Healthcare Insights, Best Practices, and Advanced Strategies You Can Use To Up Your Value Analysis Game
FALL 2013 ISSUE
Magazine
In This Issue: ===============================================================================================
Page 9— Supply Utilization Myths Page 16—Utilization = Practice Change Page 34—Is Poor Communication Slowing Your VA Process?
Special Utilization Management Issue Fall 2013 Published
Healthcare ValueinAnalysis Magazine by Strategic Value Analysis Healthcare—www.StrategicVA.com
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contents
Healthcare Value Analysis Magazine Healthcare Value Analysis Magazine is published quarterly by Strategic Value Analysis® in Healthcare P.O. Box 939, Skippack, Pa 19474
Utilization Myths, Misunderstandings, and Mistakes
Phone: 800-220-4274 FAX: 610-489-1073 bobpres@ValueAnalysisMagazine.com
www.ValueAnalysisMagazine.com ————————————
Editorial Staff Publisher
9 Supply Utilization Myths, Misunderstandings, and Mistakes: Why utilization savings are still illusive for most healthcare organizations
Utilization Equals Practice Change
Robert T. Yokl bobpres@ValueAnalysisMagazine.com
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Managing Editor Robert W. Yokl
16 Utilization = Practice Change: How to change your customers’ minds and hearts with your Value Analysis Program
ryokl@ValueAnalysisMagazine.com
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Senior Editor Patricia A. Yokl
23 How Often Should Your Value Analysis Teams Meet? The more often you meet the better for peak performance
How Often Should VA Teams Meet?
Fall 2013
39 Before, During, and After The Value Analysis Study: Why it is important to merge VA with utilization
Healthcare Value Analysis Magazine
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Editor Danielle DeShong Copyright 2013 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 email 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
Supply Chain Expense Management: It’s not about price any longer Robert T. Yokl
More and more supply chain and value analysis professionals are getting it: It’s not about price any longer. After more than 50 years of GPOs, systems, and IDNs squeezing prices until they squeak, there is very little left in price related savings to be obtaining today, tomorrow, or even in the near future. We are now in a maintenance (i.e., monitoring, compliance, and vigilance) mode when it comes to prices. It should be our goal to try to keep our new pricing below the rate of inflation for any given year. That’s all we can hope for into the next decade to contain our prices. On the other hand, there is a whole new world of savings in supply utilization management that most healthcare organizations aren’t attacking. Yes, some hospitals, systems, and IDNs stumble over some utilization savings from time to time. However, very few are actually scientifically targeting their utilization misalignments as they have been doing for years with their price savings opportunities. It’s now time for supply chain and value analysis professionals to change their cost management direction, by as much as 360 degrees, before your price savings dries up completely! Most healthcare organizations shy away from utilization management because they believe it requires more work than their price related projects, when it fact, most utilization misalignments can be identified and fixed without much effort. For instance, we recently pointed out to one of our clients, with data from our utilization dashboard, that their disposable neonatal Oxisensors’ utilization was three per neonatal patient day. It was quickly identified that the disposable neonatal Oxisensors their OB department was buying had adhesive strips that weren’t holding up during their patients’ bathing or treatments, thereby needing frequent replacement. The solution: Reusable Oxisensors that would hold up much better adhesion for many days at half the cost. As you can see, you don’t need to spend hundreds of hours tracking down and eliminating your utilization misalignments if you have the right data and some commonsense to come up with a lower cost alternative. By the way, if this client hadn’t fixed this neonatal Oxisensor value mismatch it would have cost them tens-of-thousands of dollars on just one product annually. 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 2013
Healthcare Value Analysis Magazine
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From the Managing Editor’s Desk Utilization is Not a New Concept but How We View and Attack It Is! Robert W. Yokl
The other day I was browsing through my copy of the Charles Housley (Bellwether League Honoree 2008) edited book Product Standardization and Evaluation which was published back in 1985. This was a compilation of best practice articles from various healthcare purchasing and materials management leaders at that time. What amazes me with these best practices is that many of the strategies, tactics, and ideas still hold true today and with small modification can be employed effectively. I took notice to a number of articles that pertained to managing “usage” as it was called back then. Today, we refer to usage as “utilization”. It is fun to have this book in my library and I highly recommend it be in yours, too. Just like a good song, great strategies and ideas do stand the test of time. Even back in the mid-1980’s, our healthcare supply chain leaders were writing articles about managing utilization, but when you look at it, high utilization in your supply chain has not changed. Yes, the product master files have gotten larger and the products more complex, but the fact is that using more product than you expect to use is going to drive your costs up. If you project to use 10,000 widgets on your new contract implementation that is going to save you 15% on new pricing but with the new implementation your annual usage/utilization increases by 22%, I have got news for you, your new contract is not saving you a dime but is costing you money! Front line strategies have always been to try to knock down as much of the cost overruns with the best prices and contract terms, but a good price will only go so far. You need to have strategies and systems in place to attack the usage/utilization. First, you must come to the realization that utilization is a growing issue that is not going away in our supply chains. I like to use the analogy of the hospital supply chain being a big Victory Garden with the products and services being the various flowers, fruits, and vegetables that we manage every day. You have to realize that every garden, no matter how pretty or well-maintained, has weeds. The weeds represent the regression, the unforeseen cost overruns, the waste, the product misuse, and alike. Instead of saying that there are no weeds in our garden, when every garden has weeds, we should put our efforts into picking these weeds as fast as possible and moving on. But we must always be on the lookout (tracking, trending, and monitoring) for new or old weeds popping up in our value analysis programs. Back in the 1980’s they had weeds (utilization/usage misalignments) and in 2013 we still have weeds. Yes, I can say with certainty that we have had weeds every year in-between. We need to now take on these weeds as a serious threat to our bottom lines and start eliminating, managing, and controlling the needless waste of our supply chain dollars. We need to act before we end up having to lay off people when we could save their jobs by eliminating the millions of dollars in utilization cost overruns in our supply chains. Robert W. Yokl can be reached by phone (800-220-4271) or by e-mail at ryokl@StrategicVA.com with your questions, comments or counter-points to his editorials, or anything else that peaks your interest in this issue. Fall 2013
Healthcare Value Analysis Magazine
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surgery, etc.) which they combined into an overall surgery rating. The study’s scope was from 2009 to 2011 and included 2,463 hospitals in all 50 states. The top five hospitals were: Anne Arundel Medical Center, MD; Christ Hospital, OH; Enloe Medical Center, CA; Greater Baltimore Medical Center, MD and Oklahoma Heart Hospital, OK.
Healthcare Value Analysis Magazine
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Are You Focusing on What Matters Most? Price and standardization are important up to a point, but if you aren’t focusing your supply chain expense management efforts on utilization management — where it matters most — you are losing the opportunity to save 7% to 15% on your total spend...period!
Slippery Slope We often talk about utilization
Insidious Effect
see your utilization misalignments
This matters because if you have obtained the best price and then standardized on a commodity, but your utilization of this same category of purchase is off the charts, you are losing all the savings you have gained to date.
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pricing is slowly disappearing. This is no longer conjecture; it is a What makes this situation worse is that it is almost impossible to cold hard fact. Fall 2013
Healthcare Value Analysis Magazine
UtilizerDashboard.com 8
Feature Article
Robert T. Yokl
Supply Utilization Myths, Misunderstandings, and Mistakes Why utilization savings are still illusive for most healthcare organizations
Although the term utilization management seems to be understood by some supply chain managers and value analysis practitioners, in reality, there are still too many myths, misunderstandings, and mis-takes about this new and emerging disciple. They are holding back massive new and better savings for our nation’s hospitals, systems,
and
IDNs. We need to clearly understand this new savings source if we as an industry are going to survive the winds of change in our
healthcare mar-
ketplace.
Utilization Myths
A myth is a half-truth, sometimes called fiction, about a person or a thing that has gained acceptance over the years as being true. Supply utilization has taken on this mantel in some supply chain circles for the following three reasons: Fall 2013
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Feature Article
Robert T. Yokl
1. It is believed that supply utilization is a term that can apply to just about any savings that isn’t price savings. To the contrary, supply utilization management is about uncovering specific misuse, misapplication, and value mismatches in your supply streams that requires a new vigilance on how your customers are employing the commodities you are buying for them. 2.
Supply utilization isn’t something new, since supply chain managers and value analysis practitioners have always looked for waste and inefficiencies in the products, services, and technologies we have been buying. If this statement was true, why aren’t there more savings identified as utilization savings in this category? Over the last few decades, we have reviewed hundreds of
“Myths die a slow death but eventually expire when the irrefutable facts are laid out for all to see.”
savings reports and can tell you that only a handful have reported utilization savings. The truth is: As an industry, we are not focusing on this savings category as of yet! 3.
There are very little savings opportunities to be uncovered in this supply chain expense operational area. Since very few healthcare organizations are actually measuring the savings opportunities of their product, service, and technology utilization, there is no way they can state that there “is very little savings” in this category. However, we know from our own utilization savings measurement over the last two decades, that there is 7% to 15% to be saved at any healthcare organization in the country. Fall 2013
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Feature Article
Robert T. Yokl
Myths die a slow death but eventually expire when the irrefutable facts are laid out for all to see. If you believe any of the myths about supply utilization management we have just debunked, please look at the cold hard facts that refute these claims. It is to your advantage to do so!
Utilization Misunderstandings Beyond myths, there are other erroneous misunderstandings about supply utilization management
“Supply utilization management is someone else's job.”
that need to be clarified and dispelled as follows:
Misunderstanding #1: Supply utilization management is someone else’s job.
Supply chain management’s job is to manage and control all products, ser-
vices, and technologies from “acquisition to disposition”. When you buy into this definition of supply chain management you can easily see that utilization management falls under the realm of supply chain management. This is because supply chain management is the only hospital department that has (or should) have unlimited visibility over its hospital’s supply chain expenses. No other hospital department has this visibility! Misunderstanding
#2: Value analysis teams are focused on utilization
management. It has been our observation, from working with hundreds of hospitals, systems, and IDNs over the last three decades, that value analysis teams whole focus is new product requests and/or GPO contracts. They aren’t looking at the utilization of the products, services, or technologies their hospital, system, or IDN is buying. Due to this fact, millions of dollars are lost each year at facilities that are ignoring this new and better savings source. Fall 2013
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Feature Article Misunderstanding
Robert T. Yokl
#3:
Spend managers can identify my utilization
misalignments. Spend managers were developed to benchmark your prices to uncover your competitive gaps, not your hospital’s supply utilization misalignments. Therefore, this one tool is useless in managing and controlling utilization of your products, services, and technologies. That’s why you need more than one power tool, like a master carpenter, to get the job done right – the first time!
“Don’t get caught in this cycle of misinformation; get the facts from credible sources."
All new disciplines, like supply utilization management, are misunderstood at first until more accurate information is provided to the marketplace to clarify and dispel misinfor-
mation that has arisen over time. Don’t get caught up in this cycle of misinformation; get the facts from credible sources to keep your supply utilization management program on track and on target.
Utilization Mistakes When contemplating your own supply utilization management program, it makes sense to avoid the three biggest mistakes supply chain managers and value analysis practitioners make in establishing their programs: >>>>>>
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Feature Article 1.
Robert T. Yokl
Not utilizing technology to ferret out supply utilization savings. We have found that you can’t uncover your supply utilization misalignments with the naked eye. It requires specialized technology built to classify, identify, and root out the cause of waste and inefficiencies in your supply streams. Spreadsheets won’t help since they are a static tool too labor intensive and cumbersome to be helpful in your search for new and better savings.
2.
Not shadowing your customers to understand why your hospital practices are different. Too often, hospitals will identify a supply utilization savings but not know why it is happening. This is when you need to visit the customers that are using the commodity and then observe how they are employing the product, service, or technology. Without fail, this exercise will lead to answers to your questions about utilization misalignments. Sitting at your desk or discussing this anomaly at a value analysis team meeting won’t get you the answers you need to solve this problem. You need to be proactive in doing so!
3.
Not using data (charts, graphs, and benchmarks) to convince your customers to change their costly behaviors. When you do identify, verify, and observe a supply utilization misalignment, you then need to convince your customers and stakeholders of the need >>>>
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Feature Article
Robert T. Yokl
to change their costly behavior. This is most successfully accomplished by using charts, graphs, and benchmarks to show your customers that they’re an outlier. Since no department head or manager likes to be considered an outlier, they will quickly conform their behavior to that of their peers. This tactic works 98% of the time!
“Learn from the mistakes of others to shorten your learning curve.”
We all make mistakes, slipups, and gaffes in our supply chain business, but why not learn from the mistakes of others, as we have outlined herein, to shorten your learning curve. It’s the fastest way we know of to become an
expert in supply utilization management
without the slow painful process of trial and error.
Illusive Savings As your price savings dissipate over the next few years, you will need to pick up the slack with new and even better savings to fill in your savings gaps. There is no better way to do so than with supply utilization management. First, you need to clear away the myths, misunderstandings, and mistakes that are holding back your supply utilization savings. We hope this article goes a long way in helping you on this journey to utilization management success.Θ
Fall 2013
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Clinical Value Analysis Utilization = Practice Change James Russell, RN-BC, Value Analysis Facilitator VCU Health System, Richmond, VA
What do we mean when we talk about Value Analysis projects that focus on utilization? We’re talking about practice change. To a clinician, asking them to change their method of practice can be a bit threatening. “The way they’ve always done it,” has been working just fine in their eyes, so why change something that isn’t broken? Our task, in Value Analysis, is to provide a convincing argument for change that supplies sufficient motivation and reward. Clinical Evidence By training, clinicians are scientists, to a great extent. They are trained in a myriad of scientific disciplines from Anatomy and Physiology to Biology and Microbiology to Chemistry and Pharmacy. This training includes a great deal of statistical analyses and a heavy reliance on the scientific method. When seeking to influence a clinician’s practice, use of these tactics can dramatically assist in breaking down barriers and clearing up misunderstandings. At the Virginia Commonwealth University Health System (VCUHS), the Value Analysis Facilitators (VAFs) rely heavily on the examination of clinical evidence to support proposed change. Our Chief Nursing Officer and Vice President of Patient Care Services, Dr. Deb Zimmerman, has a very predictable line whenever an idea involving practice change is pitched: “What does the evidence show?” It’s become so predictable that others ask it before getting in front of her. How can we convince her that changing the current practice, effecting utilization, will be beneficial? Evidence! >>>> Fall 2013
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Clinical Value Analysis Case Study A recent example at VCUHS involved Sequential Compression Device (SCD) sleeves. Through networking at a UHC (University HealthSystem Consortium) conference, the VAFs heard about a potentially significant ROI (Return on Investment) by converting from the higher cost thigh-high sleeves to lower cost knee-high sleeves. This ROI was primarily financial, although a clinical component existed. The first step: “What does the evidence show?” By examining several published clinical studies, a hypothesis was formulated and presented to the clinicians. Chief among their concerns were the proposed change’s effect on DVT/ PE (Deep Vein Thrombosis / Pulmonary Emboli) rates. These untoward events are serious and
“Value Analysis will never get away from price negotiations, but you can only lower a price so far. Utilization is where the greater impact can be made.”
can be potentially fatal and are the reason SCDs are used in the first place. An increase in these clinically dangerous outcomes would be unacceptable and the clinicians (rightly so) would be unwilling to “experiment” and see what happened. They’d need evidence to convince them changing their practice would be safe. The hypothesis therefore became: Conversion from thigh-high to knee-high SCD sleeves will decrease VCUHS supply costs, increase patient compliance (due to knee-high being more comfortable), and will not adversely affect DVT/PE rates. Presenting a Value Analysis project in the form of a hypothesis can be very helpful in explaining the rationale for a project and providing measurable benchmarks to follow up on later. In this presentation, the goal of cost savings is not hidden. In order to maintain (or establish) credibility with clinical experts, it is important to be upfront about a project’s goals and projected benefits. Transparency is a popular word in Value Analysis, and rightly so. Decisions involving clinicians>>>>> Fall 2013
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Clinical Value Analysis should be clear and undisguised, providing both defensibility if needed and inclusion of eclectic opinions and ideas. There was convincing evidence, from several sources, to show that the use of knee -high vs. thigh-high SCD sleeves showed no statistical difference in DVT/PE rates. Some studies also showed an increase in patient compliance with the knee-high sleeves, as the thigh-high sleeves can be quite uncomfortable. After presentation to many clinicians, the project was approved by most, but not all, and conversion occurred, except in select areas. Twelve months later, the project’s repercussions were shared with the clinicians. This is an important step in the process. If the clinicians are going to support a practice change, they should be included in the follow up, whatever the outcome. In the SCD project, VCUHS experienced a cost savings that was nearly six-figures and our DVT/PE rates not only didn’t increase, they went down! It is possible that increased patient compliance played a part in this decrease. After presentation of the follow up data, those clinicians who were reluctant to convert at the beginning of the project were convinced of the benefits and agreed to do so. Improving patient outcomes, by decreasing untoward events, can definitely provide compelling motivation for clinicians to change their practice.
Summary A project like the one described above is the very definition of a win-win. Supply costs are decreased, negative clinical outcomes are decreased, and patient satisfaction improves. Accomplishing all of this, without changing the price of the items being purchased may be different for many Value Analysis programs that are intensely pricefocused. As VCUHS’s Director of Materials Management, Timothy Wildt, points out, “Value Analysis will never get away from price negotiations, but you can only lower a price so far. Utilization is where the greater impact can be made.” >>>>>>>>>> Fall 2013
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Clinical Value Analysis A few projects like the one described here can enhance future clinician participation in utilization-based projects. Asking them to change their practice by providing sufficient evidence and motivation will be met with less skepticism and resistance when successful projects can be used as primers. It may even motivate them to generate project ideas on their own and bring them to Value Analysis! Θ Jim Russell is a Value Analysis Facilitator for Virginia Commonwealth University Health System and has more than 25 years of nursing experience, specializing in critical care and psychiatry. He's been a Staff Nurse, Charge Nurse, Clinical Coordinator, Nurse Manager, Director, and Chief Nursing Officer. He worked for many years in the for-profit community healthcare sector and also has several Academic Medical Centers on his resume. Jim sat for 5 years on the Nursing Advisory Board for a HealthTrust, performing Value Analysis for nursing related products and represented more than 70 hospitals. He is currently on several Advisory Councils and Special Interest Groups for UHC and Novation. When not at work, he can be found rolling around with his hyperactive rescue Husky. You can contact Russell with your questions or comments at jrussell2@mcvh-vcu.edu
Learn More Here at StrategicVA.com Fall 2013
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AHVAP Perspective Dee Donatelli, 2013/2014 President AHVAP
Celebrating 10 Years of Service and Vision to the Healthcare Industry As AHVAP begins its 10th year, the board is focused on providing strategic clarity around committee goals and structure. It is our belief that our committees will provide our members the tools and process to innovate and lead value analysis through the next 10 years. One thing is for sure, the challenges will not lessen. As we look around and see our government, our healthcare system, and our hospitals struggle, we must work together to overcome the immensity of challenges or better said - maximize the opportunities! VA is clearly the foundation upon which our organizations must embrace change. It is a process that should drive change to deliver the highest outcomes and value at the lowest possible cost. This continuous process improvement IS value analysis and the focus of AHVAP is for our members to be leaders in the most rapidly changing industry in the nation. To be a part of AHVAP is to be a part of change for the betterment of the healthcare system in the United States!
Join AHVAP Today! www.AHVAP.org Fall 2013
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Value Analysis Teams
Robert T. Yokl
How Often Should Your Value Analysis Teams Meet? The more often the better for peak productivity and performance. The healthcare industry norm for the frequency of value analysis team meetings seems to be once a month. However, this meeting schedule can cause communication gaps, delays in making important decisions, and eventually loss of interest by team members. It ALL comes down to “out of sight, out of mind” for most team members. Frequency is Critical We recommend that value analysis teams meet weekly or bi-weekly if there are enough agenda items for teams to be productive. Otherwise, your teams will lose their momentum. Don’t set the expectation that your VA meetings aren’t important! Frequent meetings also prevent team members from doing no work during the month and rushing to complete their projects (if they take the time to do this at all) on the last day before your next monthly meeting. This behavior leads to poor quality project reports that are rushed to the point where they are worthless. The worst VA team meeting schedule is ad hoc (or calling a meeting when there is something to talk about), which is missing the point of value analysis teams; VA teams are an extension of the supply chain department and should be actively involved in almost all supply chain expense management decisions. >>>>>>>>>>>>
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Value Analysis Teams
Robert T. Yokl
When we hear a hospital’s value analysis team meets ad hoc we wonder how a supply chain manager or value analysis coordinator can make valid and informed decisions about the products, services, and technologies they are buying.
Communication is Critical Department heads, managers, and clinicians have the expectation that their requests will be expedited in a timely manner. If your value analysis teams are only meeting monthly, then there is a minimum of a 30-day (more likely a 90-day) delay in getting these individuals an answer to solve their supply chain problems. We hear about clinicians that don’t get an answer (positive or negative) to their product request for well over a year. This is unacceptable, unnecessary, and unprofessional! That’s why it’s critical for your VA teams to meet more frequently to provide your healthcare organization’s staff with more timely communication on their requests. It is also important to improve communication between your VA project managers and your VA team leaders by having frequent VA meetings. If you don’t meet for a month, your VA leaders have no idea how their project managers are progressing with their projects. On the other hand, if you are meeting weekly, your VA leaders know in real-time how your VA projects are developing. Why keep your VA leaders in the dark month to month, when frequent VA meetings will solve this common communication problem?
Productivity is Critical VA teams that meet weekly or bi-weekly are more productive, more focused, and more accountable than VA teams that meet monthly, since they fall into a routine that they become comfortable with and it quickly becomes part of their regular duties. Whereas, monthly VA meetings are even forgotten about because they aren’t frequent enough to imprint them on an individual’s brain. Additionally, VA teams that meet more frequently than monthly naturally complete more VA projects on time, on budget, and on target. This means more savings for your healthcare >>>>> Fall 2013
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Value Analysis Teams
Robert T. Yokl
organization and more credibility with your senior management.
Peak Performance VA teams are no different than your own supply chain department’s team in that they need to be managed effectively if you desire peak performance from them. To do so efficiently with your VA teams requires the proper structure, policies, procedures, and rules that promote accountability and instill discipline in your VA methodology. Speeding up your VA meeting schedule is one way to obtain the peak performance you and your senior management are looking for in your value analysis team in the new healthcare economy.
#1 Ingredient to Improve Your Value Analysis Teams Michael E. Porter and Thomas H. Lee, in a recent Harvard Review article, put it this way, “Teams improve and excel by tracking progress over time and comparing their performance to that of peers inside and outside the organization.” This measurement process goes beyond just tracking savings, although this is what value analysis is all about. It is paramount that you also track and benchmark your: Team’s attendance: It is an established fact that when more of your team members show up for meetings, more work gets done. Tracking this metric and acting on it can greatly improve your outcomes. Projects completed on time: Teams have a tendency to take forever to get projects completed. It shouldn’t take more than 90 days for most proFall 2013
jects. You need to know this information to understand the root cause of your project’s delays. Time to complete projects: This gives you a benchmark to compare to your peers. If you find that your project managers are falling behind on their project timetables compared to your peers, you need to find out why. Rejected savings: If a project is rejected by a customer, you need to document this fact so you can revisit this project at a later date. From our experience, these savings can be achieved within 2 years by revisiting them, so don’t ignore them. Projected vs. actual savings per project: You should have an estimate on the savings to be achieved on each of your projects. Then, you can measure whether you hit your target or not. If you didn’t hit your target savings - why not?
Healthcare Value Analysis Magazine
I’m sure you could add a few more measurements that are important to the performance of your value analysis team to this list to measure your team’s progress. What is important to remember is that your value analysis team(s) won’t improve or excel if you don’t track their progress over time and then benchmark how they measure up to your peers inside and outside your organization. This is an immutable law of team management: No measurement, no progress! Don’t let anything get in the way (i.e., time, resources, or deadlines) of the measurement of your team’s progress, especially since technologies on the market today can ease the pain of measuring and managing your team’s activities.
25
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www.CliniTrackManager.com Fall 2013
Healthcare Value Analysis Magazine
26
Leadership Interview Value Analysis Leadership Interview Barbara Strain, Director, Supply Chain Analytics University of Virginia Health System, Charlottesville, VA B a r b a r a St r a i n i s a g r adu at e of C a l i f o r n i a St at e U n i ve r s i t y an d o n e of t he f o u n d i n g m e m b e r s , p a s t p r e s i d e nt a n d B o a r d Me m be r o f t he A s s o c i at i on o f He a l t hc a r e V a lu e A n a ly s i s Pr of e s s i o n a l s . S he i s a l s o a f r e qu e nt c on t r i but o r t o he a l t hc a r e s u p p ly c h ai n m a g a z i n e s on v a lu e a n a ly s i s t o p i c s .
(HVAM) Can you give us a little bit of
(physician, nurse, pharmacist, and respira-
history about your healthcare career
tory therapist) were crucial to that pa-
and how you got involved with value
tient’s outcome and prepared me for those
analysis?
hard healthcare discussions as I transi-
(BS) My 35-year career can be divided into
tioned to value analysis.
3 phases; laboratory scientist specializing in clinical microbiology, laboratory man-
When the University of Virginia Medical
agement, and value analysis, all overlaid
Center formed its own supply chain de-
with non-profit professional organization
partment, independent of the university,
governance experience.
the leadership had the foresight to include a position for a clinical FTE to be part of
Performing analytical work in clinical mi-
their organization. The job description
crobiology helped to prepare me in making
called for the clinical person to have expe-
the leap to value analysis. In clinical mi-
rience in nursing, laboratory, respiratory
crobiology we handled each patient speci-
therapy or other clinical discipline. I was
men knowing that it may be our only
lucky enough to be chosen and set on the
chance to do all we could to provide the
course of developing a value analysis pro-
information to rule a diagnosis in or out.
gram.
Collaborations with the patient’s care team Fall 2013
Healthcare Value Analysis Magazine
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Leadership Interview I have been very lucky during my career and
to lower spend; they invested in research and
was given several opportunities to expand my
other infrastructure and niceties no matter
knowledge base. One of the most valuable
whether they were not for profit or private.
was participation in a green belt six sigma training program. This process improvement
When
DRGs were
formulated, all
that
skill set, as well as other management tools,
changed. Doing more with less, working
have translated seamlessly to operationalizing
smarter not harder and departments now
value analysis. I have a detective-like nature
called cost centers were all concepts we had to
to begin with, so gleaning information from those closest to the patient is invaluable in identifying where the next best idea might come from to improve patient care or enhance the staff practice experience.
“Department heads, managers, and clinicians have the expectation that their requests will be expedited in a timely manner.”
I live by these two mottoes that have served
get a firm grasp on before they overran fi-
me well during my career:
nances. Even though we may not have called
People make problems, people can solve
it value analysis we looked at why we had cer-
problems, and to win, you have to have a
tain processes and how could we do it better
system.
while keeping quality healthcare at the center of all we do.
(HVAM) Could you share with us your perspective on healthcare value analy-
Now the healthcare mind set is infused with
sis? In addition, explain your outlook
value analysis. Using systematic proven pro-
before you became a value analysis pro-
cesses we look at all aspects of a product life
fessional through to your current view-
cycle; product standardization, ROI, safety,
point now that you are a senior value
effect on procedure times or length of stay,
analysis leader.
reimbursement. As Bob Dylan, the ultimate
(BS) When I started my career, hospital de-
poet of our generation sang; The times they
partments were called revenue centers. They
are a-changin’. >>>>
did not focus on the number of FTEs and how Fall 2013
Healthcare Value Analysis Magazine
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Leadership Interview “The mission of AHVAP is to assist the value analysis professional.” (HVAM) You are a recent past presi-
fession and professionals of healthcare value
dent and founding member of the As-
analysis was most rewarding.
sociation of Healthcare Value Analysis, what impact has AHVAP had on
(HVAM) Why is it so important to
your career?
have a strong organization like AH-
To be a part of a grassroots effort starting an
VAP for Value Analysis professionals?
organization with fellow healthcare value
(BS) Value analysis has long been associated
analysis professionals has been and contin-
only as a term defining a process. While by
ues to be personally and professionally en-
definition is true, it does not embody the
riching. From day one, when we were eight
trained professional that identifies, recom-
people on e-mail asking
mends, and im-
each other about using cer-
plements
tain products and sharing
savings
our experiences introduc-
tives. The mis-
ing new technology, con-
sion of AHVAP is
tinues to be one of the best
to assist the val-
learning environments I
ue analysis pro-
know of.
fessional.
Additionally, my time on
devoted to the
the board involved in non-
professional and
profit organizational gov-
is represented in
cost initia-
It
is
ernance was one of the greatest honors. To
its membership qualifications that “members
work with the other board members to
shall be involved in value analysis and em-
strategize how to serve the AHVAP member-
ployed by a hospital or health system”.
ship, build upon the fertile foundation of previous leadership, and to promote the proFall 2013
Healthcare Value Analysis Magazine
29
Leadership Interview (HVAM) What role do you see for val-
provided insights into the entire cradle to
ue analysis professionals with the im-
grave experience as products move through-
plementation of the Affordable Care
out the healthcare environment. It made me
Act and all the cost cutbacks and new
a better, well-informed value analysis profes-
quality requirements?
sional. The best example I have of the syner-
(BS) The value analysis professional will con-
gy between supply chain and value analysis
tinue to play a crucial role in contributing to
is rooted in a question that was posed to me
the financial success of healthcare organiza-
that went something like this, “Who decided
tions. The difference, as we begin to enter
what products would be stocked and used in
the age of Accountable Care, is the grander
my unit?” My immediate answer was, “A
scale of the initiatives and the speed in which
group of your peers,” which was followed by
they need to occur. Informed senior leaders
an explanation of our value analysis program
are providing support to existing programs
and how they could provide input.
within their organizations or are establishing programs to be front and center. The time is
Contrary to popular belief, supply chain
right for value analysis professionals to con-
does not decide what products will be used in
tribute as many never have before.
bedside care but plays an integral role in providing the data to arm the value analysis
(HVAM) With your experience, not on-
professional with the quantities that were
ly in value analysis but also supply
purchased, the price of the goods, and the
chain analytics, how do you see the
contract details as well as data to audit suc-
synergy between the two working suc-
cess of the initiative.
cessfully for value analysis professionals to reach their cost and quality
By understanding the logistics, post supply
goals?
decision, a realistic time line could be set in
(BS) Data, or should I say accurate source of
motion to operationalize the successful in-
truth data, is the grand neutralizer required
troduction of the supply. Understanding the
to legitimize initiatives, gain support, and
necessary steps from in-service training, es-
measure success. Reporting to and having
tablishing par levels, determining who would
other responsibilities within supply chain
use the product, how it would be stocked,
Fall 2013
Healthcare Value Analysis Magazine
30
Leadership Interview and entering information into the materials
lent of preventing 577 HAPU (hospital ac-
computer system are all keys to success. As
quired pressure ulcers) with a related savings
Helen Keller so aptly said, “Alone we can do
of $5M. Each member and department in-
so little; together we can do so much.”
volved in the success of this project were publically praised for the collaboration to-
(HVAM) Could you share with us a re-
ward improving patient safety.
cent success that you have had with a value analysis project at your organization? This success story involves collaboration between nursing,
the
continence
wound/ostomy/ team,
supply
chain operations, and value
“The value analysis professional should take stock of where in their organization structure they and their department reports.”
(HVAM) As a senior value analysis leader, what
advice
would
you give a new value analysis professional to help them advance their career in the
analysis. One of the patient safety initiatives
right direction?
is reducing pressure ulcers. We tackled this
The value analysis professional should take
in a coordinated team fashion including eval-
stock of where in their organization structure
uation of products, use of products for ex-
they and their department reports. If not re-
tended time on pilot units to determine effi-
porting directly to a Chief/VP then they
cacy
bed
should be reporting to someone who has a
making/linen guidelines, turning and mobi-
position high enough in the organization that
lization of patient, and administrative sup-
can influence senior leadership.
port for dedicated skin champions in each
from senior leadership for value analysis ini-
nursing unit.
tiatives is key to financial and patient quality
The project started in 2010 and final prod-
successes.
and
costs/patient,
reviewing
Support
ucts and skin integrity guidelines were rolled out in summer 2012. This is an example of
Initiatives should range from supply conver-
an initiative that increased overall product
sions to standardization of supplies and
costs but decreased the hospital acquired
practice, as well as physician procedure use
pressure ulcer rate to 1% which is the equiva-
items and overall utilization per MS DRG. >
Fall 2013
Healthcare Value Analysis Magazine
31
Leadership Interview This activity requires individuals trained in
A team of five AHVAP members developed
value analysis who have clinical experience,
two half day pre-conference workshops for
supported by data analysts who mine inter-
the AHRMM 2013 annual conference. Gloria
nal and external sources and a direct link to
Graham and Colleen Cusick led the Value
supply chain management. Finally, today
Analysis 101 session outlining the elements
more than ever, value analysis professionals
of a value analysis program, program struc-
need to stay in touch with one another through organizations such as AHVAP. Networking and knowledge sharing, whether live or virtual, is the life line to past, present, and future strategies that could make a difference in their organization’s success. (HVAM) You recently were part of a
“Today more than ever, value analysis professionals need to stay in touch with one another through organizations such as AHVAP.”
team of AHVAP Senior Value Analysis
tures and membership, as well as basic tools
Professionals who created a Value
for decision support and other getting-
Analysis 101 and 201 training program
started principles. James Russell, Terri Nel-
which you previewed at AHRMM 2013.
son, and myself led the Value Analysis 201
Will this program roll out fully at AH-
Advanced Concepts in Value Analysis session
VAP 2013 in October? Could you share
where we reviewed strategies in addressing
some highlights or key thoughts about
physician preference items, product stand-
the programs?
ardization and utilization, as well as how to
Most of you may know that AHRMM rolled
engage physicians in value analysis. Both
out a new movement centered on cost, quali-
programs were well received at AHRMM as
ty, and outcomes. Through organization-to-
evidenced by positive comments in their
organization networking, AHVAP was asked
evaluations. Θ
to participate in their annual meeting by bringing value analysis principles to their healthcare materials and resource management membership. Fall 2013
Healthcare Value Analysis Magazine
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Letter To Our Customers and Subscribers Dear Colleagues: It has been brought to our attention that our competition is telling our customers and subscribers that SVAH’s Utilizer® Dashboard is a spend manager. We want to make it absolutely clear to our customers and subscribers that our Utilizer® Dashboard isn’t a spend manager - not by a mile. To the contrary, our Utilizer® Dashboard is a utilization manager, which differentiates us from the other guys. While spend managers help you hunt for better prices, which are slowly disappearing, our Utilizer ® Dashboard is focused on the new low-hanging fruit (utilization management) that we can virtually guarantee a 5% to 7% increase in your supply expense savings within 12 to 18 months. Beware of vendors selling old technology by putting a new face on it and calling it a utilization manager. There is only one utilization management system in the healthcare marketplace today: Utilizer® Dashboard. Don’t be fooled by the misinformation campaigns of imitators! Or, your utilization savings results will be disappointing at best! Sincerely, Robert T. Yokl Robert T. Yokl President & Chief Value Strategist, SVAH Robert W. Yokl Robert W. Yokl Vice President of Operations, SVAH
Fall 2013
Healthcare Value Analysis Magazine
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Value Analysis Techniques
Part-Two of Series
Is Poor Communication Slowing Your VA Process? Tips and tools to enhance your VA communication and productivity By Wanda-Dupree Lane, RN, BSHA, MaED, Clinical VA Coordinator, The Regional Medical Center, Memphis, TN
The most valuable tool for improving communication is the template. Develop templates like figure 2 for communication tasks based on the feedback from your surveys and productivity spreadsheets. If one of the survey items reveals an information gap regarding time between request and availability, develop an email template with specific information included and set a reminder to inform the requestor bi-weekly. Figure 2 Sample Communication Template
Good Afternoon _________:
The product you have requested has passed Value Analysis. The conversion process began on _________. Our distributor has informed me that we currently have approximately ________days/weeks stock on hand based on typical usage patterns.
The new product is expected to be available by __________. Education for this product will begin ________________. I will update you regarding this item on ____________.
Thanks for working with the Value Analysis Team and we hope we are serving you well.
Wanda Lane Fall 2013
Healthcare Value Analysis Magazine
34
Value Analysis Techniques This communication assures the requestor that his product was considered and provides expected dates for completion, including an explanation for delayed availability. Clinicians may have no idea that logistical issues determine product availability; thus in this culture of immediate gratification, this information satisfies the anxiety caused by delay. Another useful template to develop is a conversion table. Developing a template to use during the conversion process promotes accountability, visibility to obstacles and challenges, and supports transparent conversion processes. Simple formatting and repetitive use of this template will foster a sense of routine, alleviating the sense of controlled chaos that often accompanies conversions. Figure 3: Conversion Graphic
Graphic tools Develop a conversion graphic (figure 3) that clearly illustrates where a product lies in the process. Consider posting this graphic on the Value Analysis landing page on your facility’s internal website or on a whiteboard in an accessible location in the facility. This at-a-glance tool provides assurance that the request is in queue and promotes accountability in managing the process. Fall 2013
Healthcare Value Analysis Magazine
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Value Analysis Techniques Another graphic tool that assists in communication and defines boundaries with product requests is a Request Cycle Graphic (Figure 4) with dates assigned monthly, made visible to clinicians, physicians, and vendors. This graphic closes the gap on product request deadlines, eliminates repetitive questions, and establishes guidelines for all parties involved. Figure 4: Request Cycle Graphic
Placement of this graphic should not coincide with Conversion Graphic as this pertains to vendors as well as staff. This type of graphic could be placed on the VA web page, but also displayed in the Purchasing office or at check-in kiosks.
The final graphic is a simple product change poster (figure 5) used to alert all staff members of a product or labeling change. In this case, a photograph of the current product is placed next to a photograph of the new product with an arrow and wording to indicate the action. Fall 2013
Healthcare Value Analysis Magazine
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Value Analysis Techniques Implementation If your facility doesn’t have these tools in place, consider an implementation strategy beginning with the survey and benchmarking information. Develop the tools approved by your team and begin implementation. After the tools are in place for 90 days, track the same information on the tool used for benchmarking. If productive time is increasing and redundancy is diminishing, repeat the survey. If not, tweak your tools to address the gap that remains. After six months, repeat the survey and look for patterns. Compare the results to the previous survey and assess successes and challenges. Position the communication tools as a Value Analysis service upgrade and promote positive response with communication saturation. Starting strong with the tools and templates will bring visibility to your team and the progress made.
Conclusion Value Analysis communication is multi-faceted and complicated. By using consistency and simplicity, acknowledging the three P’s of communication, and implementing tools such as the templates included in this article, your team will achieve maximum productivity in minimal time. Wanda-Dupree Lane is the Value Analysis Coordinator at the Regional Medical Center at Memphis, TN. Wanda has been a registered nurse for 26 years, vendor representative for five years, and business owner for several years. During that time, Wanda has watched healthcare perceptions and actions change with a unique perspective. In her current position, Wanda has enjoyed watching her hospital’s Value Analysis program grow and develop. The program continues to evolve, seeking new and innovative ways to meet customers’ needs and provide the best possible care in the most fiscally responsible manner. You can contact Wanda with your questions or comments at WLane@The-MED.org, or call her at 901-545-8662.
Fall 2013
Healthcare Value Analysis Magazine
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Value Analysis Analytics
Robert W. Yokl
Before, During, and After the Value Analysis Study Why it is important that utilization management works in concert with a strong VA program
When we engage with a value analysis committee or team, we often observe that the VA teams tend to get caught up in an “episodic mindset”. An episode represents the value analysis study itself. Once a committee or team performs a VA study they are inclined to believe they have completed the study (or finished the episode) and now can move on to the next VA study (or episode). But in today’s complex healthcare environment where anything and everything can happen before, during, and after a value analysis study, we must be on guard for the realities that may occur with our value analysis studies after we believe they are actually finished. Unintended Consequences The reality in value analysis today is that no study is perfect, no implementation goes as planned, and there are always outliers that we need to address to fix the end result of our VA studies. We cannot just implement a new policy and procedure and think that everyone is going to adhere to it. We can’t think that everyone is going to use the new recommended product perfectly and in the same usage patterns as its predecessor. We have to assume that there are going to be issues and devise systems to alert us to these issues or endlessly assume that we live in a perfect VA world when the reality is dramatically different. Fall 2013
Healthcare Value Analysis Magazine
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Value Analysis Analytics
Robert W. Yokl
Case Study One example of this “episodic mindset” was a hospital environmental manager who changed from a reusable underpad to a disposable. It’s important to note that the practice of using a reusable underpad that is laundered by an outside linen processing company is an industry best practice. But this manager decided to go with a disposable underpad anyway to try to reduce his linen processing costs. He devised a scenario with his underpad representative that he believed would save his hospital upwards of 20% to 27% on his linen/laundry processing costs. Contrary to others’ experience, he went ahead anyway and made the change with the “episodic mindset” that he had just achieved a big win for his healthcare organization. He then tracked his estimated savings by reviewing his laundry processor’s monthly reports. As he
VA teams tend to get caught up in an “episodic mindset”.
hoped, the reports were telling him that he was saving over 27% on his reprocessed underpad usage. Now, here’s the rest of the story! At this point in time, we weren’t working directly with this Environmental Manager, since he made this change with approval from his Vice President, but didn’t consult with his hospital’s value analysis committee. How I learned of this product change was through the use of the hospital’s utilization dashboard which we were facilitating for this client. Employing this technology, I observed this hospital’s absorbent hygiene utilization category shooting up to over $284k annualized from the two years prior, without knowing a change was made in this category of purchase. The Director of Value Analysis, who was aware of the change, knew his hospital’s underpad cost would spike, and looked at their linen processing cost that should have been going down dramatically to offset these dollar increases in disposable underpads. What he and I uncovered was that the hospital’s linen processing expense was only down by 5% overall. Therefore, the savings that was projected by the hospiFall 2013
Healthcare Value Analysis Magazine
40
Value Analysis Analytics hospital’s absorbent hygiene utilization category, shooting up to over $284k annualized from the two years prior. When we spoke to the Environmental Manager about this fact, he was a bit incredulous that we were questioning his successful underpad project. He had this mindset because he was only viewing one dimension of this VA study, which was only the usage of the reusable underpads that were eliminated from his linen laundry processing reports. He thought he was successful with this project but he was not! What he did not anticipate was that the new underpad would be overused, wasted, and misused on the nursing floors. What we dis- “What he did not anticipate was covered was that the hospital’s nursing floors were now
that the new underpad would posable underpads. Something was clearly missed on this be overused, VA study, and the Value Analysis Director decided that he wasted, and misused on the would now conduct a new underpad study to determine nursing floors.” the best course of action going forward. using more bed linens which was caused by the new dis-
End Result The good news for this hospital was that because of their utilization management system they realized that they didn’t achieve the 27% in Linen underpad processing savings that was projected by their Environmental Manager—-it happens. This would have been an even bigger disaster if this hospital did not have a tracking system in place to alert them of the additional unintended $284k utilization cost overrun. Because they had a utilization management system working in concert with their strong value analysis program, they avoided this big hit to their bottom line. Once you come to the realization that there is no perfect value analysis study, as in this situation, you then can see the significance of knowing with >>>>>>
Fall 2013
Healthcare Value Analysis Magazine
41
Value Analysis Analytics
Robert T. Yokl
certainty where you are before your value analysis study begins, what is going on during the VA study, and what the end result is after the VA study. There is no substitute for this process if you want to get it right – the first time! To summarize, projected savings are only projections. We need to make sure that all projected savings last for the long-term and are sustainable. Therefore, they must be tracked, trended, and monitored. If you don’t follow this process, you may just be spinning your wheels thinking you are saving big dollars but in reality, like the example above with the underpad, you could be actually costing your healthcare organization money instead and not even know it.Θ
Are You Experiencing “Groundhog Day” With Your Hospital’s Value Analysis Committee and Teams? I’m sure you remember the movie with Bill Murray called “Groundhog Day”, where Murray is a TV weatherman who is trapped in a time loop of repeating the same day again and again on Groundhog Day in Punxsutawney, Pennsylvania. Well, we have seen the same phenomenon with hospital value analysis teams who repeat the same team meeting again and again. We have mentioned before how we frequently read the minutes of value analysis teams, going back a year, and are flabbergasted by how the same items are on their agenda month after month and even year after year. There are three reasons why this “Groundhog Day” is happening with value analysis teams, and they are as follows: 1. No time line for completing projects: Every value analysis project needs a beginning and an end or it will go on forever. In our value analysis model we give the VA project manager 90 days to complete his or her project. If the project isn’t completed in 90 days, then the
Fall 2013
hospital’s value analysis steering committee must approve an extension of the project. 2. No accountability for project completions: Each VA project should be assigned to a VA project manager who is accountable for its completion. This way there is no buck passing, obfuscation, or excuses for not completing a project on time and on budget. 3. Lack of urgency to get things done: A sense of urgency must be created with your VA team members to get projects completed. As mentioned, this can be accomplished with deadlines, steering committee oversight, or prodding. However, if you decide to speed up your projects, you must create a sense of urgency to get them done in a timely manner. If you look at your own value analysis team and find that they, too, are experiencing “Groundhog Day” you owe it to your hospital and yourself not to repeat this nonproductive behavior. It can be quickly corrected with these three tactics which have worked every time we have employed them.
Healthcare Value Analysis Magazine
42
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Healthcare Value Analysis Magazine
43
Evidenced-Based Value Analysis Why Are We Ignoring the Common-Sense Solution? Dee Donatelli, RN, BSN, MBA, Sr. Vice President, Provider Services, Hayes, Inc.
As clinicians, hospitals, and consumers look ahead to 2014 and the full implementation of healthcare reform, much discussion centers on ways to achieve clinical quality improvements and cost savings. Achieving certain quality measures won’t be easy, but I’m sure we can all agree that our runaway healthcare expenses need to be corrected. The question is, are we ready for the changes that are necessary to rein in costs and realize highquality health outcomes? In the ongoing process of executing the Affordable Care Act, I believe some providers have overlooked the most commonsense solution: Integrating scientific evidence into healthcare decision making, especially our purchasing decisions. The consequences of this failure have been overuse, misuse, and even (in some instances) underuse of the supplies, products, devices, services, and interventions healthcare providers use to deliver care to their patients.
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Evidence-Based Value Analysis In my previous columns, I’ve advocated for such an evidence-based approach, and some organizations are already doing it. What I want to flesh out in this issue are the reasons more hospitals and healthcare systems aren’t embracing such an easy solution. A host of factors create barriers to evidence-based value analysis (EBVA), but in my perspective, one of the biggest problems is a lack of understanding about the value of scientific evidence compared with physician preference or opinion. Most value analysis professionals, myself included, haven’t been trained to critically evaluate and apply evidence to the value-analysis process. As a result, our attempts at EBVA become stymied by multiple roadblocks, such as:
Strong physician preferences for certain products or management approaches due to physician training and familiarity with the products.
Misleading and biased information communicated in
“Hospitals can’t afford to wait any longer to start systematically incorporating evidence into their value-analysis processes.”
the media.
Influential relationships that exist between manufacturers/pharmaceutical representatives and clinician users over which we have little control.
Competition among practitioners and hospitals, coupled with the desire to gain a marketing advantage, which is often driven by patient expectations and demands.
Conflicts of interest that result when physicians receive royalty payments and consulting fees from companies and higher professional fees associated with using certain products or providing certain procedures.
Defensive medicine, especially with regard to ordering diagnostic tests.
Local patterns of care and peer pressure.
Hope and belief that something newer and more high tech must work better than an older approach.
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Evidence-Based Value Analysis Nod your head if you’ve been guilty of allowing any of these factors to influence your purchasing decisions. Hospitals can’t afford to wait any longer to start systematically incorporating evidence into their value analysis processes. Already, academic scholars, healthcare reformers, and consumer advocates are questioning the way we make decisions
in
healthcare.
Consider,
for
example,
Selling
Sickness
[http://
sellingsickness.com], an alliance between patients and professionals that is calling for the enactment of several reforms intended to improve public health and safety and save money. Some of these reforms include comparative-effectiveness research that evaluates drugs and devices against appropriate controls, rapid identification and removal of unsafe or ineffective products, and access to raw clinical trial data so that independent analyses can be performed. It’s time to move beyond a cost-based, SKU approach to systematic selection and utilization that includes patient outcome and safety data. Using this type of evidence will enable your institution to replace confusion with clarity, subjectivity with objectivity, waste with savings, and mediocrity with clinical excellence. Θ
Ms. Donatelli has more than 30 years of experience in the healthcare industry, with expertise in the areas of supply chain cost reduction and value analysis. Before joining Hayes, Ms. Donatelli was Vice President of Performance Services at VHA, Inc., where she provided executive leadership and direction for VHA’s consulting services, including Clinical Quality Value Analysis. She is a Certified Material Resource Professional (CMRP) and a Fellow of the Association for Healthcare Resource and Materials Management (AHRMM). She the current president of AHVAP, the Association of Healthcare Value Analysis Professionals. Dee can be reached at ddonatelli@hayesinc.com for questions or comments. Hayes, Inc. (http://www.hayesinc.com), an internationally recognized leader in health technology research and consulting, is dedicated to promoting better health outcomes through
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What Are Utilization Misalignments Costing Your Organization?
Utilization Values Change Quickly. Don’t Base Your Cost Management Decisions on Only Price! Get a Complimentary Demonstration of Your Utilization Savings Potential Today! Stop Guessing and Start Saving More, Beyond Price! WWW.UTILIZERDASHBOARD.COM Fall 2013
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Benchmarking
Robert T. Yokl
Where Are You Getting Your Benchmarks? Multiple benchmarking sources ensure that you are getting them right the first time.
Benchmarking is an art and a science, but there are some hard and fast rules that need to be followed to ensure the best results possible. One hard and fast rule is that multiple benchmarking sources ensure that you are getting them right the first time. To this end, make sure one of your benchmarking sources is a peer hospital. Benchmarking Sources A study we conducted some time ago shows that most healthcare organizations get 57% of their benchmarks from their GPOs and third parties. However, we have found that the best benchmarks are obtained from peer hospitals. This is because you have an opportunity to talk to these peers and discuss what is different about them that makes up their benchmarks. On the other hand, benchmarks obtained from your GPO, distributors, consultants, or third parties generally don’t permit you to talk to the source of the information that you are being provided. Hence, you don’t know what is behind the numbers. For instance, if you were to benchmark your I.V. sets’ usage you would need to ensure that you are comparing apples to apples. The only way you can understand what your peers’ IV practices are is by asking questions of them, such as, does your benchmark partner have an I.V. start team? What IV manufacturers are they using? Do they have a closed or open system? Fall 2013
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Benchmarking
Robert T. Yokl
Once answered, all of these questions will help you to decide if you are indeed comparing apples to apples. Or, do you have a mismatch?
Statistical Profile Another way that we have found helpful to discover good benchmarking partners is to use a survey, which we call a Hospital Statistical Profile (HSP), to determine the operating characteristics of potential benchmarking partners. The HSP form requests annual operating statistics (i.e., patient days, adjusted patient days, discharges, operating procedures, etc.) along with questions about how potential partners do business, such as, what departments they outsource, to give us a good understanding of how they operate and at what intensity level.
“Make sure one of your benchmarking sources is a peer hospital!”
We also visit their website to determine their clinical departments and specialties and if they have clinics or a nursing home, etc. This gives us additional information that helps us fully understand what our potential benchmarking partner is all about, such as, are they a trauma center (what level?), and do they
have a cardiovascular center of excellence. You would be surprised what you can find out about a potential partner from their website. All of this information, put together, gives us a clear picture of potential benchmarking partners’ hospital operations. We then match this partner to clients that have similar operating characteristics when we are benchmarking their commodity groups or anything else. You can do the same. Your goal should be to find a benchmarking partner that looks like your own hospital statistically and operationally to get the best results. For example, if you are a community hospital you wouldn’t benchmark yourself against a teaching hospital, as this would be a mismatch. You need to find a community hospital in your town or region that looks a lot like yours. Fall 2013
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Benchmarking
Robert T. Yokl
Multiple Sources One source or metric compared to itself isn’t always a reliable benchmark. That’s why we like to have multiple sources and multiple benchmarks in our database to ensure we are getting it right – the first time. You, too, should make this a best practice! We are now honing in on blood products as a new source of savings for our clients; therefore, we have been collecting blood product benchmarks from multiple
“One source or cles, associations, etc. to make sure we are getting metric compared this metric right. to itself isn’t If we only decided to use, for instance, a always a reliable benchmark from a magazine article, the chances benchmark.” are we would be wrong since, as I just said, every sources - our clients, white papers, magazine arti-
hospital has different operating characteristics. To hit the bull’s-eye, you need take this important factor into consideration. To this end, we are always refining our benchmarks as we talk to our benchmark partners. Just the other day, we asked one of our clients how they got their blood products’ cost per patient day so low. They told us that they started a blood management program a few months ago. This is how we put context to our benchmarks that give them real meaning and credibility. As you can see, there is a lot more to benchmarking than meets the eye, but you can never go wrong by having multiple benchmarking sources, along with peer hospital benchmarking partners, to ensure you are getting them right – the first time! Θ
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The Last Word
Robert W. Yokl
Why Do We Continue to Ride an Old Tired Horse? Price Savings Have Diminished by a Shocking 70% to 80% Overall Many of my peers think I am crazy when I make the statement that price savings is fizzling and that the majority of the bonafide big savings opportunities now reside in utilization management of their supplies, services, and technologies we are now negotiating best prices for. As I work with organizations throughout the country, I see different levels of maturity of Supply Chain Programs, and quite frankly it does not surprise me that the mainstream strategy is still price focused. We live in a price centric world, from our GPOs in healthcare to Costco, Target, and Best Buy in our personal lives. We are forever chasing the “best price� for our organizations and for ourselves. But is that same old tired horse we have been riding for over 40 years in the healthcare supply chain going to meet our savings and cost goals over the next 1, 2, or 5 years?
The answer is a big NO!
Are there still price savings? Yes, there are always going to be some price savings from the vendors and manufacturers who can reduce costs and be innovative enough through tough economic times to bring you a lower cost product, but to what degree? When our price horse was a mature steed, about 6-8 years ago, we used to find 5% to 7% savings in total supply budget annually, but those days are far gone. Now, we are lucky to eke out 1% or 2% in savings opportunities each year in price savings. That means that our price savings have diminished by a shocking 70% to 80%. Your price savings are suffering from a serious case of the law of diminishing returns. Utilization is the next strong horse that we need to mount up and start riding if we are going to get back to the levels of savings we once achieved at 5% to 7% or higher! Yes, they are achievable! I have seen utilization savings in the range of 7% to 13% in overall budget achieved at hospitals throughout the country who >>>>>> Fall 2013
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The Last Word
Robert W. Yokl
have committed to utilization management. How could this be possible? If you are totally focused on price, you are overlooking the opportunity to reduce the supply utilization costs in your organization. If you are not looking
“If you are totally focused on price, you goes for utilization. You must have systems, processes, and are overlooking the methods in place to find and drive out the utilization cost opportunity to reduce the supply utilization that is the next generation of supply chain savings. costs in your I am not saying you should ignore price savings, organization.� for the salt then you will not find the salt, and the same
since it is the first bastion of opportunity, and like anything else it is a part of our total supply chain management process just like inventory management and value analysis. We must now add a new systematic process to our departments and organizations, and that is utilization management. You can then utilize your value analysis committee and teams to attack these new and better savings. Once your value analysis committee or team has driven out the unwanted and unnecessary costs, you can continue to track the utilization of the products on an ongoing basis to ensue these savings stick. Your new utilization management horse is ready for you to mount up and ride to achieve a new level of savings that is certifiably there in your supply streams for you to achieve. This is a different type of savings that you must develop new systems, new approaches, and refocus your value analysis teams and committees on these new opportunities that your utilization management program will uncover. Traditionally, value analysis committees and teams are new product-costquality and conversion focused, but now you can add a new element to the mix with utilization management. Specifically, driving out the mismatches, misalignments, failures, and waste in your existing products and services in your supply chain. Remember, this new horse will deliver you to the next level of savings but only if you mount up and start riding today!Θ Fall 2013
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Turning Skeptics into Believers! Even our Utilizer® Dashboard clients were at first skeptics until they saw the results of their new and better savings opportunities. A typical Utilizer® Dashboard client can yield as much as 7% to 15% in supply utilization savings in less than one year! Are you a skeptic or a believer? Over the last 6 years, SVAH has helped leading healthcare organizations realize new and better savings - beyond price and standardization - in the range of 7% to 15% from budget.
ardization initiatives, but utilization can now explode your savings by as much as 67% to 79% vs. just price savings alone. We have the documented proof to back up this extraordinary claim.!
Prove Positive
Our Clients Were Skeptics
A typical hospital normally saves 1%, 2% or 3% on their total spend with price or stand-
All of our Utilizer® Dashboard clients were skeptics, until they saw the results for themselves,
and are now experiencing these new and better savings. Breakthrough Savings If you are looking for a breakthrough in your savings yields, there is no time like the present to sign up for a “demo” of our Utilizer® Dashboard. We even guarantee up to 3:1 ROI to protect your investment!
Sign up for a FREE Demo at Fall 2013
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It’s Not Too Late... To Rescue the Supply Utilization Dollars That Are Drifting Away From Your Bottom Line
Why Lose Any Dollars If You Don’t Have To? Learn Today How You Can Rescue All of Your Utilization Dollars and Never Let It Damage Your Bottom Line Again. Fall 2013
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