they were to analyze your Post It Notes you may save $350 to $400 annually, OR, have your team analyze your IV Administration Sets so you save $30,000 to $75,000 annually. It comes down to given them regular or premium fuel to improve performance!

Work Smarter, Not Harder!

In a perfect world value teams should analyze 100% of all of our 15,000 plus products, services and technologies in annual purchases to eliminate the waste and inefficiency in our supply chain. Common sense tells us that we look at the biggest dollar expenditures in our organization first and work down from there right? Is this happening in many healthcare organization’s today? NO!

Dollar limits (or minimums) should be set, for example, that anything over a $25,000 annual spend qualifies for review by your value team. That eliminates the Post It Note syndrome from dominating what your value team really should be analyzing — high dollar purchases that require intensive study in order to bring about change. Remember only about 150 big dollar commodities categories exist In hospitals today, get your team focused on those first!

Surprisingly Simply, Yet Highly Effective

Develop a methodology/process whereby your team or your materials department can identify products services and technologies for your value team to review. This could be as simple sorting your item spend master in descending dollar and identifying your high dollar line items or commodity groups. You will be surprised how effective this method is in generating new value analysis candidates.

Many value teams tend to fall into the trap that I call the “Review Team Approach,” whereby your team is 80% to 90% focused on group purchasing contracts. Avoid this at all costs! I am not saying disregard GPO contracts that may save you money, but you don’t want to become the “GPO Review Team” . Value teams to be effective need focused their energies on identifying and eliminating unnecessary internal supply costs while improving quality and meeting customers exact requirements. 80% of your supply savings come from 20% of your supply spend. That's were you should focus your value team’s efforts for the best results!