Volume 9/Issue 1
Healthcare
Leading Cost and Quality Strategies for the Healthcare Supply Chain
Magazine
Featured Article:
Optimizing Patient Care in the Emergency Department Using a Guidewire-Assisted Intravascular Catheter Approved for Placement in the Internal and External Jugular Veins
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It’s a Fact…. The More Organized You Are with Your Value Analysis Program…
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Contents
Healthcare Value Analysis & Utilization Management Magazine
4 FROM THE PUBLISHER’S
Healthcare Value Analysis & Utilization Management Magazine is published Bi-monthly by SVAH Solutions®
DESK By Robert T. Yokl
Turbocharge Your Value Analysis and Utilization Management Savings in 2021
P.O. Box 939, Skippack, Pa 19474 Phone: 800-220-4274 FAX: 610-489-1073
6 FROM THE MANAGING
bobpres@ValueAnalysisMagazine.com
EDITOR’S DESK
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By Robert W. Yokl
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You Will Only Reap What You Sow with Clinical Supply Utilization Management
Editorial Staff Publisher Robert T. Yokl bobpres@ValueAnalysisMagazine.com
9 FEATURED ARTICLE By Andrew Little, KaiDan Guan, Nicole Ferko, Kim Alsbrooks
Optimizing Patient Care in the Emergency Department Using a Guidewire-Assisted Intravascular Catheter Approved for Placement in the Internal and External Jugular Veins
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Managing Editor Robert W. Yokl ryokl@ValueAnalysisMagazine.com
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16 VALUE ANALYSIS 101
Senior Editor
By Robert W. Yokl
Improve Your Strengths and Overcome Your Weaknesses
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Editor and Graphic Design
20 UTILIZATION MANAGEMENT
Danielle K. Miller
By Robert W. Yokl
Best Practices for Your Bottom Line in 2021
25 PERSPECTIVE By Robert T. Yokl
3 Things You Must Know About GPO Price Savings to Make Them Stick
Volume 9/Issue 1
Patricia A. Yokl
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Copyright 2021 SVAH Solutions. 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: 800-2204271 E-Mail: ryokl@valueanalysismagazine.com for approval to reprint, excerpt, or translate articles. 3
From the Publisher's Desk Turbocharge Your Value Analysis and Utilization Management Savings in 2021 Robert T. Yokl
I was just asked today by the editor of HPN Magazine to comment on the trend that most healthcare organizations consider value analysis to be a synonym of “product evaluation.” I can’t give you my exact response that will be published in a future HPN article on value analysis due to a copyright agreement that I signed. However, I can say that this misunderstanding about the meaning of value analysis is the biggest challenge that is holding back turbocharging your supply chain expense savings in 2021. This is especially true since it has been my observation that most value analysis teams generally add more costs to their healthcare organization with their new product evaluation (new product requests) processes than they save each year. Do the math if you don’t believe me.
Value analysis teams generally add more costs to their healthcare organization with their new product evaluation process than they save each year.
For the record, here is the difference between the product evaluation and value analysis concepts. Product evaluation is a process to determine the appropriateness of the product, service, or technology being requested. Value analysis is a technique to determine the exact functional requirements that are needed and then search for lower cost alternatives that meet the functions for the product, service, or technology reliably.
For example, instead of approving a request for a new cardiac catheter tray that appears to satisfy their customers’ requirements cost effectively, a value analysis project manager would work with the customers to define their cardiac catheter tray’s primary, secondary, and aesthetic functions that meet their exact requirements. In many cases, the VA project manager would then negotiate with the customers to eliminate some of the unnecessary functions that were requested. Once this functional analysis phase is completed, the VA project manager would look for lower cost alternatives to meet the agreed upon functions. Although there are more steps (e.g., our 6 step Value Analysis Funneling™ Process) to the VA process, I’m sure you get the idea that product evaluation and value analysis are two different distinct processes. By confusing them, VA practitioners are leaving millions of dollars in new savings on the table, untouched.
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From the Managing Editor’s Desk
You Will Only Reap What You Sow with Clinical Supply Utilization Management By Robert W. Yokl, Sr. VP, Operations — SVAH Solutions
“Future consequences are inevitably shaped by present actions.” This old proverb becomes a reality for healthcare supply chain organizations in that you must first plan, build, implement, and sustain a clinical supply utilization program before you can reap the major benefits of it. What exactly are the major benefits of clinical supply utilization management? They are an opportunity to attack your savings, beyond price and standardization (waste, inefficient use, value mismatches, overstandardization, and lifecycle shortfalls). Our studies over the past ten years have shown that could be an additional 7% to 15% of total supply chain budget; a new robust savings opportunity that is worth the effort to obtain in these challenging times for healthcare organizations.
How Can There Still Be 7% to 15% in Total Supply Budget Savings? Let’s face it, 94% of all healthcare organizations do not have any type of supply utilization program in place in today’s hyper-competitive supply chain world. Have they implemented and sustained dramatic savings in their price and standardization programs? Yes! Have they implemented robust value analysis programs to find the right products and vet new product requests? Yes! But neither of these addresses the in-use costs of products, services, and technologies once they are in the hands of their customers and how they consume/utilize these products. For example, you have the best price on an IV catheter or an endomechanical stapler, but you are using three catheters when you should be using one, or two staplers per case but your surgeons are using three or four. These are just simple examples of clinical supply utilization that occur, and you don’t even know this is happening.
Is Clinical Supply Utilization Management the Next Purchased Services Savings? Remember a few years back when purchased services started to become a major savings opportunity? These opportunities are in excess of 8% to 13% overall. You could ask the same exact question then as you can now for supply utilization: How could we have missed 8% to 13% in overall budget savings? Now, most hospitals and health systems throughout the country have purchased services savings pro-
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From the Managing Editor’s Desk
Robert W. Yokl
grams in place, and GPOs all have major purchased services contract offerings as well. Clinical Supply Utilization is the true last bastion of major supply chain savings because it is not about price - it is about optimizing the total in-use cost to the organization of each product, service, or technology.
You Can Continue to Ignore Clinical Supply Utilization at Your Bottom Line’s Peril The best way to start down the road to Clinical Supply Utilization Management (CSUM) is to first educate your supply chain team that there are more savings than just the almighty price. Price savings, due to the maturity of hospital contracting, is not growing in new opportunities but shrinking in most cases because you have become much better. The law of diminishing returns comes into play there. Thus, we must move to the next big savings opportunity in supply chain which is clinical supply utilization - savings beyond price!
Next Steps Towards 7% to 15% Savings Beyond Price Next, you need to start to establish a baseline of reporting that will not only track spend but also track spend to operating metrics for all of your supply chain purchases. You can then use this information to compare to system level, fiscal year, quarterly, monthly, and cohort benchmarks. The reality is that you cannot compare to anything or anyone without first establishing your baseline of data/reporting. This will immediately start to pay dividends as you can now see the ebb and flow of your clinical supply chain major/minor product categories which will result in robust savings opportunities.
How Do You Achieve Clinical Supply Utilization Major Savings? As I mentioned above, CSUM is about total in-use costs, so you are looking for the waste, inefficient use, value mismatches, and lifecycle shortfalls that occur with your products, which your new reporting will spell out for you. When you have your cost per adjusted patient day for Troponin Lab Test Kits increase by 67% ($233K annualized increase) from FY20 to FY21 to date, then you know that there is something wrong that needs to be addressed. There is no way you have patient indications in Covid times that would cause that big of an increase on a product that is primarily used in the Emergency Department. This then gives you fuel for your value analysis team to address this issue as a regular savings project using your own internal processes. Value analysis will be confident in getting results because they have good data to work from, but without the good data, you and your VA team will more than likely not even be looking at this out-of-control cost.
No Guessing with Clinical Supply Utilization Management The good news is that once you get CSUM up and running, it will be a continual flow of savings opportunities in all of your major supply chain categories. There are 500-700 major categories of spend and another 700-800 in minor categories of spend, depending on your size. If you are an individual hospital you will reap major savings. It will be even bigger savings if you are a health system, as you will have even more comparable benchmarks to work from. Either way, there are huge savings just ripe to be picked, but you must first plan, build, and implement a clinical supply utilization management program. Go get your 7% to 15% savings beyond price now!
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Volume 9/Issue 1
Featured Article Optimizing Patient Care in the Emergency Department Using a Guidewire-Assisted Intravascular Catheter Approved for Placement in the Internal and External Jugular Veins Andrew Little, DO, AdventHealth Central Florida KaiDan Guan, MBDC, BHSc, CRG-EVERSANA Canada, Inc. Nicole Ferko, MSc, BSc, CRG-EVERSANA Canada, Inc. Kim Alsbrooks, BSN, RN, RT(R), VA-BC, Becton, Dickinson and Company
Copyright 2021 BD - Used with Permission-DSC_5104.jpg
The Importance of Timely Vascular Access Timely placement and management of vascular access is critical in emergent patient care. However, there are many circumstances in which traditional means of peripheral venous access are either unsuccessful or inappropriate for the patient.1 In situations where clinicians are performing multiple venipunctures without success, each additional puncture further delays the initiation of patient treatment, increases the risk of complications, and contributes to patient discomfort and anxiety.2 Recognizing the value of a new catheter indicated for jugular vascular access, a large academic hospital implemented an initiative in their emergency department to improve patient care, optimize
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Featured Article workflow efficiencies, and help improve patient outcomes. In an interview with Dr. Andrew Little, D.O., one of the emergency department physicians, he characterized the team’s experience with VeloCath™ intravenous catheter (VeloCath™), the new peripheral vascular access device.
Historic Methods of Vascular Access At the academic hospital, which receives between 85,000 to 95,000 annual emergency visits, the emergency team previously used three approaches to gain peripheral vascular access in situations where traditional means were difficult or unobtainable. 1. A common approach was to place triple lumen central venous catheters (CVCs) in the internal jugular (IJ) vein. Often, when a triple lumen CVC was placed, only one of the three lumens was used, and the device was removed within 24 hours of placement. The full potential of these central lines was not optimized in this patient population. 2. Insertion of the 18-gauge, 6.5cm introducer catheter found in their Copyright 2021 BD - Used with Permission-EDP_7473.jpg CVC insertion kit was another common method, utilizing the Easy-Internal Jugular (Easy-IJ) technique. This involved placing a single lumen peripheral intravenous catheter (PIVC) in the IJ under ultrasound guidance.3 When the Easy-IJ technique was employed, emergency department physicians opened CVC kits only to use the 18-gauge, 2.5-inch catheter, lidocaine, and syringe, and discarded remaining components, including the CVC catheter. The benefits of the Easy-IJ technique include: • • •
The ability to avoid venous dilation or a confirmatory chest x-ray (CXR) often required with CVC placement Faster time to placement while providing a less invasive option Minimized unnecessary radiation exposure as a confirmatory CXR was not needed
3. When compared to the first two options, intraosseous needles were less commonly placed and mostly reserved for patients who were unconscious or in need for immediate access. At an institutional level, there were no algorithms in place to manage situations involving difficult or
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Featured Article unobtainable peripheral venous access, so the emergency department aligned on treatment pathways, such as attempting PIVCs with and without ultrasound guidance, followed by one of the three identified approaches. Although the success rates were relatively high for these approaches, the greatest challenge was procedural time, which may take up to 20 minutes, depending on experience level.4 Taking into consideration the importance of delivering timely vascular access for emergent patients, as well as the benefits of standardizing the procedure, the team recognized the need to increase efficiency and minimize the risk of complications.
Approved Solution to Timely Vascular Access In March 2020, the emergency department adopted a new device indicated for jugular vascular access that accommodates different operators (e.g., physicians, nurses, and paramedics). The goal was to address the historic challenges related to timely and efficient vascular access. The VeloCath™ is offered as an 18, 20 or 22 gauge, 2.25-inch device that is indicated for vascular access, including both the external and internal jugular veins, to sample blood, monitor blood pressure, or administer fluids intravenously, and is suitable for use with power injections.5 Dr. Little and his team have found VeloCath™ to be a welldesigned solution for placing a peripheral line in patients in emergent situations. Many of the recipients of VeloCath™ were critical patients in a state of diabetic ketoacidosis, volume depletion, severe anemia, or requiring fluid resuscitation. Copyright 2021 BD - Used with Permission-DSC_5027.jpg
The introduction of VeloCath™ also solved the greatest challenge associated with these critical care patients: procedure time. Across insertions, the median procedural time was reduced to three minutes overall, including one minute for a successful cannulation. Based on the department’s experience, Dr. Little estimated that approximately 20% of patients who received either midline or central line placements could benefit from this type of access. This number includes critical patients requiring rapid access using a single lumen device.
Implementing the New Solution Between March and June 2020, 18 VeloCath™ intravenous catheters were placed by five emergency
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Featured Article department physicians. The majority of VeloCath™ placements took place in IJ veins, with two in the brachial, one in the left IJ vein, and 15 in the right IJ vein. The five physicians who placed VeloCath™, including two attendings and three residents, received on-mannequin training from the manufacturer, prior to their adoption in a clinical setting. The team found the techniques required for placing a VeloCath™ were similar to placing a central line, except that the operator can stop once the initial venous cannulation is complete, avoiding the subsequent steps and time associated with placing a CVC (i.e., guidewire insertion, skin nick, tissue dilation, etc.). Copyright 2021 BD - Used with Permission-DSC_4933.jpg
Based on the emergency department’s experience, no catheter-related complications were observed with VeloCath™. Nonetheless, Dr. Little suggested all operators pay close attention to the flash chamber located in the housing of the device. It was noted that it may be difficult to visualize blood entering the flash chamber during the procedure. To circumvent potential complications and/or procedural delays associated with this difficulty, all jugular procedures using VeloCath™ were performed under ultrasound guidance, as this allowed for the visualization of venous cannulation and guidewire advancement during the procedure, ultimately ensuring successful placements. However, if ultrasound is unavailable, it is possible to place VeloCath™ using the landmark technique, depending on the operator’s comfort level. Compared to other catheters, another benefit of VeloCath™ was the decreased risk of accidentally perforating nearby structures (e.g., artery) and advancing the guidewire too far. In the VeloCath™ device, the guidewire is anchored within the housing, which eliminated the risk of losing the guidewire during the procedure or advancing the guidewire too far. Additionally, VeloCath™ is a self -enclosed system, which means there is no need for direct manual contact with the insertion components or the catheter during the procedure, nor the need to navigate the sterile field to transfer components from the tray to the insertion site. The operator creates a sterile field, inserts the catheter, waits for the blood flash, and retracts the needle. This system was perceived to eliminate the risk of contamination when compared to a traditional CVC insertion.
Although the initiative is still in its early stages and further clinical experiences are required to fully assess outcomes, the department is confident that timely placements and positive outcomes will continue with their ongoing use of VeloCath™.
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Featured Article Achieving Both Clinical and Economic Benefits while Optimizing Patient Care Dr. Little observed the following benefits with VeloCath™: 1. Faster time for the overall procedure along with an increase in successful placements compared to a CVC insertion 2. Reduced risks of complications compared to historic standards of care (e.g., CVC) 3. Reduced wastage of CVC kit components As previously identified, one major downside associated with providing care for acutely ill patients is the time required for a successful line placement. The literature suggested a CVC insertion procedure takes up to 20 minutes when considering pre-sterile prep (e.g., gather components), sterile prep and anesthesia (e.g., drape, gown, skin antiseptic, lidocaine injection, etc.), insertion procedure (e.g., cannulation, insertion of guidewire, dilation, and advancement of catheter), and postCopyright 2021 BD - Used with Permission-DSC_4981.jpg insertion steps (e.g., remove drape, dress the device, dispose all personal protective equipment, etc.)4. Adopting the Easy-IJ technique with VeloCath™ simplified this process, according to Dr. Little, which reduced total insertion time to 3 to 4 minutes.6 Second, the pre- and post-procedure time was also reduced, given that all the materials needed were available in VeloCath™ ’s all-inclusive emergent access kit and no CXR was needed, which saved the emergency department valuable time that otherwise would have been spent collecting and preparing the materials and ordering the CXR. Third, no complications associated with VeloCath™ placements were observed. This may be attributed to the length of VeloCath™, which helped to decrease the likelihood of perforating nearby structures, and an anchored guidewire, which helped to minimize the risk of guidewire embolization. Overall, VeloCath™ was deemed successful and worthwhile to implement in the emergency department. While some of the perceived outcomes were comparable to historic standards of care, such as
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Featured Article the median number of cannulations and the number of emergency department staff required to initiate therapy, Dr. Little believed it is possible to enhance care by minimizing variation in their vascular access practices. By standardizing the use of VeloCath™, both emergency staff and patients can benefit. For emergency department staff previously performing the Easy-IJ technique, VeloCath™ is an improvement on the devices they have used previously. For emergency department staff who were not using the Easy-IJ technique, VeloCath™ can be viewed as an alternative to CVCs.
Final Thoughts and Future Perspectives Dr. Little’s team experienced early challenges when patients who received VeloCath™ were transferred out of the emergency department. Education must be provided to the relevant clinical staff (e.g., internal medicine, intensive care, and radiology) on the objectives, benefits, and potential limitations of the device prior to implementation. Dr. Little’s department suggested this was the most valuable lesson learned in a successful hospital conversion to VeloCath™. Along with education, achieving internal alignment was essential for the emergency department team to ensure all patients who could benefit from VeloCath™ would receive it and retain the device for its optimal duration. Since adoption of the all-in-one VeloCath™ Emergent Access Kit, it has been reported that the emergency department staff has felt nothing but excitement over the new decision tree. VeloCath™ provided power injection capabilities, which allowed for the delivery of contrast media. This feature was beneficial to radiology technologists at the facility. The staff who placed VeloCath™ also benefited by reducing critical placement time. While Dr. Little acknowledged the operators at large academic hospitals, like his, may be mostly or entirely physicians, nurses may also benefit in settings like community hospitals, where they may also perform the procedure. Based on their experiences at this large academic hospital, Dr. Little and his team recommended VeloCath™ for use in emergency departments to help with placement efficiency and optimizing health outcomes in situations where minutes can make a critical difference.
Reference List 1. Lisa Gorski LH, Mary E. Hagle, Mary McGoldrick, Marsha Orr, Darcy Doellman. Infusion Therapy Standards of Practice. 315 Norwood Park South, Norwood, MA 02062: Journal of Infusion Nursing; 2016. 2. Liu YT, Alsaawi A, Bjornsson HM. Ultrasound-guided peripheral venous access: a systematic review of randomizedcontrolled trials. Eur J Emerg Med. 2014;21(1):18-23. 3. Moayedi S, Witting M, Pirotte M. Safety and Efficacy of the "Easy Internal Jugular (IJ)": An Approach to Difficult Intravenous Access. J Emerg Med. 2016;51(6):636-642. 4. Leidel BA, Kirchhoff C, Bogner V, Braunstein V, Biberthaler P, Kanz KG. Comparison of intraosseous versus central venous vascular access in adults under resuscitation in the emergency department with inaccessible peripheral veins. Resuscitation. 2012;83(1):40-45. 5. BD. VeloCath™ Intravenous Catheter In:2020. 6. Kiefer D, Keller SM, Weekes A. Prospective evaluation of ultrasound-guided short catheter placement in internal jugular veins of difficult venous access patients. Am J Emerg Med. 2016;34(3):578-581.
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Featured Article
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Value Analysis 101 Improve Your Strengths and Overcome Your Weaknesses By Robert W. Yokl, Sr. VP, Operations — SVAH Solutions
Through my 28 plus years in the healthcare supply chain and value analysis world, I have seen many value analysis professionals over the years and all their different ways of managing their hospitals’ and health systems’ value analysis programs. I am happy to see that there are so many value analysis professionals now in our supply chain world. I am even happier to see that VA professionals have now moved from a luxury of having a value analysis clinical nurse in supply chain to being a vital element of successful clinical value analysis processes that include new product requests, product conversions, and evidenced based studies. But just being one of these professionals in the role does not always guarantee your success. I would like to offer a few best practices to help make you better when it comes to maximizing your strengths and negating your weaknesses. Go to Where the Care Is Given to Learn More: You come into the value analysis profession from somewhere else, whether it be nursing, laboratory, or even supply chain, and you bring with you strengths that will greatly aid you in the value analysis world. For example, if you are a nurse, you are already considered a great asset and are part of the circle of trust in a healthcare organization, which is outstanding. However, as a nurse, you more than likely only had a certain focus and
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don’t have a full perspective on other areas (e.g., you were a surgical nurse but you don’t know as much about the products on the nursing floor, lab, and other procedural areas). In value analysis, you will have to interact with these areas as a coach and leader of value analysis initiatives, trials, and conversions. Do walk-throughs on these clinical areas, non-clinical areas (Environmental, Dietary, Lab, etc.), or throw on your scrubs to observe Perioperative areas in action to get a feel for how they do business. Build Strong Relationships with Internal Colleagues as Your Experts: Even though you may know a lot about many of the products that you will be performing value analysis on, as you stay longer in the supply chain department, your day-to-day knowledge will diminish because you are not on the floors any longer. The best way to keep your finger on the pulse of the products in your departments is to have strong relationships with the department heads and managers on these clinical floors that you can call on at any time to answer your questions or enlist them as experts in a value analysis initiative. With these strong relationships, you can call on them to perform product evaluation trials in their clinical areas more often and feel more confident about the feedback you get because they are a trusted resource to you. Find a Mentor: When you first enter the healthcare supply chain world, you will discover that there is an overwhelming number of products, services, and technologies that you are expected to know and deal with on a daily basis. Add to that all the duties that come along with the value analysis job and all the interactions you are thrust into, and all of this can really put a major dent in your confidence to do your value analysis job. This happened to me when I first started out on my learning curve, but luckily, I had a great mentor, my father and CEO of our company, Robert T. Yokl (Bob Sr. in our firm), to coach me through my learning curve and help me become the proficient value analysis trainer, coach, and analyst that I am today. I remember one instance that I had at a value analysis initiative meeting with a vendor representative and supply chain director to share a utilization spreadsheet report showing a cohort comparable to the client hospital that pointed to big savings. Well, the vendor was totally irate, yelling and banging on the table when we presented the data, disagreeing with everything in the report. I came
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back to our office feeling majorly dejected. I told Bob Yokl Sr. what had happened and that I figured that was it for that savings opportunity with the client. On the contrary, he stated that, “If the vendor got that mad, then you struck a chord and that means there are big savings there. Keep at it!” Turns out he was right, and the hospital client ended up saving over $500k on that one savings initiative. It would have never happened if I did not have a great mentor. Questions are Your Power: I am not a clinician, nor am I a true expert in any product category within a hospital, but more of a generalist with solid familiarity in most areas of operations. One important aspect that I learned early on was the power of questions and the ability to use them to overcome the lack of expertise and turn what appears to be a weakness into a strength. For my first five to ten years in supply chain, I used to really sweat the meetings where I had to sit down with a surgeon or clinician, for example, on a recommended value analysis change we were proposing. My mindset was, “I really don’t know anything about a particular clinical specialty, and I hope they don’t chew me up and spit me out.” Case in point, about 20 years ago, I was working on a value analysis initiative for a client that involved Covidien Endomechanical Staplers. I was proposing in a meeting with a key surgeon that he switch to these staplers for dramatic savings. He looked at me and said, “I would if I could but I can’t, so I won’t, because I don’t like the feel of those Covidien staplers. I tried them in the past.” Not being a clinician myself and this being one of their top surgeons, I had to leave it at that, and the initiative was done. In getting back to our office, I reported to my boss, Bob Yokl Sr., and he asked me, “What exactly did he not like about the feel of the Covidien staplers?” He continued, “Was it the angle, the grip, or what was it? You can’t let them just tell you they don’t like a product. You have to find out the facts and perhaps Covidien has a stapler that he would like the feel of in their product line.” I was flabbergasted. He just taught me a major lesson - to ask better questions. Instead of becoming a product expert, I have now become an expert questioner and listener, and realize that I don’t have to know it all about anything in a hospital because I can ask the expert in the organization what I need to know. There are always many experts within a hospital and/or health system to call on! These are just a few ways that you, too, can improve your value analysis game to make your job much easier and more fulfilling for you and your healthcare organization!
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You Don’t Need to Turn Your Organization Upside Down to Uncover the Millions of Dollars in Savings Still in Your Supply Chain
But You Do Need to Have a Utilization Management System to Find the New Low Hanging Fruit...Supply Utilization Let us help you to quickly and easily identify and implement millions of dollars of savings right in your own back yard.
It is now mission critical to do so! www.ClinicalSupplyUtilization.com SVAH SOLUTIONS WWW.UTILIZERDASHBOARD.COM Volume 9/Issue 1
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Utilization Management Best Practices for Your Bottom Line in 2021 By Robert W. Yokl, Sr. VP, Operations — SVAH Solutions
Hello 2021! I think most of us are happy to see 2020 pass us by and we can now focus on our goals for 2021. Given that we still have major challenges with the financial end of the healthcare supply chain business, I thought it would be a good idea to list best practices which could greatly assist healthcare value analysis and supply chain leaders. Create a Supply Utilization VA Team: Yes, the time has come to create a supply utilization management team with the sole focus of attacking the utilization increases that are occurring on your high value supplies. This should be a no-brainer, as we often create teams for functional areas such as cardiology, cath lab, or even purchased services as a whole, so why not supply utilization management? We estimate that there is between 7% to 15% of total budget savings in supply utilization. This definitely warrants having a team to go after these savings. I know what most of you are thinking: Doesn’t my current value analysis team manage these? The answer is that about 96% of all value analysis programs, unless they already have a utilization VA
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team, do not venture into the waste, inefficient use, or other utilization areas during a value analysis project. This leaves the door wide open to have a team to focus on a critical area of the healthcare supply chain that, if done right, may save more dollars than any of your current teams in place in 2021. Give Your People the Valuable Next Level Training They Need: If you expect your supply chain team and department heads/managers to step up to the new financial challenges for your organization and pull a multitude of new, robust, and different savings out of a hat, then they will require new skills to do so. Like the creation of a supply utilization team in the first best practice example here today, you can form a team and give it a focus, but then what about the team members? For most newly formed VA teams, there will always be some obvious low hanging fruit that you can delve into for maybe one round of projects. After that, the team starts to lose momentum or worse, leaves hundreds of thousands or even millions of dollars on the table because your team members and leaders only know what they know and have not been given any advanced training. If you give them the tools, tactics, and methods to take them where you want them to go to meet your savings goals, then it is a double win. You get the savings, and the team, if fully educated, will continue to deliver double digit savings to your organization for many years. Remember, most of your team members are department heads and managers and this new advanced training will transfer to their day-to-day budgets as well. Take Your Savings Tracking to the Next Level: The biggest knock on supply chain savings reporting over the past 25 years has been the fact that we show all of these savings to our CFOs, yet the supply chain budgets keep going up year after year. I cannot tell you how many CFOs want to take the savings from the savings report and reduce these dollars from the budget. But how can we really do this when our savings reports are only showing one side of the equation or 50% of the true report? The other 50% are all the cost increases that are occurring with new product requests, contract increases, and other hidden increases (vendor upsells, utilization changes, etc.). At what point are we going to start to track all of the changes in savings and increases in our supply chain?
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Utilization Management
Robert W. Yokl
Stop Tracking Mission Critical Reports on Spreadsheets: Spreadsheets are versatile, jackof-all-trades tools that can do so many things, but just one copy and paste error or missed calculation can throw off your entire mission critical report. Spreadsheets tend to become monsters to manage and control because we always add more columns of data to these, and many times overwrite the previous data that we want to obtain in case we need to revisit this area. It is the beginning of 2021. It is time to embrace a database-driven, automated approach to tracking mission critical reporting in the healthcare supply chain. I recommend that you create an internal supply chain team to review your mission critical reports and work to automate these into databases and associated reporting. Keep in mind, there may be low cost solutions in the marketplace that have already done the heavy lifting of putting these mission critical reports into a database system that you can use “turn-key.”
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Utilization Management
Robert W. Yokl
Establish a Baseline: I cannot give a more perfect example of establishing a baseline of data than the Covid-19 PPE crisis and all the other supply cost (not to mention acquisition) challenges that hospitals have faced. The good news for our hospital and health system clients is that when they do business with us, we set up their baseline data from a volume centric standpoint and thus give them a rock-solid baseline moving forward. They have a baseline on over 700 major products and services to compare to in a good year and the changes that did or did not occur from FY19 on to FY21. Without this baseline data on cost per metric, they would just be flying blind moving forward. So, when one of our client’s isolation gowns’ cost went to $45 per patient day due to Covid-19, they knew that their previous baseline cost per patient day was $0.95. Why is this important? You need to have this baseline data to know what to go after. At some point, this PPE challenge will subside, and hospitals will need to have goals for supply chain and internal customers on what the new normal is. Will they ever get back to $0.95 per patient day? Probably not for a few years, if ever, but they know they need to dial back their spend from being 4,736% over their previous fiscal year’s cost. Most importantly, this is only one category of over 700 major categories a hospital purchases. Most have been affected in small ways or not at all.
Final Thoughts If I were to recommend the most important two elements to have the most dramatic effect on your healthcare organization’s bottom line from the list above, I would say that number one would be to establish a baseline. If this is done on an ongoing basis, it will give you all of the reporting you need to track in an exacting manner with confidence (spend, cost per metric, year over year, internal benchmarks, etc.). You can’t ask for a better major system than this that can answer so many questions, customer challenges, and much more. Secondly, it is long past due to establish a supply utilization team and acknowledge that there are big dollars in this area, and that you don’t have to wait for any contracts to expire or GPO agreements to be finalized. You can quickly get inside your own contracts, utilization, and requirements, and find out which product categories are causing damage to your bottom line. Your team can quickly develop solutions to drive out the overspends and keep them driven out. In a perfect world, I would want to see all healthcare supply chain organizations throughout the country achieve all of these 2021 objectives that I laid out above, but even if you just achieve one or two, you will be so much better off than you were at the end of 2020.
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Imagine Losing Up to 17% or More of Your Overall Annual Savings Implemented from All Sources The $5.2 Million in Projected Savings for Your Hospital is Now Only $4.3 million - Net Loss of $884K to Your Bottom Line
The $12.5 Million in Projected Savings to Your Health System is Now Only $10.4 million - Net Loss of $2.1 Million to Your Bottom Line
How Could This Be Happening? Because 96% of All Supply Chain Organizations Are Only Tracking Savings on the Front End After Implementation and Not Tracking Them Any Further for Actual Real Time Results Throughout the Year Find Out How You Can Fix Your Leaky Bucket Scenario
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Perspective
3 Things You Must Know About GPO Price Savings to Make Them Stick Robert T. Yokl, President/CEO, SVAH Solutions
Over the last few decades, GPOs have been the driving force on price and standardization savings for healthcare organizations. However, as Isaac Newton’s third law states, “With every action, there is a reaction.” The reaction, or result of taking your GPO’s price and standardization at face value, is that you are missing three things you must know about savings to make them stick: 1. Most GPO Savings Projections Are Guesstimates. In general, the GPO savings reports that supply chain professionals are reporting to their senior management are projections (or guesstimates), not a number you want to use for budgeting purposes. This is because things change (e.g., volumes, policies, use patterns, procedures, etc.) and people change over the term of the contract. Unless you take these variable factors into account on each and every GPO contract, your GPO savings are only a projection, not a reality!
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Perspective
Robert T. Yokl
2. Most GPO Savings Are Overstated or Understated. SVAH’s studies have demonstrated that only 64% of supply chain expense savings reported to senior management by supply chain leaders are correct, again, because things change and people change over the term of your GPO contract. For example, one of our clients projected a $90,000 savings (over three years) on a new exam glove contract, only to be surprised that after the first year there was only a savings of $12,000, not $30,000 as projected. This was because of faulty glove box holders, which were later replaced. The actual savings verified after three years (after the glove box holders were replaced) was $132,000, not $90,000 as planned. Because they were tracking/validating their exact savings on this contract, they were able to make a mid-course correction to not only achieve their planned savings, but to exceed it. This would not have been the case if our client did not make this correction. Instead, they would have only achieved about $36,000 or 40% of the projected total savings.
Because they were tracking/validating their savings on this contract, they were able to make a mid-course correction and exceed their planned savings.
3. Most GPO Savings Projections Are Suspect. Once more, SVAH’s studies show that GPO savings projections can be off by as much as 33%. How can this be? It’s simple. GPOs’ automated pricing systems and faulty auditing of savings projections are not careful to eliminate outliers, correct unit of measure issues, or understand how a product is employed by its members. Therefore, we recommend a trust but verify approach to all of your GPO savings projections to ensure they are error free. These are great savings opportunities that your GPOs are bringing to you, but they all need fine tuning and tracking before, during, and after the contract has been implemented.
The answer to this challenge is savings validation to ensure that all of your GPO and other savings reporting is accurate, verified, and not understated or overstated. We call this “closed-loop” savings validation, which ensures that your savings reports are correct the first time.
Volume 9/Issue 1
Healthcare Value Analysis & Utilization Management Magazine
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FAST-TARGET SAVINGS ASSESSMENT Value Analysis 101
Robert T. Yokl
Is It Time to Accelerate Your Supply Utilization Savings? 7% to 15% Savings From Total Supply Budget Is Available Beyond Price & Standardization!
Assessment Features
Covers All Non-Salary Areas Completed in 30 Days or Less Little or No Work From Your Staff Guaranteed 3:1 in Savings
Drills Down from 30,000 Feet to SKU Level Pinpoints Exact Departments Who Waste Provides Trending Graphics & Charts Provides Year-Over-Year Trends
Learn More at www.FastTargetSavings.com Allow us to help you to uncover those hidden savings beyond price and standardization
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How Is Your Organization Managing the Purchased Service Hot-Potato?
Advanced Purchased Service Analytics Average $2.1 to $4.1 Million in Savings Per Hospital
Purchased Service Advantage
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A System That Does All the Heavy Lifting So You Can Achieve All of Your Savings and Improvement Goals
www.PurchasedServiceAdvantage.com
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