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September 3, 2001

 VA Committee (where’s the value?)

 Vs Team Approach to Value Analysis

Most healthcare organizations are employing value analysis committees to reduce their product, service and technology cost and maintain their quality, but are these committees truly adding “value” to value analysis?  And are they even practicing value analysis?  Numerous VA committees that we have observed over the years have as many as 35 department heads and managers meeting monthly to review and approve new product, service and technology offerings. Occasionally, these committees will investigate product, service or technology failures that have been reported to them in some formal or informal fashion. But mostly, these committee members listen to the committee chair-person, who is usually the hospital’s material manager, for an hour or more report on new or renewal contracts from their GPO.  The hospital material manager usually handle the cost analysis (applying classic accounting principles) then the members are asked to vote (yea or nay) on these new or renewal contracts or to send the product up to a department for a trial to see if they like it.  Committee members will then move on to their next meeting or appointment feeling good about their value analysis skills and how they added value to the VA process.  NOTHING COULD BE FURTHER FROM REALITY!

Value analysis in the classic sense isn’t suitable, possible or profitable as a committee function, since VA requires in-depth studies of the products, services or technologies under investigation in collaboration with customers, stakeholders and experts. This dynamic doesn’t happen in a committee structure, which I characterized as passive, valueless, risk averse and a time waster.  A much better way is to empower and train Value Teams of employees to make these savings and quality gains happen.  Why, because no committee member or members collectively ever see the negative or positive affects of how a product, service or technology is impacting its internal and external customer’s value chain. Yet, VA committees nation-wide approve billions of dollars of purchases annually, many times, with a narrow vision. A better management system to manage and control your purchases – from acquisition to disposition – is to employ Value Teams for this purpose.  In doing so, these Value Team involve all internal and external customers in the buying decision and subject all purchase to rigorous value tests in order to determine the most appropriate products, services and technologies based on their functional requirements to meet customers wants and desires at the lowest possible cost.

Value Teams have unique characteristics, roles and structure to enable them to be effective in their sphere of influence.  They must be in alignment with your healthcare organization’s culture, compensation policies, and they need to develop creative strategies and tactics to align themselves with your organizations short and long term goals and objectives. Value Teams are now coming into there own at many healthcare organizations throughout the country, because they make more sense then VA committees in getting the job done faster, better and by customers, stakeholders and experts who understand their products, services and technologies much better than a committee member or members collectively can or should.  In doing so, Value Teams add value to the value analysis process, whereas, VA committees don’t.