Healthcare Value Analysis & Utilization Management Magazine - Volume 4 Issue 2

Volume 4/Issue 2

Healthcare

Leading Cost and Quality Strategies for the Healthcare Supply Chain

Magazine

A Blueprint for Greater Performance and Focus In Value Analysis and Supply Utilization Management

www.ValueAnalysisMagazine.com

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Healthcare Value Analysis & Utilization Management Magazine

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The

RIGHT TOOL makes all the

DIFFERENCE

www.SupplyUtilizationAdvantage.com

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Now the right tool for supply utilization management is here: Supply Utilization Advantage System is designed to help you quickly and effortlessly uncover and resolve savings and quality challenges in your supply chain .

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This unique system is built on a powerful reporting engine that has shown countless successes in the real world of supply utilization and value analysis management.

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contents

Healthcare Value Analysis & Utilization Management Magazine Healthcare Value Analysis & Utilization Management Magazine is published quarterly

by Strategic Value Analysis® in Healthcare P.O. Box 939, Skippack, Pa 19474 Phone: 800-220-4274

8 FEATURE ARTICLE

By Robert T. Yokl

A Blueprint for Greater Performance and Focus in VA & Supply Utilization Management

FAX: 610-489-1073 bobpres@ValueAnalysisMagazine.com

www.ValueAnalysisMagazine.com ————————————

Editorial Staff Publisher Robert T. Yokl

12 UTILIZATION ARTICLE

By Robert W. Yokl

SUM: Flavor of the Month or the Next Mission-Critical Cost & Quality Control System?

bobpres@ValueAnalysisMagazine.com

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Managing Editor Robert W. Yokl ryokl@ValueAnalysisMagazine.com

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Senior Editor

24 CLINICAL VA Article

By James Russell, RN-BC

What’s Your Value Analysis Onboarding Process?

29 THE LAST WORD

By Lynn Everard

Products or Outcomes: What Are You Buying?

Volume 4/Issue 2

Patricia A. Yokl ————————————

Editor and Graphic Design Danielle K. Miller Copyright 2016 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

Robert T. Yokl

The Lone Ranger Effect Robert T. Yokl

Value analysis is a real profession and a lifetime career for those who decide to make it so. Yet, too many value analysis professionals decide to go it alone when they enter this profession. Meaning, they have no training, mentoring, or pathway to success to follow in this important field. Too many are “winging it” at their own peril.

Just think of the power value analysis professionals have to wield. They can endorse or negate a million-dollar purchase while saving hundreds of thousands of dollars annually for their healthcare organization. They can influence the decisions of the value analysis teams and/or their supply chain leadership who look to them on a daily basis for guidance. Hence, value analysis is a position of influence that too often goes unnoticed in a hospital, system, or IDN.

Just like any other profession, value analysis has ethical standards, creeds, doctrines, and beliefs that set it apart from other occupations, such as, the tenet that value analysis is the study of function and the search for lower cost alternatives. It’s not about price or comparison shopping as too many value analysis practitioners believe. However, without comprehensive value analysis training and mentoring value analysis practitioners can and will get caught up in this paradigm and then be lost forever.

Most new value analysis practitioners receive on-the-job training by an incumbent or are selftrained. The disadvantage of doing so is that you either are taught the bad habits of the incumbent and/or you never seek out training or mentors that can help you to follow the right path to success. I personally had a mentor when I was first hired as a supply chain/value analysis practitioner who kept me on the straight and narrow path to success. I don’t know if I would be where I am today without this mentor.

Here are four sources for training and mentoring that I recommend to help you in your quest for professionalism: SAVE International, Association of Healthcare Value Analysis Professionals or our Special Reports and Best Practices sections at our SVAH Solutions website. We hope you will investigate these excellent resources to up your value analysis game. It is mission critical that you do so!

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******FREE Webinar****** A Strategic Approach to Integrating Utilization Management into Your Value Analysis Program You read in all of the major supply chain publications that utilization management of supply and purchase services is the next big thing in cost and quality management in healthcare supply chains.

The future is now to find the next level of big savings in your hospital’s supply chain which is utilization management. The key challenge is bridging the gaps between current supply chain and value analysis programs to achieve the significant savings that utilization management can bring to your hospital’s bottom line. Most value analysis and supply chain programs do, on occasion, find significant utilization savings on contract and/or in value analysis studies, but the key to utilization management is finding ALL of the significant savings available to you in your supply chain. This presentation will show you how you can turn the occasional “utilization finds” into a consistent system that complements your supply and value analysis program while bringing major savings and quality results in the short and long term.

Presented by Robert W. Yokl, Sr. VP Operations and Robert T. Yokl, CEO of Strategic Value Analysis in Healthcare PROGRAM OVERVIEW 1. Utilization Management - The Missing Link in the Supply Chain Continuum 2. Understanding the Relationship GAP Between Supply Utilization and Value Analysis 3. Getting Past "Price Thinking" to Increase Savings Opportunities by 7% to 13% of Overall Budget 4. Getting Your Organization Ready for Supply Utilization Management 5. The Strategic Approach to Utilization Management Integration—Reporting, Training, Management Buy-in, Deployment, and Ongoing Savings 6. Best Practices to Uncover ALL of Your Hidden Utilization Savings Opportunities 7. Utilization Management - The Future is Now!

Thursday May 12, 2016 - 1:00 pm EST 4/Issue 2 Healthcare Value Analysis & Utilization Management Magazine 5 ClickVolume Here to Register Or Visit - www.SupplyUtilizationManagement.com

Charting the Right Course for Your Clinical Departmental Supply Utilization Management

Clinical Supply Utilization Savings & Quality Enhancements Made Easy Learn More at

www.ClinicalSupplyUtilization.com or Call 1-800-220-4274 Volume 4/Issue 2

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From the Managing Editor’s Desk

Robert W. Yokl

The Best Way to Gain Value Analysis Focus and Performance Robert W. Yokl

As we enter in the new level of quality and supply chain performance with our value analysis programs, we are now being called upon to do so much more than just evaluate products, services, and technologies. We are being asked to ensure that not only are these products viably effective in their use as well as cost efficient, but we must also warrant our organizations against products that do not offer quality or reimbursement to the hospital.

Value analysis professionals have always been known as the gatekeepers for the majority of products that enter a hospital or health system, but the game is changing. Now we have to add to our already frenetic workloads new elements that are crucial to the survival of our organization’s bottom line. As the evolution and progression of value analysis in the supply chain happens right before our eyes, it is a very good time to take a step back and take stock of what needs to be done as we move forward.

As you view your existing program, look at yourself and your level of expertise, as well as your committee and team’s proficiency and know-how. Where are you on the competency level as compared to your peers in the industry? Where is your team's level of expertise and skill related to value analysis? We all know that they are proficient in their respective areas, but the new level of value analysis is going to require a whole new degree of advanced training and understanding to weed out all of the quality benefits and utilization savings for your organization.

Ask these important questions. When was the last time you or your team had any training in an intermediate to advanced level of value analysis or related education? How can you focus your program's efforts in the right direction when everyone may not be on the same page? With multiple members and multiple teams, you can no longer rely on your team members to "just get it." Eventually, you need to ensure that they are in the game right away. You have to set them up to win at the next level of the VA game.

With all of the Continuing Education Units (CEUs) required for all of the clinical and non-clinical areas of healthcare, you can easily say that ongoing training is always part of the job. With this in mind, do not underestimate the value of training in the world of value analysis. It will pay your organization back in dividends 20 fold or more and will make you and your team more efficient with better results.

Look for the best training in the industry and plan to make it part of your value analysis program on at least an annual basis from now on. Train yourself and your team for success!

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Feature Article

Robert T. Yokl

A Blueprint for Greater Performance and Focus In Value Analysis and Supply Utilization Management Your Pathway to the Future of Value Analysis and Utilization Management Robert T. Yokl, President, SVAH Solutions

We know from experience that any system as a whole is greater than its parts. It’s the same with value analysis (VA) and supply utilization management (SUM) practices. As standalones, the savings techniques of value analysis and supply utilization management can be very effective, but employed together they can be greater than their parts; more comprehensive, more savings achieved, and with more long-lasting results.

Understanding the Relationship Between VA and SUM In the traditional sense, value analysis is the study of function and the search for lower cost alternations. Yet, to truly choose the lowest cost alternative between the available options, value analysis practitioners need to look at the new or existing product, service, or technology’s utilization (or lifecycle) cost. Therefore, the relationship between value analysis and supply utilization management is the difference between selecting and maintaining the lowest cost commodities imaginable or just “good enough” supply chain expense management thinking. In this era of lower reimbursement and higher quality standards, “good enough” thinking just isn’t “good enough” for your healthcare organization to stay afloat in these turbulent times.

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Feature Article

Robert T. Yokl

Why Do Less When You Can Easily Do Even More to Save Money That brings me to my message in this article: Why do less when you can easily do even more to save money by integrating supply utilization management into your value analysis process. For instance, why would your value analysis team select and then approve a new lab test that will cost your hospital $0.10 more per test (this is your utilization cost, not your contract price) than your current lab test? You would say that would be crazy for your value analysis team to make this decision, but that is the type of costly decisions your VA teams are making every day if you are not merging supply utilization management into your value analysis process. Do you get this powerful idea?

Getting Past “Price Thinking” Can Increase Your Savings by 7% to 15% Another challenge that is holding back the merger of VA and SUM practices is value analysis practitioners getting past their “price thinking” mindset. Here’s why. Your group purchasing, standardization, capitation/constructs, and custom contracts are only yielding your hospital, system, or IDN 1%, 2%, or at best 3% annual savings (The Formula: Total annual savings/Total supply chain budget).

Conversely, your SUM savings could be in the range of 7% to 15% annually. Don’t hold on to the past (VA), when the future (SUM) is your pathway to more and better future savings.

The Supply Chain Expense Big Picture In the 21st Century

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Feature Article

Robert T. Yokl

It’s getting harder and harder in healthcare to save money on supplies because the ripe fruit has been picked on your products, services, and technologies, especially if you are only depending on price, value analysis, and standardization (22% in combined savings opportunities annually) efforts to carry the day. Equally important is the 78% in supply utilization savings opportunities that is being overlooked, underutilized, or ignored by most healthcare organizations in the country. How can healthcare organizations bridge the savings gain without adding supply utilization management to their VA program?

Bridging the Gap: Getting Ready for Supply Utilization Management

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Feature Article

Robert T. Yokl

1. Find the supply utilization misalignments in your healthcare organization and stop their negative effects from hurting your bottom line. Can you imagine the millions of dollars (yes, I said millions) in supply utilization savings just waiting to be saved at your hospital, system, or IDN? This is the reality of supply chain organizations today.

2. Buy, make, or rent technology to do the heavy lifting (normalizing, stratifying, cataloging, organizing, analytics, and analysis) to enable your value analysis teams to identify, quantify, manage, and control your supply utilization misalignments going forward. Trust me when I say that without technology you will only be touching the edges of your supply utilization savings for decades.

3. Find the quality gaps that will be revealed in your supply utilization reports. It’s a little known fact that overutilization of your products, services, or technologies can and will cause big quality and even productivity gaps. For instance, if nurses are changing patients’ I.V. sets prematurely this could not only cost your hospital money (supplies and labor), but could also cause unnecessary patient infections.

4. Train your value analysis teams to win the supply utilization game. Supply utilization isn’t something your value analysis teams can learn on the job. They will need in-depth training to be proficient in this new supply chain discipline.

This four-step plan is really a shortcut for your value analysis/supply utilization management success. To ignore any of these steps could be a fatal mistake.

The Future Is Now: This Is Your Time to Shine Value analysis has a 76-year tradition of adding new cost and quality techniques, refinements, and new elements to its methodology to make it even better. I predict that the integration of value analysis and supply utilization management will be one of those leap frog successes in the annals of healthcare supply chain expense management. Our healthcare organizations are depending on us for more savings and quality improvements. We need to meet this challenge head on. Remember, failure is not an option.

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Utilization Management

Robert W. Yokl

Supply Utilization Management: Flavor of the Month Fad? or the Next Mission-Critical Cost and Quality Control System?

Supply utilization management (SUM) has its origins in the accounting world where it is known as activity-based costing (ABC). The best mainstream adoption of this ABC methodology in healthcare to date is in the form of budget to FTE reports. If you have ever managed employees at your healthcare organization then you have probably seen your share of productivity management reports in the form of full-time equivalent employee (FTE) reporting. This can be comparing budget, which is volumebased, to the department’s actual cost per operating metric, and is normally run on a monthly basis. Just about every healthcare organization runs some form of this report to keep track of their productivity and labor budgets. If you have not seen one of these reports, ask your boss to share their report with you. I guarantee they receive one at least once a month.

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Utilization Management

Robert W. Yokl

Your CFO’s Trusted Report Methodology Can Work for Supply Chain A typical budget to FTE report issued by your Finance Department is based on projected volume (budget is projected) as compared to your actual volume at which your department is really performing. Many hiring and employee replacement decisions are based first on looking at these reports to ascertain whether the position is needed based on budget and volume requirements. If, for example, a respiratory department that is running 2 to 3 FTEs below their normal strength and are requesting just one new hire as a replacement, then the CFO/COO and HR department have no problem approving the position for hire. Why? Because they are showing that they are truly running below standard. However, if you don’t hire at least one or two full time employees, then your respiratory department could have trouble covering all the procedures and maintenance that is required at the hospital. Delaying or doing nothing could result in a huge quality problem due to lack of manpower.

Easier to Pinpoint Supply Budget Overruns Supply utilization management is not yet in the mainstream of missioncritical systems, but it can certainly perform the same functions as the budget to FTE example that is in fact a mission-critical report at hospitals. All hospitals have supply budgets that are set out to monitor the fluctuation of costs by department. But, these are global measures that are non-specific beyond telling you how much you are over budget. For example, OR, ED, and ICU are running over in their supply budgets - now what? Keep in mind, hospitals purchase anywhere from 5,000 to 25,000 products, services, and technologies on a continuing basis, therefore, a supply budget report is not specific enough to take focused action on products, categories of products. These individual departments could use 2,000 to 5,000 products between them all. We need better systems to help pinpoint the root causes, and the solution is SUM.

Utilization Case Study Highlights Not Only Cost Issues but Quality As Well Once a department goes over budget it is difficult to ascertain where and when this cost increase occurred, not to mention what products are affected. One of our client hospitals was running at near best practice levels on their cost per adjusted patient day on blood collection needles, but then this suddenly increased over a 6-month period by over 200%. They had a major increase in cost based on volume of the department, but they should also have looked at this from a quality and performance perspective as well. Does a 200% increase mean that the hospital’s phlebotomists are sticking their patients twice as much? Could this increase be a quality problem with the safety blood needles or their associated vacutainers? Or, is the proficiency of the phlebotomists decreasing (which would require in-servicing or additional training)? Let’s also think of it this way: If phlebotomists are sticking more, the possibility of bloodstream infections increases which could cause the hospital to lose reimbursement.

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Utilization Management

Robert W. Yokl

Value Analysis Root Cause Analysis System for the Future If your departments are over budget, and certainly there are some that are, wouldn’t it be nice to know what products or category of products or services are causing these departments to be over budget? SUM can be that simple root cause analysis report to aid supply or value analysis professionals in assisting their departments with their budget overruns. Plus, it will help negate the inevitable “supply chain needs to get us better pricing” excuse that we hear from our departmental leaders when they go over budget. In the blood collection needle example above, if supply chain was able to eke out an additional 10% to 15% in price savings (which are already pushed to the limit), the department’s overall cost would still be 85% over where it should be. No supply or value analysis team pricing improvement can win that cost battle alone.

Trusted Mission-Critical ABC Systems are Used Throughout Our Hospitals, Systems, and IDNs, but Are Still Missing from the Supply Chain -Why? We use activity-based costing in our day-to-day operations to manage productivity and performance at our hospitals, systems, and IDNs, so why don’t we use this mission-critical system in our supply chain in the form of supply utilization management?

When we are able to uncover a major utilization management issue through a VA study, we are ecstatic with the savings we bring about and the results we find. Why don’t we report on all products then? We use procedural-based, activity-based costing for specific surgical cases and procedures that works very well, such as cost per orthopedic case or cost per endoscopy procedure. These are activity-based costing systems that are mission-critical at our hospitals. So, why aren’t we adopting supply and purchase service utilization systems at our hospitals, systems, and IDNs as the next level of mission-critical cost and quality control of our products, services, and technologies? Only you can answer that question!

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Value Analysis Advantage Software - Analytics - Support - Actionable Reports Advantages that Take Your Value Analysis Program to a Whole New Level of Quality and Savings Performance

Learn More today at www.ValueAnalysisAdvantage.com Volume 4/Issue 1-800-220-4271 2 Healthcare Value Analysis & Utilization Management Magazine 15 or Call or email us at sales@svahsolutions.com

Leadership Interview Value Analysis Leadership Interview Beth Potter, RN, CMRP, CVAHP, UnityPoint Health, Des Moines, IA

Mary (Beth) Potter is the Immediate Past President of the Association of Healthcare Value Analysis Professionals. She is also a Certified Material Resource Professional, Certified Value Analysis Healthcare Professional, and Director of Clinical Value Analysis and Pharmacy Contracting at UnityPoint Health in Des Moines, Iowa.

It was a landmark event when AHVAP unveiled their value analysis certification program at the association’s 2015 annual conference. With this said, we asked Beth Potter to answer the following questions to give our Value Analysis & Utilization Management Magazine readers the background on this important value analysis educational program.

(SVAH) How did the CVAHP Certification program come about?

(BP) One of the goals of AHVAP’s original founders was professional certification. They felt strongly that Healthcare Value Analysis Professionals should be recognized for their expertise through the distinction of certification.

(SVAH) Why was the timing right for this CVAHP certification program for the healthcare supply chain?

Over the past 13 years, the organization has Volume 4/Issue 2

grown from 30 members to over 300 members.

In 2013, we determined we finally had the resources and network of professionals to create the curriculum and generate the test. More than 35 experienced value analysis professionals invested over 1000 hours, on top of their day-today jobs!

(SVAH) Why did AHVAP partner with Owens & Minor University (OMU) and AMP for the implementation of the CVAHP certification program?

In our process of fact-finding about establishing a certification program, we recognized we needed to establish a structured, accredited program in order to offer consistent comprehensive education on a flexible schedule to meet the needs of our members. We evaluated two different providers and made the decision to partner with OMU for education based on their experience (continued on page 18)

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Value Analysis Professional Certification is Here!

As Healthcare Value Analysis becomes more integral to healthcare’s financial viability, the need for a credentialed industry standard is greater than ever before

Introducing the industry’s first and only healthcare value analysis credential—Certified Value Analysis Healthcare Professional AHVAP is nationally recognized as the preeminent clinical resource in providing education, resources, and networking to value analysis professionals and promoting value analysis in the healthcare community. Value analysis professionals drive value for their organizations by collaborating with clinicians and multi-disciplinary teams on ways to deliver optimal patient outcomes in a cost-effective manner. AHVAP’s mission is to provide and promote processes and information to assist value analysis professionals in evaluating healthcare services for clinical quality and cost effectiveness.

Volume 4/Issue 2 Healthcare Value AnalysisToday & Utilization Management Magazine 17 Learn More About Certification WWW.AHVAP.ORG

Leadership Interview

Beth Potter

with other healthcare organizations and their demonstrated support for AHVAP. The purpose of the education is to teach the skills required to successfully practice as a healthcare value analysis professional. The objective of certification testing is to validate that the candidate possesses the knowledge required to successfully fulfill the role of a healthcare value analysis professional. There are rigid controls and standards for certification testing. The teaching organization cannot conduct certification testing. OMU recommended working with AMP to format and rate the questions generated

by AHVAP members and assist AHVAP to establish a passing score based on standard testing principles. AMP provided the psychometrician!

AHVAP members developed the curriculum, contributed the educational content, and generated all of the questions.

(SVAH) Who are the ideal candidates for the CVAHP certification program and where does their level of expertise need to be prior to applying for the program?

The Healthcare Value Analysis courses are particularly valuable to someone new to their role.

The information provides a solid foundation of skills and knowledge to help them understand their role and responsibilities and equip them to execute them effectively. Experienced healthcare value analysis professionals may struggle with certain aspects of their job and would benefit from a little “refresher.� Completion of the CVAHP course work is not required in order to be eligible to sit for the CVAHP exam.

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To sit for the certification exam, the best teacher is experience! Only experience provides a value analysis professional the opportunity for practical application of their education and it does not happen overnight!

A candidate with a high school education must have at least five years of cumulative experience in a value analysis role before they are eligible to sit for the exam. Candidates with at least two years of post-secondary education must have at least three years of cumulative experience in a value analysis role before they are eligible to sit for the exam.

(SVAH) How does the CVAHP certification work in practice?

CVAHP certification recognizes the candidate possesses the skills and abilities required to function successfully as a healthcare value analysis professional. Many organizations award achievement of certification with increased responsibility, salary, and professional recognition. Certification signifies professional expertise and accomplishment.

(SVAH) What can the CVAHP certification do for the success of a value analysis professional, now and in the future?

CVAHP certification for healthcare value analysis professionals is comparable to CMRP designation for supply chain professionals or any other specialized certification. CVAHP certification brings professional credibility, recognition, and positions value analysis for career advancement.

CVAHP certification will be a requirement for advanced value analysis professional positions.

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Ask yourself this important question: Would you rather be aware of where all your utilization savings reside today or would you rather risk your supply chain's future by not knowing and then getting blindsided somewhere down the road?

Protect Your Supply Chain’s Future—Awareness is Your Strategic Ally There is a strategic shift in our industry. Are you seeing it? It is the result of your hospital, system, or IDN needing all of the savings it can muster, just to stay in place. Saving the old ways is not enough to keep you from getting blindsided. To protect your future you will need to have multiple sources of savings (i.e., price, standardization, and utilization) to prevent the loss of control of your future.

Dramatic Case Study of 403-bed Community Hospital Until two years ago, there was a 403-bed community hospital that was 100% dependent on price and standardization savings for its survival. Unfortunately, it was running out of these savings. That’s when SVAH came along with our three-prong approach to savings; price, standardization, and utilization.

With SVAH’s help, this healthcare organization is now on track to save $235,098 (1%) on price, $4,671,428 (15%) on utilization, and $2,363,391 (18%) on their purchase services, or a total of $7,269,917 (11.3%). Is this the kind of savings that your senior management is strategically looking for?

Nothing Lasts Forever If you think your price savings will last forever, you are sadly mistaken. It’s now time for a strategic shift in your supply chain expense management if you are to protect your future. Yes, 407 healthcare users can’t be wrong! your regional GPO will give you a small bump in your price savings for a few years; however, this is a short term tactic, not a solution to your cost challenges. Only by making a strategic shift can you be assured that you won’t run out of savings.

Learn more about how partnering with an expert third-party supply chain organization can bring about major savings dividends and protection for the future for your supply chain savings programs. Just visit our website (below) to see how we can make this happen.

Call Us Today at 1-800-220-4274 or Fill Out the No Obligation Contact Form to See the Latest Savings Technology at www.ProtectYourSupplyChain.com Volume 4/Issue 2

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Value Analysis 101

Robert T. Yokl

Four Essential Productivity Tips for Value Analysis Practitioners

No longer can value analysis practitioners just evaluate new products for their appropriateness, quality, and their safety features. VA practitioners now need to be more productive in their practices since time and resources represent money too and need to be managed effectively.

Value Analysis Teams Can Be Very Costly Some hospitals, systems, and IDNs have six, eight, or even twelve value analysis teams with 10 to 15 members who meet monthly for one or more hours. Do you know what your VA meetings are costing your healthcare organization? For example, it is my estimate that it is costing a hospital, system, or IDN with six VA teams (six teams x 10 members x 1 hour [60 hours x $27.00 average hourly rate] a minimum of $1,620 per meeting.

Even if you only have one VA team with 10 members meeting monthly it is still costing your healthcare organization $3,240 annually (at a $27.00 hourly rate). This figure does not include benefits or the hours spent by team members outside VA meetings investigating new product, service, or technology offerings. As you can easily see, your value analysis meetings can be very costly, even if you are saving money at each and every VA team meeting.

Do You Need a VA Team to Evaluate Every Offering?

With the above in mind, the first value analysis time and money saving idea I recommend is to only have your value analysis teams evaluate products, services, or technologies that have an annual purchase value of $25,000. You can decide on higher dollar amounts if your hospital has over 100 occuVolume 4/Issue 2

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Value Analysis 101

Robert T. Yokl

pied beds. This one change in your value analysis policy could cut your VA meeting agendas in half and make them more productive.

This doesn’t mean the remaining products, services, or technologies aren’t evaluated for appropriateness, quality, or safety. It just means that these commodities are now evaluated by your hospital’s buyers along with the customers that would be effected by any change. Trust me when I tell you that this change in your VA policy won’t detract from your VA program, but will enhance it since your VA team members won’t be overwhelmed by the volume of products, services, and technologies they need to evaluate.

Convert Your VA Committee and Team Members to Project Managers One of the most effective value analysis productivity management techniques we have discovered and promoted is to convert all of your VA team members to project managers. You do this by assigning a VA project (i.e., product, service, or technology evaluation) to each of your team members. If you have 10 team members then you have 10 VA projects started at one time. The process is then repeated as each project is completed. This VA project team model also gives you clarity, visibility, and accountability on all of your value analysis projects, since at each VA meeting you have your 10 project managers report on the progress of their projects. You will also need a team leader who should be one of your hospital, system, or IDN’s department heads to lead, coach, and guide your VA team’s efforts. Ideally, as a value analysis practitioner you would facilitate (e.g., active listening, ask questions, encourage participation, etc.) these VA meetings, not lead them.

90-Day Completion Timeline for Each VA Project Another big time and money saving idea is to have all of your VA projects have a 90-day completion timeline. This means that if your VA project managers don’t have their VA projects completed within 90 days they need to have their projects reviewed by your value analysis steering committee (I hope you have one) to obtain a 90-day extension on their project. Otherwise, your value analysis projects could go on forever without a conclusion while costing your healthcare organization hundreds or even thousands of dollars unnecessarily without an adequate return-on-investment.

Return on Investment Should Be Your Measurement of Success There are many metrics (e.g., money savings, projects completed, quality improvements, etc.) that can be used to measure the success of your value analysis program. I would suggest that the best measurement would be return on investment (i.e., annual savings/labor + capital investment to attain savings = ROI), which encompasses not only the money you saved, but the labor and capital that was invested to save the money. For example, if you saved $10,000 and invested $1,500 to do so, your ROI is 7:1. This number rightly reflects your value analysis productivity, too, which is becoming just as important as the money you save your healthcare organization annually.

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SVAH Solutions - 800-220-4274

www.SupplyUtilizationAdvantage.com

The

RIGHT TOOL makes all the

DIFFERENCE Rapid Savings and Quality Results Beyond Price! 



 





Eliminates Waste and Inefficiencies to dramatically lower your cost per patient day Gives back time to your clinicians by identifying supply misalignments & rework Adds an Additional 7% to 15% in savings to Your Total Supply Budget Allows you to strategically manage where to attack your supply utilization Fuels the agenda of your value analysis teams with new savings opportunities.

Engages your clinicians and department heads in real world evidencebased data discussions that gain buy-in.

The average IDN/system can save more than $3 to $5 million per hospital in 6-12 months. This represents $45 to $75 million in added revenue that would have to be generated to achieve the fast bottom line results with the Utilizer® System.

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Why Do SVAH Clients Employ the Utilizer® System?

“We have solid VA committees, analytics, and great people, but we deployed Utilizer® because of the maturity of the software, working experience, support, and training behind the system that fast-tracked our supply utilization program from a basic beginner stage to advanced expert in less than 45 days!”

The Utilizer® Supply Utilization Management System simplifies the work of organizing, categorizing, analyzing, identifying, and then eliminating your system or IDN’s supply utilization misalignments

Volume 4/Issue 2

Sign Up for a FREE “Walk Through” at Healthcare Value Analysis & Utilization Management Magazine www.SupplyUtilizationAdvantage.com

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Clinical Value Analysis What’s Your Value Analysis Onboarding Process?

James Russell, RN-BC, Value Analysis Facilitator, UF Health at Jacksonville

“What’s your value analysis onboarding process?” During an interview for a Value Analysis Facilitator (VAF), we had a candidate ask this question.

We looked at each other and thought, “Well, we show you where your office is, give you a code to get into the computer, and off you go!” Of course, that’s not what we said. It was, however, an excellent and appropriate question.

Value analysis is a relatively young profession, when compared to nursing, medicine, materials management, sterile processing, and central supply (all departments that value analysis interacts with routinely). Most VAF’s (but not all) I know are nurses, so I’ll analogize this to nursing. In the 1980’s, when I was a new nurse (probably before some of you were born), my orientation consisted of a 12week critical care course and then 12 more weeks of working alongside clinically expert preceptors who tried to keep me from killing my patients. I’m being facetious. Sort of. The point is, I went through numerous procedures to ensure I was ready to do my job before I was ever “on my own,” including competency checklists, actual exams (both written and hands-on), and return demonstrations of the management of complicated equipment such as intra-aortic balloon pumps (IABP’s), mechanical ventilators, and cardiac defibrillators. In my value analysis orientation, 20 years later, I was shown my office and told, “Good luck! Now go save us some money!” Not really, but not all that far off, either.

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Clinical Value Analysis

James Russell

The point here is that reliance upon an individual hospital to orient a new VAF can be sketchy at best. There may be thousands of nurses in the hospital and a well thought out orientation process… but there may only be one or two VAF’s in that same hospital. Who orients them? Luckily, there are some resources available to help.

When I began my official value analysis role in 2008 (I had been doing it unofficially since 2005), I was lucky enough to be part of an academic medical center that was a member of the University HealthSystem Consortium (UHC), which had a formal value analysis orientation. This consisted of a full week of training with other new VAF’s at their Chicago offices. A large portion of the curriculum was geared toward project management and how to run a meeting. The information was quite helpful. What was even more helpful was the connections I was able to make with the folks doing my job in other facilities (they had the forethought to include experienced VAF’s as guest instructors). Again, with a “normal” nursing job, you are not the only critical care nurse in the hospital and you have someone to help you clarify what CVVHDF is. VAF’s usually don’t actually have many peers in their own facilities. Having a manager or director at the same level doesn’t make them a peer. Having access to a network of colleagues that I could bounce ideas off of and run “stupid” questions by was invaluable. At the time, I had a boss who’d often say, “There are no stupid questions, just stupid people who ask questions.” That certainly kept me from asking him what PPI meant the first time I heard it!

But I could call Barbara in Charlottesville, Joan in Birmingham, Jen in Chicago, Kathy in Ann Arbor, John in Los Angeles, Kamy in Denver, or Dorcas in Portland and say, “What in the world is PPI?” They’d patiently guide me through physician preference items, without bringing up that I’d asked the same thing two months ago. Again, access to this kind of network was invaluable. Luckily, we all have access to the Association of Healthcare Value Analysis Professionals (AHVAP) which has a wonderful blog on their website. It’s a great place to ask questions and share knowledge. Another source for new VAF’s is this magazine you’re reading right now! While there are some great articles in other magazines, such as Healthcare Purchasing News or Nursing Management, they are not completely devoted to value analysis. This one is.

Additionally, I found out about the power of attending conferences. As a Nurse Manager and Nursing Director, I had attended many national conferences before and thought of them as basically an excuse to travel somewhere. NTI is in Vegas? I’m there! But value analysis conferences are different.

I’ve learned some really important lessons there. If I can steal a quote from someone I can’t remem-

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Clinical Value Analysis

James Russell

ber, “If intelligence is not repeating your mistakes, then wisdom might be not repeating the mistakes of others.” Here’s a great example of getting an idea from a colleague and running with it. I learned from Cindy, at a national conference, that there was interesting clinical evidence regarding the effectiveness of thigh-high vs. knee-high sequential compression devices (SCD’s). When I got home, I did the research, noted the tiny P-values that were statistically insignificant, converted almost all of my hospital’s “thighs” to “knees,” and saved my hospital nearly 6 figures by altering our utilization of products we already bought. A year later, doing our follow up with clinical (and not just financial) data, we discovered our DVT/PE rates (blood clots) had actually gone down (possibly from increased patient compliance with the more comfortable size).

This is the very embodiment of a value analysis “win-win”. An improvement in patient outcomes and a decrease in direct supply costs. We didn’t even experience a change in our products (the pain of conversion) or pricing (the pain of negotiating). When bragging about this project to another peer, Todd from LA County, he said, “Well done, you’ve graduated from Value Analysis 101. Way to go.” I was initially kind of offended at this, but soon realized that he was right. I was still new and there was a lot more to learn. For example, the term utilization is a value analysis buzz word (it’s even in the title of this magazine!), but what does it actually mean? Here’s another real-world example that may help explain it to new folks.

Suppose your hospital pays $8.00 for a disposable pulse oximetry (POx) sensor (Sp02) and you buy 100,000 of them annually. Do the math and you end up with a significant annual spend of $800,000. When negotiating prices, there’s only so far you can go.

Perhaps you can threaten to move to a competitor and even perform a clinical evaluation (of what amounts to Coke vs. Pepsi, based on the evidence). Suppose you’re able to negotiate a savings of $0.25 per POx sensor. That’s 100,000 quarters. $25,000 in annual cost savings. Well done! Here’s a different project with the same product…

Suppose your hospital performs 15,000 surgeries annually. In pre-op, you place a pulse oximetry (POx) sensor on every patient’s right hand, because the vital signs monitor is on that side. When the patient rolls into the OR, you place a POx sensor on every patient’s left hand, because the anesthesia machine is on that side. Every patient that rolls into PACU (the Recovery Room) has two POx sensors, one on each side. The nurses in PACU are the ones who alerted you to this!

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Clinical Value Analysis

James Russell

We have found that by moving the pre-op machines to the other side of the bed, you’ve saved $8.00, 15,000 times. $120,000 in utilization savings! Wasn’t that more fun? Utilization analysis is like detective work. Sure, negotiating can be fun too, but there are probably folks in your organization that are better at it than you (Purchasing, for one). Nobody does product utilization but you. This can be your wheelhouse. You are the translator. You can explain continuous veno-venous hemo-diafiltration and IABP’s to the operational folks in Purchasing, Contracting, and Finance. You can also explain what SKUs, POs, and FMV is to your clinical folks. You’re the perfect liaison! I dislike that word (not sure why), but it’s accurate.

Here’s the point…use your connections. I went to a conference, got an idea, and saved my hospital >$90,000. That’s enough to send me to a lot more conferences! Value analysis conferences are much more interactive than the average and you might actually learn some nuggets of wisdom that you can take back with you. My friend Neil from Richmond went to a conference and came back repeating the same phrase over and over, regarding challenging the status quo: “Culture eats strategy for breakfast.” I don’t remember the source of the quote, but how apropos to value analysis? I call it kicking anthills and watching people get hysterical and say the sky is falling, but that’s probably offensive to someone.

Having access to an email listserv, or a blog on a website, or an article in a magazine, or a conference, or a WebEx, can provide priceless insight into this fascinating world we call value analysis. You really don’t have to re-create the wheel.

Jim Russell is a Value Analysis Facilitator UF Health at Jacksonville and has more than 25 years of nursing experience, specializing in critical care and psychiatry. He has 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 James.Russell@jax.ufl.edu

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The Last Word Products or Outcomes: What Are You Buying?

Lynn Everard, Managing Director, Valumatrix, LLC

In today's healthcare world there are only two things for sale: products and outcomes. In the hospital supply chain we have a long history of bringing down unit product acquisition costs. But we have exhausted the easy money of haggling over price and we are likely not putting as much in savings to the bottom line as we were in the early days. Once an item is commoditized additional effort at lowering its price is like burning hundred dollar bills to light our search for pennies in the dark. Now we, like other parts of heath care and other industries, are starting to realize that we do our best work on the bottom line when the top line is robust and growing. And that is supply chain and value analysis’s new opportunity.

How do we take a supply chain function and turn it into a powerful support for increasing revenue for our facility? One answer to that question is outcomes. Clinical outcomes are the result we get when we combine the right products with the skills of our clinical team. When patient care is improved through measurable results, when patient satisfaction increases and the total cost of doing both goes down - that is a powerful outcome.

This is where the product supplier gets to choose between just selling us stuff and becoming partners in our success. The ideal partner knows that the best way to sell their product is by working with us to optimize our use of their product in producing superior clinical outcomes, even if it means selling us fewer units of their product. The ideal partner knows that building a long term value relationship is far more important than making a quick sale of a high volume of products.

What makes a sales representative an ideal partner?

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The Last Word

Lynn Everard

1. They understand that the relationship creates the sale; not the other way around, and that real relationships take time. Most of us know when we are being sold and we don’t like it. We also know when someone is pretending to be friendly to get the sale. Recently on LinkedIn a number of people have posted a message that says something like this, “Don’t you hate it when someone asks you to connect with them and then five minutes after you do they are trying to sell you something?”

2. They ask good questions and they listen to your answers. We have all had conversations with people where we just knew they were not hearing anything we said because they were busy thinking of the next thing they were going to say.

3. They listen to your questions and provide answers when they have them. They know that even if we are in a hurry the right answer will always serve us better than a hasty wrong answer.

4. They work for a company that truly values its employees. Your supplier can never value you if the employees who work there are not valued and that includes your sales representative.

5. They value you as a person. You are not just some gate that they have to come up with a way to get past. You are treated with respect but not kept at a distance.

6. They have studies that point to the value of their products in achieving outcomes. By now we hear the term “evidence based medicine” in our sleep. Yet how often does a representative try to sell a product with no supporting outcomes data?

7. They are committed to quality. They know that quality is not just the absence of manufacturing defects but is the presence of positive attributes that will have a meaningful impact on clinical outcomes. Quality is not just a product characteristic; it is a state of mind and a practice that is instilled into the culture and baked into every product.

8. They stop selling. It may take a while but when the sales representative stops selling the focus product for the month and simply engages in discussion about how they can help you improve your clinical outcomes, you know you have a partner.

Lynn Everard is Managing Director of Valumatrix, LLC. Valumatrix delivers strategy, content, and messaging for a rapidly changing world. Their newest offering is an outsourced employee newsletter that provides inspiration and supports wellness. Valumatrix is an NCI Partner. Contact him at leverard@valumatrix.net.

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Finally, A Proven System That Engages Clinical Department Leaders to Save Money in Supply Utilization Why Do Clinical Departments Need Only Clinical Departments Can More Proof Than Just Total Spend? Control Their Clinical Departmental Supply Utilization Supply and Value Analysis Managers have been challenged with providing evidence to show where clinical departments’ supply utilization is running over. Normally, when the utilization overrun is brought to the clinical department managers’ attention in the form of spend totals, their first reaction is that patient volumes or acuity was high for the period. That is where the conversation usually ends and that is where huge dollars are tied up in your hospital’s supply chain. How do we provide the proof clinical departments need when it comes to supply utilization?

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On the contrary, they will help manage utilization costs but require solid evidence when it comes to their major and minor product category overspends. Supply and Value Analysis Managers have been able to keep costs low for many years with various value analysis and contracting strategies but there comes a time when the clinical departments must learn where they need to do better.

Clinical departments have traditionally managed the supplies that are used for care on their patients but they have been doing this without a solid reporting system to tell them where they can do better based on patient volumes and acuity. With a system in place, clinical departments can now visualize all of their major supply categories and make the necessary adjustments which in turn will save big dollars (11% to 23% supply utilization savings per clinical department) for the hospital.

$3.8 Million for 350-Bed Hospital Recently, a 350-bed hospital reported clinical departmental savings of over $3.8 million. Why so much savings? Because they had never taken the utilization reporting to the departmental level and thus the savings were low-hanging fruit when it was brought to the clinical department leaders’ attention. Clinical Department Utilization Manager software made it easy to pinpoint the exact category in the exact nursing unit and the exact product(s) that were causing the overspend. Prior to this, they did not have any idea where to look or how to prove the savings to the clinical department leaders.

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