Healthcare Insights, Best Practices and Advanced Strategies You Can Use To Up Your Value Analysis Game
FALL 2012 ISSUE
Magazine Featured In This Issue: ==========================================================================================================
Page 8—Strategic Value Analysis Planning Page 15—Value Analysis Team Leadership Page 18— Breakthrough Savings on Demand
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Healthcarewww.ValueAnalysisMagazine.com Value Analysis Magazine www.ValueAnalysisMagazine.com
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Strategic Value AnalysisÂŽ in Healthcare
Value Analysis Strategies
Super Saver * 79% of new supply chain expenses reside in this savings category
Learn more with a FREE test drive - www.UtilizerDashboard.com Fall 2012
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contents
Healthcare Value Analysis Magazine Healthcare Value Analysis Magazine is published quarterly
Breakthrough Savings
by Strategic Value Analysis® in Healthcare P.O. Box 939, Skippack, Pa 19474 Phone: 800-220-4274 FAX: 610-489-1073
Strategic VA Planning
bobpres@ValueAnalysisMagazine.com
www.ValueAnalysisMagazine.com ————————————
Editorial Staff Publisher Robert T. Yokl
VA Team Leadership
8 Strategic Value Analysis Planning : Your key to a Successful and Sustainable Value Analysis Program. Learn from an expert the three steps to gain your senior management’s support and the three phases of a SVA plan 15 Value Analysis Team Leadership: 9 essential leadership characteristics you need to succeed with VA teams 18 Breakthrough Savings on Demand: The promise of value analysis analytics to up your savings game
Isn’t Easy Being Green
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23 Five Major Benefits of Healthcare Value Analysis: Why let these diamonds in your backyard go undiscovered? 26 It Isn’t Easy Being Green: 4 strategies to better “green” your healthcare organizations without pain Healthcare Value Analysis Magazine
bobpres@ValueAnalysisMagazine.com
————————————
Managing Editor Robert W. Yokl ryokl@ValueAnalysisMagazine.com
————————————
Senior Editor Patricia A. Yokl ————————————
Editors Maureen Coulter Danielle Deshong Copyright 2012 Strategic Value Analysis® in Healthcare. All rights reserved. Reproduction, translation or usage of any part of this work beyond that permitted by Section 107 or 108 of the 1976 United States Copyright Act without permission of the copyright owner is unlawful. For permission call, fax, or e-mail Robert W. Yokl, Managing Editor, Phone: 800-220-4271, FAX: 610-489-1073, E-Mail: ryokl@valueanalysismagazine.com for approval to reprint, excerpt or translate articles.
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From the Publisher's Desk
Is Value Analysis a Fad or a Force in Healthcare? Robert T. Yokl
If you have worked in healthcare for any period of time then you have heard of the term value analysis. It has become shorthand for savings and quality improvement at most hospitals, systems and IDNs, but is it a fad or a force in healthcare? Well, we are betting our reputation with the launch of the Healthcare Value Analysis Magazine that it is a force in healthcare that will grow even stronger over the next few years. So much so that we believe that a magazine dedicated to this maturing discipline is long overdue. That’s what this new magazine is all about! At least quarterly (more often if we get a positive response from our readership) we will provide insights, best practices, advanced strategies, techniques and trends in value analysis that you can apply immediately to your own supply value analysis program. As we look to the future, our goal for this magazine is to evolve, as the value analysis profession evolves, into a leader of value analysis knowledge resource that can be depended on for its clarity, accuracy and innovation. In doing so, we invite our value analysis community to submit articles for publication, provide news releases for distribution and write letters to our editors with counter points or elaborations on their experience at their hospital, system or IDN. It is our hope that you, as value analysis professionals, will see this magazine as your voice and feedback mechanism to further improve your own supply value analysis program as we enter into the new healthcare economy that is upon us. Robert T. Yokl can be reached by phone (800-220-4274) or by e-mail at bobpres@StrategicVA.com with your questions, comments or counter-points to his editorials. Or, anything else that peaks your interest in this issue. Fall 2012
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Dear Colleague: For more than two decades now, SVAH has been helping healthcare organizations, who have hit the wall on their price savings, to restart their savings engines with a powerful twopronged new approach: utilization and demand management! After signing on to our Utilizer® Dashboard subscription service, our clients have quickly discovered that their utilization and demand management savings far exceed their price savings by as much as 26:1. This approach has turned around scores of supply chain departments that were formally scratching for savings and now have become virtual saving machines. Here’s how it works… No matter how many GPOs you belong to or how skilled you are at negotiating your custom contracts, at some point you will hit the wall on price savings. That’s why you need new savings sources (beyond price) to pick up the slack. Our Utilizer® Dashboard could be the answer you are looking for to jump start your savings. Your Partner in Savings Beyond Price™
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From the Managing Editor’s Desk
Look What We Have Done Now! Robert W. Yokl
Yes, we have started a new magazine about value analysis!! Why? Because we feel that value analysis is going to become an even more important component of the financial and quality success of healthcare organizations throughout the country. Our goal with this magazine is to provide our readers with unique value analysis and utilization management strategies, tactics and methodologies while offering alternative views on the cutting edge challenges that supply chain and value analysis professionals face today. There is a need for forward-thinking value analysis best practices, benchmarks and training which we believe we are uniquely qualified to bring to you with our over 25-plus years in the healthcare value analysis arena. Let’s face it, value analysis has high name recognition in our healthcare industry but there are many fundamental differences in philosophy, methods and practices that we believe need a helpful voice to bring everything into perspective. We want to explore new vistas and go boldly where no other supply chain magazine has gone before in order to bring you the best savings strategies and practices that will help your hospital, system or IDN’s value analysis teams and committees move to the next level of performance. Our scope is endless when you think about the multitudes of savings opportunities that we can talk about on the hundreds of thousands of products, services and technologies purchased on a daily basis by each and every healthcare organization in the country. Our mission with this new magazine is to help promote the best of the best strategies and methods in value analysis and then to pass them along to our value analysis community, thus benefiting everyone in the healthcare value analysis world. This is a continuing journey for us in which we need to up our game to a new level in our writing, teaching and research to improve our own core competencies. If you are interested in joining us as a writer, editorial advisor or would just like to comment on an article , please email me at ryokl@StrategicVA.com Fall 2012
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You could be leaving up to 11% to 18% in new supply savings on the table untouched!
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Four easy steps to quickly ring the towel dry on these multi-million dollar expenditures... 1. Build a case for change: Show your C-suite how much they are spending and what the potential savings (11% to 18%) would be if you were to aggressively attack these multimillion dollar expenditures that are ready to be harvested. Or, let BenchPlus do it for you! 2. Centralize all purchase service contracts: We recommend that all of your purchase service contract documents be archived and administered by your materials management/supply chain department. If the workload justifies it, you will need to hire a contract administrator to manage, control, analyze, bid or negotiate these contracts. However, this very small investment, if required, will yield a high ROI in a very short time. Or, archive with BenchPlus! 3. Benchmark all purchase service contracts: This will ensure that your purchase service contracts’ total lifecycle costs are within acceptable limits. Otherwise, how could you know if there are savings opportunities if you don’t quantify them and have a roadmap to start saving? This shouldn’t be a one time event, but instead a continuous process. Fall 2012
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Value Analysis News AHVAP 9th Annual Convention to
the land. That’s why the “Supply Chain Trian-
be held in Minneapolis, MN
cial report, should be of utmost importance to
gle”, which is explained in detail in this spe-
The 9th Annual convention of the Association
you.
of Healthcare Value Analysis Professionals Na-
It will show you how to close the door on more
tional Educational Conference and Vendor
than just two savings sources and then open
Showcase will be held on October 25—26,
up a new world of savings: utilization manage-
2012 at the Radisson Plaza Hotel, Minneap-
ment. Don’t miss out on this groundbreaking
olis, MN. AHVAP’s theme this year is “Value
special report, since your job and career could
Analysis: Envisioning the Future.”
depend on it. It is a limited-time offer!
AHVAP’s conference planners believe that this
To download your FREE copy of this special
will be an outstanding program of continuing
report visit www.supplyspecialreport.com.
education and a great opportunity for value
Supply Chain Hall of Fame Awards Dinner in
analysis professionals to network with their
Chicago on October 2nd
peers. For more information or to register for this
event
please
contact
AHVAP
at
www.ahvap.org.
Bellwether League Inc. invites you and your organization to participate in its 5th Annual
FREE Special Report: Strategic Supply Utilization Management
Honoree Induction Dinner, which will be held on Tuesday, Oct. 2, 2012, at the Sheraton Chicago O’Hare Airport Hotel, just outside the
If you are looking to unlock the secrets of ex-
northeast corner of Chicago’s O’Hare Interna-
traordinary and sustainable supply chain sav-
tional Airport. We hope that you will want to
ings then this new special report is for you.
demonstrate your appreciation and respect for
This special report will answer the question, “Where will my next supply expense savings come from now that price and standardization savings are gradually disappearing?”
these industry leaders in person: John H. Clarke, Paul V. Farrell, Max Goodloe Sr., Roberta Graham, R.N., George O. Hansen, James L. Hersma,
Thomas W.
Hughes, Carl L. Manley,
Raymond
This isn’t a new question, but one that has be-
Seigfried and Robert A. Simpson. For
come mission critical now that the Patient
more information contact Rick Dana Barlow at
Protection and Affordability Act is the law of Fall 2012
rickdanabarlow@bellwetherleague.org.
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Value Analysis Strategies
Strategic Value Analysis Planning Thomas Carlyle once said, “Nothing is more terrible than activity without insight.” Yet, most value analysis initiatives are launched, re-launched or tweaked with much activity, but with little or no planning.
Then, to everyone’s surprise, the inevitable happens a few months or a year
down the road – the value analysis initiative fails to meet its stated goals and objectives. Or, worse yet, is perceived by your clinicians as a cost cutting vehicle that is dramatically reducing the quality of the hospital or system’s products, services, and technologies. How can we avoid this activity trap? To avoid this eventuality, it should be your goal to develop a comprehensive “Based on our experience, this journey Strategic Value Analysis Plan (SVAP) starts with finding a champion to spon- to be utilized as a roadmap to sor your new or refined supply value establish, refine or reinvent your analysis program” supply value analysis program. It’s important to understand that while bottom up VA initiatives are commendable, what works best is when a hospital or system’s executive management team buys into, is committed to, and sets the tone and direction for any VA initiative. Based on our experience, this journey starts with finding a champion to sponsor your new or refined supply value analysis program from within your healthcare organization’s executive management team.
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Value Analysis Strategies Executive Management Connection Typically, the best champions are your CEO, COO or CFO because of their clout and status in your healthcare organization. If, for some reason, it is impossible to enlist one of these top executives in your campaign, then any vice president can be a strong candidate for sponsoring your supply value analysis program. The key here is that you must find a high level executive to fight for, defend and support your supply value analysis initiative in the short and long-term, or you could quickly find the doors to your executive suite closing on you and your ideas before they even have a chance to take hold. Let me give you an example of what I’m talking about. A 350-bed community hospital engaged our firm to assist them in refining their current supply value analysis program (and even paid their first payment on our fee), but when we arrived to give the hospital’s executive management team an orientation on what to expect from their new supply value analysis program, the only reactions we got were blank stares and no questions. Shortly thereafter, the new initiative was cancelled by a phone call from their materials manager. After investigating what went wrong with the start-up of this supply value analysis program, we found that although the hospital’s material manager was promoting this new program to her executive management, she did not enlist one member of the hospital’s executive management team as a champion to prepare the way, defend or fight for her new program. When she found that there was little or no interest in reinventing her current supply value analysis program, she was left to her own devices to try to resurrect her old supply value analysis program, with little or no success, because she had the doors closed to the executive suite before she even got her program off the ground.
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Value Analysis Strategies It All Starts with Finding A Champion The good news is that one year later, the hospital’s executive vice president visited the office of this same material manager and asked what happened to the new supply value analysis program she was promoting, since he now needed this type of program to save money on his next year’s budget. After she got off the floor from the shock, she told him she was still keyed up on the program, but she did not think anyone else was. He told her that attitude would change, since he was now sponsoring the new supply value analysis program. Further, he asked that she call my firm and get us back to the hospital as fast as possible for a new start-up orientation to the executive management team. He told her if there were any further issues to be dealt with regarding this new program, she was to come to him for any decision or guidance necessary to make this new program successful this time around.
“Your value analysis planning always begins with finding a champion within your healthcare organization’s executive management team to sponsor your new or refined program.”
Let me repeat again, your value analysis planning always begins with finding a champion within your healthcare organization’s executive management team to sponsor your new or refined program. Without a champion on your side, it will be
next to impossible to move forward with your supply value analysis program. All you can do is wait for the right opportunity to begin your campaign with a strong champion on your side.
How to Gain Management Commitment Now that you have found your champion, it’s time to obtain the commitment from your executive management team by giving them ownership over the planning, administration, measurement and management of your supply value analysis program.
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Value Analysis Strategies The Strategic Value Analysis Planning process provides the vehicle to obtain this ownership. The SVAP begins with an invitation by your champion, or your hospital or system’s executive management team members, to a one-hour orientation meeting as the first of three steps in the buy-in process as delineated below: Step 1: Executive Management Orientation: The orientation session starts with an exercise to determine if your executive management team is ready for the challenge of introducing your new or refined supply value analysis program initiative at your healthcare organization. The exercise that we use to open a dialogue with the participants is to ask them what roadblocks or barriers they envision politically, culturally, operationally, attitudinally and transformationally that would hold back their new or refined supply value analysis program. The answers to these questions are listed on a flip chart and discussed until all participants have found answers to avoiding the roadblocks and barriers that are identified in our discussions. With few exceptions, we have found that with just this short dialogue between executive management members, the buy-in process for your new or refined supply value analysis program will start to germinate. However, if for some reason you find that your executive management team members cannot gain consensus on how to overcome roadblocks and barriers, or there is no enthusiasm for the supply value analysis program you are introducing, it is time to regroup with your champion. You should determine what the next step would be in reintroducing your program, assuming the timing was right. Fall 2012
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Value Analysis Strategies Assuming that you are getting a green light for your supply value analysis program at this juncture in your orientation, your next step is to review, with your executive management team, your new supply value analysis program’s philosophy, principles and practices, and answer any and all questions on how the new program will work at your hospital or system. At this meeting you will also ask your executive management team members to appoint a steering committee chairperson (your champion, if possible), a recorder, and up to ten members who would represent your hospital or system’s executive management team’s (e.g., CFO, CNO, CMO, etc.) interests by guiding and managing your new supply value analysis program. Your value analysis director, manager or coordinator would be an ex officio member of the Value Analysis Steering Committee. The steering committee would conduct hour-long monthly business meetings to discuss, monitor and guide your hospital or system’s value analysis program. Step 2: Strategic Value Analysis Planning Session: Soon after the appointment of your Value Analysis Steering Committee, you would ask your chairperson
“Have each Steering Committee member actively involved with your Value Analysis Teams”
to invite his/her committee members to a three-hour Strategic Value Analysis Planning session where the members of the committee would design your new or refined program. This planning session will enable these members to be intimately involved (involvement = ownership) in the planning at a high and low level in the detail of your program. Step 3: Have Each Member Actively Involved with VA Teams: If at all possible, have each and every one of your Value Analysis Steering Committee members become actively involved with your new initiative by: (1) attending the value analysis training program, and (2) by volunteering as administrative champion for your value analysis team(s). This will enable them to see firsthand the challenges and opportunities that your supply value analysis team(s) are facing, which will enable Fall 2012
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Value Analysis Strategies them to make informed decisions at their monthly steering committee business meetings. These three steps are the critical success factors in obtaining buy-in and commitment to your new or refined supply value analysis program by your executive management team in the short and long term, thus giving you the foundation that you will need to succeed and sustain your new or refined supply value analysis program for many years to come.
Strategic Value Analysis Planning: A Three-Phase Process The SVAP starts with evaluating the strengths and weaknesses, or gaps, in your current supply value analysis program strategies and tactics and ends with the development of your Strategic Value Analysis Planning Document that will be used as the blueprint to ensure that your new or refined Supply Value Analysis Program is successful—the first time. This entails a three-phase process as follows: Phase I: Evaluating your Current Supply Value Analysis Program: The first step in your SVAP is to understand quantitatively and qualitatively the strengths, weaknesses or gaps in your current strategies, tactics, methods and practices. This can be an audit of your current program. The most critical part of this audit, beyond understanding what your current program elements are today, is to determine where your hospital or system’s savings gaps are in relation to best in class hospitals and systems. This can
Fall 2012
be determined by benchmarking your supply and purchase cost as a ratio of operating revenues with a peer hospital or system. The normal ranges for these rations are 13% to 15% for supplies and 24% to 28% for supplies and purchase services. If your hospital or system has a higher ratio than those shown above, the difference between your ratio and the normal range can be considered your savings opportunity gap.
hurdles you will face over the next few years. Phase III: Planning and Execution of your New or Refined Supply Value Analysis Program: Finally, you have reached the point in your SVAP at which you are required to develop strategies, tactics, milestone metrics and an evaluation system to ensure that your goals and objectives for your new or refined program are met or exceeded on a timely basis. The Planning and Execution Phase of your SVAP is based on the philosophy that, “what is measured happens”. We strongly recommend that a Balanced Scorecard be utilized monthly to measure the success of your new or refined program, since it will enable you to measure a number of critical success factors instead of just one factor — savings.
Phase II: Development of your Strategic Value Analysis Planning Document: Your next step in the development of your Strategic Value Analysis Planning Document is to define your mission, vision, organizational and administrative structure, goals and objectives, policies and procedures, reward and recognition program, value analysis candidates, etc., for your new or refined program. This exercise If your SVAP is developed carefully will give you a blueprint that you will and properly it will increase your require to weather the problems and probability of success 10-fold.
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Most healthcare organizations have 3, 5, or even 20 new products, services and technologies that their organization is evaluating at any given time. These clinical trials could easily add up to millions of dollars in new (and sometimes unneeded) expenditures — if left to chance.
Yet,
most healthcare organizations are “flying blind” when it comes to effectively, efficiently and systematically managing these high impact dollar clinical and non -clinical evaluations.
Too Little Time - Too Many Steps The biggest challenge that we hear about, from our value analysis community on their evaluations, is that there are so many steps (one VA coordinator we talked to told us that she has a 17-step evaluation process) to be followed that it’s almost impossible to keep up with all of the paper work.
We also know how difficult it is to find time to track, document, coordinate and
communicate to multiple stakeholders (steering committees, VA teams, project managers, clinicians, purchasing, distribution, etc.) the various evaluations — in real time.
Are these your value analysis team’s challenges too? We have also observed that most healthcare organizations archive their value analysis study data in either an Excel spreadsheet or Access database. That being said, if you tried to employ these tools for this purpose you will quickly discover that your study data becomes difficult to retrieve, awkward to manipulate and almost impossible to generate meaningful status and financial reports.
It Doesn’t Need To Be That Way! After researching the challenges that value analysis teams are facing, SVAH has developed and is now licensing seats to our new CliniTracK™ Value Analysis Management System. Our objective with this new SAS product line is to provide you with the solutions you have been looking for to the annoying problems we have just talked about, as
well as to speed up, streamline and reengineer the current value analysis manage-
ment process at your hospital, system or IDN. FREE “test drive” @ www.strategicva.com Fall 2012
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Value Analysis Teams
Value Analysis Team Leadership While we are all looking for leadership in our value analysis team leaders, what do these characteristics really look like in the real world? I think Dr. David G. Javitch, an organizational psychologist, got it right when he identified these nine basic leadership characteristics that are essential for your value analysis team(s) to succeed: 1. Mission: Do your VA leaders know what their mission is or are they making it up as they go along? I know that we have all experienced the frustration of having a team leader who is leading by the seat of their pants instead of taking control of their VA team. This doesn’t happen when a VA team leader understands that their mission is to guide, coach and support their team members in their search for lower cost alternatives to what they are buying now. It doesn’t get any simpler than this! 2. Vision: Vision is the ability to see the big picture and how a value analysis team fits into your healthcare organization and what the team will look like as it fulfills its mission. Without this vision, it will be hard for team members to understand why their VA team is important and to be willing to actively participate in the team’s tasks and activities without any compensation. Fall 2012
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Value Analysis Teams 3.
Competency: VA leaders must be seen by their members as if they know
what they are doing. They can’t “wing it” and hope nobody notices. They need to understand team dynamics and how to manage by persuasion, influence and example. Otherwise, it will be difficult for team members to respect, admire and follow such a VA leader no matter what their credentials say they have achieved in their own discipline. 4.
Goals: If a VA leader doesn’t set qualitative
and quantitative goals for their VA team, then how do they measure their team’s success? Javitch tells us that “Goals need to be operational; that is specific and measurable. If your output and results can’t be readily measured, then it will be difficult to know if you have achieved your purpose.” It would be counterproductive to do otherwise! 5.
Team Builder: No leader ever succeeds without a strong team. Therefore,
leaders have the rare ability to identify, attract and select outstanding individuals who will make their team stronger. After building their team, they then work on motivating the team to reach the highest level of performance. 6.
Communication Skills: Communicating at value analysis team meetings
isn’t enough. Team leaders need to keep in touch between meetings by e-mail, voicemail, and in-person meetings to make sure that their team members’ projects are on time, on budget and on target. To do less is a failure to communicate effectively in a just-in-time manner to get your VA team’s important work done. 7.
Interpersonal Skills: A team leader who is open, easy going and accessible
is more likely to build rapport with their team members. Those qualities contribute to team members wanting to interact with their leader to resolve issues without fearing retribution or embarrassment. It’s all about feeling comfortable with your team leader who has your best interest at heart. Fall 2012
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Value Analysis Teams 8.
Can Do Attitude: Nothing builds success, like success! That’s why team
leaders need to see every problem as an opportunity, every roadblock as a minor setback and every challenge as just another door to pass through. By doing so, they can build momentum to meet the goals and objectives they have set out for their VA team in a timely manner – over and over again!
9. Inspiration: Team leaders need to inspire their team members by their words and actions. They need to be advisors,
counselors
and
even
cheerleaders when the situation calls for it.
Above all,
team leaders must encourage their team members to believe that their projects are doable and manageable to counteract pessimistic thinking about project outcomes. That’s why a team leader’s words and actions can greatly influence the performance of any VA team.
The basic message here is that value analysis team leaders need specific skill sets to be successful in managing, maturing and maximizing their value analysis team’s efforts. If the selection of your team leaders is left to chance, then your hospital, system or IDN won’t obtain the highest level of performance that you are looking for in your value analysis teams. So when you are selecting your team leaders, look for these nine essential leadership characteristics that your team leaders must have if they are to succeed in managing your VA teams. Fall 2012
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Value Analysis Analytics
Breakthrough Savings on Demand The promise of value analysis analytics to up your savings game
Your healthcare organization is datarich, but most supply chain professionals don’t optimize the use of their hospital, system or IDN’s data to pinpoint, with certainty, where their best value analysis savings opportunities reside. Historically, supply chain management hasn’t been interested in value analysis analytics since their price and standardization savings have been so robust over the years. So, they haven’t had the need to analyze their savings beyond price and standardization. Technology investment has lagged behind at most supply chain operations, so the tools to analyze data have been missing.
The Law of Diminishing Returns Yet, we don’t believe there is a supply chain manager in the country today who can say that their price and standardization savings is even keeping pace with inflation. The law of diminishing returns has finally arrived in supply chain circles, where even with gargantuan efforts your hospital, system or IDN will be unable to increase your savings yield beyond a certain point. These are just the hard facts we must accept as reality in today’s healthcare supply chain environment. Do not be discouraged by this information, there is a whole new world of supply expense savings Fall 2012
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Value Analysis Analytics available to your hospital, system or IDN. That is the promise of value analysis analytics to up your value analysis game: The tool of choice to identify your best value analysis savings opportunities. Value Analysis Analytics Value analysis professionals can use value analysis analytics in many ways to improve their study outcomes (cost and quality), uncover supply chain inefficiencies, and improve your healthcare organization’s bottom line. More importantly, they can have a steady stream of new savings opportunities for their value analysis team(s) to tackle instead of running out of steam for the lack of new projects.
Definition Value Analysis Analytics
However, these feats of legerdemain can’t Thomas H. Davenport, the author of be accomplished without a digital data ware- Competing on Analytics, describes
(value analysis) analytics as “the exhouse. This is because material management in- tensive use of data, statistical and quantitative analysis, explanatory and formation systems are transactional in nature and predictive models, and fact-based aren’t built to analyze the millions of bits of data management to drive decision and actions.”
that flow through your supply chain department
and financials annually. On the other hand, value What Davenport is saying, in layman’s analysis analytics software can sift, sort and extract from your purchasing and financial data unfavorable trends, utilization misalignments and anomalies in your supply streams. Yet, software alone isn’t enough for you to take full advantage of the power of value analysis analytics. You will need to change your organiza-
terms, is that if you organize your supply spend into standardized descriptive categories (e.g. intravascular sets, dressing, office supplies, Oxisensors, transcription services, etc.) and then measure these same products, services and technologies’ activity-based performance against your own historical standards or that of your peers, your savings opportunities beyond price will quickly materialize before your very eyes.
tional mindset from a price orientation to utilization awareness to receive the full benefits of this breakthroush savings on demand concept. Fall 2012
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Value Analysis Analytics Change of Mindset For decades, supply chain and value analysis professionals have been focusing their savings efforts on reducing their prices and maximizing their standardization of the products, services and technologies that they have been buying. The advent of GPOs has made this chore even easier. Since your GPOs package savings opportunities is in the form of contracts, your healthcare organization only needs to evaluate and select the best GPO offering that meets your exact requirements. It’s fast, easy, and a somewhat straightforward process. Unfortunately, this universal best practice has embedded price, above all else, into all of your value analysis team’s conversations to the exclusion of other contributing cost factors. This is one of the biggest challenges we find when we are facilitating value analysis teams: changing team members’ mindsets from a price orientation to utilization awareness. One of the reasons for this phenomenon is that it is relatively easy to determine “best price” from competing vendors,
GPO
contracts
or
local
“Value analysis team members take the path of least resistance when searching for new savings opportunities. It is just easier to do so!”
sources, whereas it is much harder to uncover utilization misalignments that are hidden from your view. Value analysis team members take the path of least resistance when searching for new savings opportunities. It is just easier to do so! This is the mindset that needs to change if your hospital, system or IDN is to take full advantage of the power of value analysis analytics. Since the data along with analysis will lead you to robust savings opportunities, you will still need to change your healthcare organization’s culture and focus on price to adopt a new philosophy of reducing your total cost from acquisition to disposition. As Sherlock Holmes would say, “It’s elementary my dear Watson, you can’t have one without the other.” Fall 2012
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Value Analysis Analytics New Healthcare Economy Healthcare organizations are under tremendous pressure to control their cost and improve their quality while maintaining their market share. The ability to collect, analyze and act on the data that is stored in your digital data warehouse is paramount for supply chain and value analysis professionals in the new healthcare economy. It is no longer good enough to obtain the best price for the commodities you are buying. It is now mission critical for you to control all of your supply chain expense categories, from point of entry into your supply streams to their exit from your healthcare organization. To accomplish this worthy goal, supply chain and value analysis professionals will need to employ value analysis analytics as the first line of defense against excess costs in supply chain expenses. It is necessary to change behaviors that are contributing to these excesses and, most importantly, cultivate a culture of “zero waste” to ensure that your department heads and managers don’t return to their old habits. Once you have achieved these three milestones, you will fulfill the promise of value analysis analytics to up your savings game. There is nowhere else to go for savings — not even price or standardization can meet the threshold necessary to control your supply costs in the new healthcare economy we live and work in. Fall 2012
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BREAKTHROUGH GAME CHANGING BOOK IS YOURS FOR FREE! THE FUTURE OF SUPPLY CHAIN MANAGEMENT IS ALL ABOUT UTILIZATION!
BECOME A SAVINGS MAGNET Read this book and in a few weeks save more money than you have in years!
Sound unbelievable? Robert T. Yokl and Robert W. Yokl, healthcare’s leading authorities in Supply Utilization Management, have helped hundreds of hospitals, healthcare systems and integrated delivery networks to save close to a half billion dollars by employing the same utilization management strategies, tactics and techniques that they will teach you in this book.
Understand why you are slowly but surely running out of price savings
Learn why utilization management is more important than ever before
Hear why a new discipline of utilization management is on the horizon
Review 8 categories of utilization misalignments that cost you money
Know why value analysis analytics is the new science of savings
Grasp the worth of the value analysis/utilization management connection
The Book is FREE ($12.95 Value), but the Information is PRICELESS!
Get your FREE Copy @ www.StrategicVA.com Fall 2012
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Value Analysis Benefits 5 Major Benefits of Healthcare Value Analysis Why let these diamonds in your backyard go undiscovered?
Like our counterparts in the business world, we must now look to cost reductions as the next big revenue source for our healthcare organization, so it can thrive and flourish while we adjust to the impact of the Affordable Care Act and the market forces of change surrounding it.
One low cost yet high yield methodology in your arsenal is value analysis.
This can give you the next level of savings while maintaining and/or improving the
“It is time that you take a hard look and recommit your entire organization to the major benefits of a value analysis program�
quality of patient care. It is time that you take a hard look and recommit your entire organization to the major benefits that you can and will receive by enhancing your new and/or existing value analysis program. Here are the five major benefits that your healthcare organization
should be receiving from your current or upgraded value analysis program: 1. Dramatically Reduced Costs – Done correctly, with the right tools and systems in place, value analysis can offer double-digit savings opportunities beyond simple price negotiations or group purchasing contracts. Given the ratio of savings to revenue dollars, which can range from a low of 1:10 to as high as 1:30 savings to revenue ratio, it would take $10 to $30 in new revenue to generate the same bottom line results. Our business counterparts in industry have been generating profits in the weakened economy in this way. The same strategy is available to your healthcare Fall 2012
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Value Analysis Benefits organization, and value analysis is the engine to get you there. 2.
Improves Quality of Care – Value Analysis is all
about meeting our customers’ functional requirements exactly, which equates to meeting their quality goals as well. Functional analysis is a key success system for quality improvement, which all value analysis programs should be moving toward. If we meet our customers’ quality requirements every time, then this automatically eliminates waste, inefficiencies or feature rich products that would absolutely drive your supply costs up. 3.
Uncover Hidden Opportunities Inside Your
Operations – Forget savings for the moment as a benefit of value analysis because the learning curve that the value analysis process gives your healthcare organization is enormous. It can uncover risks that your hospital didn’t know were occurring with your products and services. If left untouched, these unnecessary costs and/or quality issues will grow exponentially. By using a proven VA methodology for your value analysis studies, you will be able to uncover these hidden and sometimes dangerous operational issues before they become endemic. 4.
Educate Your Department Heads and Managers – Let’s face it,
department heads and managers are the ones with the supply budgets that need to be managed. Those authorities and their employees are the ones who are specifying all the products, services and technologies you are buying. It is now mission critical to have them actively involved in the value analysis program so they learn how to better manage their product and service purchases inside their budgets. By actively participating in value analysis studies, in value analysis teams, this action alone will translate into savings on their own respective budgets. 5.
Learn How to Work Together In Teams – There are many different
teams in healthcare organizations, but very few effective teams where each and every Fall 2012
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Value Analysis Benefits member is tasked with duties to make the end results happen. Value analysis teams give you that power. We recommend that other than the team leader, who has duties as well, each and every value analysis team member should be assigned a VA study to lead.
Teams are the future for solving the ever com-
plex problems that healthcare organizations need to tackle in order to compete in the future. Train your team members in the best practices in the industry and you will reap the benefits of these dynamic teams. There are acres of diamonds in your backyard that are not being mined. The time has come to rededicate ourselves to mining these diamonds. Value Analysis can give you the tools to convert these diamonds to dollars. More importantly, VA can give you a competitive advantage in your marketplace, if and when you decide to elevate your value analysis program to a whole new level of performance. If not, you won’t receive the full benefits of value analysis. It’s your choice.
What’s Worse Than Not Training Your Workers and VA Teams? I just read a quote, “What’s worse than training your workers and losing them? Not training them and keeping them” by motivational speaker Zig Ziglar, which says in 15 short words all you need to know about why training of your supply chain staff (and value analysis teams) is mission critical. You should paste this quote up on your wall so you don’t forget it.
their department heads and managers continuously in training programs. Every few weeks there would be a mandatory training program on reading financial statements, how to write memos, how to conduct a meeting, change management, how to conduct job interviews, etc. These gave me a master’s degree in business management without paying a hefty tuition. As an aside, it also built strong relationships between our department heads and managers and gave us all an esprit de corps that carried over to our day-to-day jobs.
Zig coined this phase, I’m sure, to show the lunacy of not training your workers because they may leave your employment sometime down the road. You may also believe that it’s expensive to do so, but consider the expense it will cost you if your workers aren’t productive employees. This goes for your value analSimply stated, training is the “Magic Bullet” for inysis teams, too! stilling in your workers (and value analysis teams) It should also be noted that employees value employ- the right attitudes, methods and practices to make ers who train them because it tells your employees your supply chain operations exceptionally successthat you think they’re important. I remember one ful. It isn’t an expense, but an investment in your hospital I worked for many years ago that had all of workforce’s future success. Fall 2012
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Value Analysis Green Teams
It Isn't Easy Being Green 4 Strategies to Better “Green” Your Healthcare Organization
Who would have thought that a forty year old song by Kermit the Frog of Muppets fame, “Bein’ Green” would be so relevant to the healthcare supply chain? But given the fast pace of the healthcare supply chain and the thousands of options that your customers get to choose from in their products, services, and technologies it’s easy to understand why this is still an ongoing challenge for healthcare organizations going “Green”. Just adopting the “Green” philosophy and practices is a major challenge, let alone making it all happen in a cost-effective manner. The major issue that we fight against in the healthcare world is the balance between convenience and cost when it relates to “Green” products. Our clinicians want to use a product, throw it in the trash bin and forget it. They don’t want to remember to take a reusable product, use it and then throw it in a special bin for reprocessing. Not to mention the thought that the product has been used before on other patients. That just does not sit right with them. This is outside the norm for our clinician staffs and they would prefer to just take the straight and easy path. Fall 2012
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Value Analysis Green Teams With that mindset and internal inertia with so many products, how do we advance “Green” strategies while maintaining quality and reducing/maintaining costs? Here’s four ideas that might help with this transformation: 1.
Start with an Easy Win-Win Pilot – Before you propose a “Green”
program for your organization, identify easy win-win projects that would make sense as a pilot with your current value analysis committee/team. They then have already done all the leg work and will know ahead of time what all the options are and what the recommended outcomes will be; e.g.,
“Identify easy win-win projects reprocessing Harmonic Scalpels can save that would make sense as a pilot up to 35%. There are plenty of cohort peer with your current value analysis benchmarks to show that this is a best committee or team” practice and will not jeopardize quality. These pilots will give you the opportunity to go through an actual “Green” project and then provide you with a learning curve on what is involved with this process. 2.
Gaining Management Commitment – It is always best to get your
senior management behind your “Green” initiatives because you, most certainly, will be facing opposition from your clinicians, department heads and managers while making change happen. You are going to be asking them to take products that are working perfectly with no issues and requesting them to change to alternative “Green” products that may or may not create issues. Of course, they are going to challenge you. You will need to sell your management on “Greening” your organization. I’m reminded of the case of one of our community hospital customers, whose President happened to be sitting in on a VA Steering Committee meeting when the subject of “Green” products came up. He asked all the right tough questions and made the decision saying, “We will be a “Green” hospital.” I am not saying this will happen so easily for you, but you will need to convince your senior level management of all the positive aspects of a “Green” program in order to gain their support. Fall 2012
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Value Analysis Green Teams 3.
Set Goals – the old adage, “How do you know where you are going if you
don’t plot a course on a map?”, applies to any major initiative and “Green” programs are no different. What is your savings goal for your “Green” program? What are your quality goals? How are you going to monitor and track your goals now and over the long term? Work with your senior management and “Green” team members to develop your goals, year by year, to ensure that you have a fresh set of goals working from the start of your program and for many years to come. There is nothing more energizing for any team than setting goals and then meeting them! 4.
Learn from the Best – Plan to train your teams in “Green” strategies
but don’t assume, as we do in the supply chain world, that they will understand what they are going to be asked to do. Plus, you will need to put all of your “Green” team members on the same page with training. Look for an expert that you could hire for a half day program to educate your team members. It will be worth every dollar you spend to make sure that your team has a good foundation to spring forward.
“Green” strategies are here to stay, so look to engage your value analysis teams in this new “Green” world just as you would any other cost reduction or capital procurement process. We have worked with dozens of healthcare organizations who have had “Green” initiatives and have seen the value in these undertakings. So, it might not be easy going “Green”, but the benefits far outweigh the negatives. Fall 2012
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Who Says You Must Have Multiple Databases to Uncover Your Price, Standardization and Utilization Savings Opportunities? Why Do You Need to Employ the Utilizer® Dashboard?
Stop Hidden Utilization from Wearing Away Your Bottom Line Effortlessly Manage, Attack and Control Over 285 of Your Major Product Categories
Stop Waste and Inefficient Use
Make Your Job Easier
Spend Less Time on VA Studies
Utilizer® Dashboard is Your Next Generation Savings Tool One of Our Most Powerful Tools in These Difficult Economic Times! “The Utilizer® is quickly becoming one of our most powerful tools in these difficult economic times. It has not only been able to show us where we have been, but it is also pointing the direction of where we need to go in order to remain competitive and viable in what are sure to be challenging times ahead. Is it possible you could do the same?” Bill McFarland, Senior Director, Materials Management,
Learn a FREE Demo—www.UtilizerDashboard.com Fall 2012more with Healthcare Value Analysis Magazine www.ValueAnalysisMagazine.com 30
