Healthcare Value Analysis & Utilization Management Magazine - Volume 5 Issue 1

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Healthcare

Leading Cost and Quality Strategies for the Healthcare Supply Chain

Magazine

Why Surgical Value Analysis is More Important Than Ever Before!

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Healthcare Value Analysis & Utilization Management Magazine

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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

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

9 FEATURED ARTICLE

By Robert W. Yokl

Why Surgical Value Analysis is More Important than Ever Before

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

Editorial Staff Publisher Robert T. Yokl bobpres@ValueAnalysisMagazine.com

13 UTILIZATION ARTICLE

By Robert W. Yokl

How is Your Value Analysis Pipeline?

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Managing Editor Robert W. Yokl ryokl@ValueAnalysisMagazine.com

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Senior Editor

22 Supply Chain Education

By Michael Bohon

Supply Chain Education is Not an Expense. It is an Investment.

36 THE LAST WORD

By David Hinkle

Stumbling Around Vs. Targeting Your Clinical Supply Utilization Savings Volume 5/Issue 1

Patricia A. Yokl ————————————

Editor and Graphic Design Danielle K. Miller

Copyright 2017 Strategic Value Analysis® in Healthcare. All rights reserved. Reproduction, translation or usage of any part of this work beyond that permitted by Section 107 or 108 of the 1976 United States Copyright Act without permission of the copyright owner is unlawful. For permission call, fax, or e-mail Robert W. Yokl, Managing Editor, Phone: 800-220-4271, FAX: 610-489-1073, E-Mail: ryokl@valueanalysismagazine.com for approval to reprint, excerpt or translate articles.

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From the Publisher's Desk

Robert T. Yokl

Clinical Supply Utilization Management Isn’t a Sometime Thing Robert T. Yokl

We congratulate the supply chain/value analysis practitioners that are attacking their utilization misalignments (i.e., the wasteful and inefficient consumption, misuse, misapplication, and value mismatches in your supply streams) when they get time to do so or when they stumble over them.

However, this isn’t giving enough attention to these unwanted and unneeded costs to register any significate reading on the Supply Chain Expense Richter Scale. Instead, you need a full court press, at all times, to uncover and then eliminate your utilization misalignments for these three reasons: 1. Your healthcare organization is losing millions of dollars while you wait for the right time, the right staffing, and the right circumstance to attack your utilization misalignments.

2. Quality issues go unresolved because you aren’t continuously tracking, trending, and monitoring how your products, services, and technologies are being employed in your clinical departments.

3. Time wasting and inefficient practices continue to be a common occurrence in your clinical departments since little or no effort is being made to discover and eliminate them.

These three reasons are why clinical supply utilization management can’t be a “sometime” thing. It needs to be an automatic, systematic, and nonstop tracking, trending, and monitoring of the tens-ofthousands of products, services, and technologies you buy and utilize annually. Any less effort than this won’t result in moving the needle on your Supply Chain Expense Richter Scale.

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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 or Call 1-800-220-4271 or email at&sales@svahsolutions.com Volume 5/Issue 1 Healthcare Value us Analysis Utilization Management Magazine 5

From the Managing Editor’s Desk

Robert W. Yokl

How to Keep Everyone Motivated in the Value Analysis Game Robert W. Yokl

Let’s face it, we need everyone involved in our value analysis program to stay positive, stay the course, and, most importantly, stay motivated to keep working in the program. This is a challenge for many value analysis professionals who are leading and facilitating their healthcare organization’s value analysis program. Most value analysis programs do not have any form of rewards or recognition built into them for their value analysis team members so we must rely on other methods to keep our teams motivated.

It is important to remember that the members who are on your teams and committees are normally department heads, managers, and supervisors of their respective departments and value analysis is not their main job. One of the main reasons that value analysis teams/ committees fail or fizzle out is that your team members lose interest in the program and stop coming to meetings or engaging in your true value analysis processes. Nevertheless, we need them to be heavily engaged in the program as much as possible. Senior management looks at value analysis as everyone’s duty as good stewards of our healthcare organization, so you really can’t count much on any monetary “motivation” in the form of bonuses. However, there are other ways to keep your teams motivated that you should consider.

Promote Your Value Analysis Team/Committee Members’ Successes Every value analysis team produces great work on an ongoing basis, so why not promote this great work throughout your healthcare organization with positive articles. The articles do not have to be white papers or evidence level articles; they just need to be simple one, two, or three paragraph articles. These can then be published in your hospital’s monthly newsletters/magazines, blogs (yes hospitals do have blogs now), or submit these to industry magazines or associations for publication.

You can also create your own value analysis newsletter to be distributed on a monthly, quarterly, or semi-annual basis.

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From the Managing Editor’s Desk

Robert W. Yokl

The major benefits to publicizing your value analysis teams’ work is to ring praise down on those hard workers and key players who help make the savings and quality improvements happen. Everyone says that they don’t want to be praised in this manner but everyone does like to be recognized by their peers inside and outside their organization. Most articles, whether internal or external, are search engine friendly and it is fun for those involved in value analysis to search their own name and see a positive article about value analysis come up.

Develop Rewards for Your VA Program That Cost Little or No Money If you walk into any department in a hospital you will more than likely see all the awards that they have received over the years in meeting key goals organizationally, or through their associations for their specific modality. Awards have significant meaning to healthcare organizations and to the individuals that lead these departments, as you will see their awards posted on their walls as well.

Work with your supply chain director and/or VP to see if you could find about $200 to add to the budget each year to purchase awards and plaques for recognizing the success of the value analysis committee/team members. This is a relatively small amount of money to spend when your committee could be saving you $2, $3, or even $9 million a year.

More than likely, your healthcare organization already has a discounted relationship with a plaque maker company and you could put together a nice plaque for “Outstanding Contributions to Value Analysis Success – 2017” or something to that effect. You could then develop your own criteria or let your value analysis steering committee or senior leadership help craft and approve your standards and winners on an ongoing basis. Give the awards on at least a quarterly basis and continue to give these to ensure that you’re consistently motivating your value analysis team/committee members. If the award is significant enough, perhaps a special parking space (VA Employee of the Month or Quarter) could be made close to the hospital’s entrance for this team member. The cost is little or nothing but may mean a lot to the person who has access to it.

In this time of tight budgets and challenging value analysis studies that require even more collaboration and engagement from our value analysis teams/committees, as well as all the departments in the organization, it is good to develop some simple motivational plans for your value analysis program. Without motivated and engaged team/committee members, we go nowhere fast!

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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 5/Issue 1

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Featured Article

Robert W. Yokl

Why Surgical Value Analysis is More Important than Ever Before Robert W. Yokl, Senior Vice President/COO, SVAH Solutions

Historically, surgical value analysis (SVA) teams focused on evaluating the newest technologies that surgeons and clinical leaders believed would improve patient outcomes for their respective procedures/cases. While this remains a stalwart goal of most SVA teams, we must evolve to meet the growing challenges our hospitals, systems, and IDNs face. The primary question that remains is, how and where do we need to progress our SVA teams? I thought it would be great to not only share my views on this important topic, but I have reached out to my colleagues at the Association of Value Analysis Professionals who are distinguished value analysis leaders and experts to get their take on new SVA best practices. ďƒž

Barbara Strain, Director of Value Management- University of Virginia Health: With the Affordable Care Act taking full effect on our industry, we must start to work towards surgical value analysis aligning with the oncoming value based purchasing initiatives. For example, there are test initiatives for a bundled payment model starting with comprehensive joint replacement (CJR) that the hospital will be responsible for a patient from the time of diagnosis to the joint replacement and for 90 days through recovery. The hospital is accountable for the outcome of the

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Feature Article

Robert W. Yokl

patient through the entire continuum of their joint replacement regardless of whether the patient has a positive or negative result with an owned or not owned entity of the hospital. This could dramatically affect the way the hospital is reimbursed and may bring on competition from other value based purchasing groups in and out of their region for the business of performing the total joint procedure.

At the University of Virginia, SVA teams focus on tracking the cost and variation of procedures to educate all involved whether it be the surgeons, clinical or non-clinical support team, or even an outside vendor.

Our goals are to identify the variation in our surgical procedures in our controllable areas that will lead to improved quality outcomes. This will not only ensure reimbursement but will also lead to reduction of costs up to 20% by procedure type. The quality outcomes and cost savings may not be related to just supplies. It could also be procedural, support centric, or even as simple as changing the way electronic paperwork is submitted. 

Gloria Graham, DNP, RN, CVAHP, Clinical Materials Specialist, Cincinnati Children’s Hospital – AHVAP President: At Cincinnati Children’s Hospital, we focus a lot of our attention on evidenced based research to support our value analysis process including our surgical value analysis teams. The goal is not only to find just any evidence but to find evidence that is usable and can be communicated to our key surgeons, surgical leaders, and surgical support team. More importantly, we focus our attention on helping our nurses and clinicians understand how this evidence relates to our surgical value analysis processes. During my recent doctoral research work, I have found that this education process for surgeons and nurses is irreplaceable and should not be taken for granted. The research literature demonstrated that clinicians have a knowledge deficit regarding the value analysis process within the healthcare setting. There is no school of value analysis for the supporting players in our hospitals, systems, and IDNs. As SVA leaders, we need to start thinking about how to educate these key professionals in the next level of surgical value analysis.



Wanda Dupree-Lane, RN, MaED, CVAHP, Value Analysis Manager - Regional One Health: Forward thinking medical schools now include fiscal responsibility, quality and outcomes goals, and supply chain metrics in their curriculums, raising physician awareness of

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Feature Article

Robert W. Yokl

the cost of the business of healthcare. The benefit for SVA teams will be physicians who are open to change, understand variation reports, and share innovative ideas to reduce waste and costs.

The challenge will be for those professionals who have been in healthcare for many years. For example, a surgical nurse who has worked in the OR for 18 years typically places cost, waste, and performance secondary to the procedure, the surgeon’s wants, and the quality of patient care.

Challenging them to place patient care as highest priority, while considering cost, waste, and performance along with managing surgeons’ requests will require new ways of thinking and much support, as experienced professionals are thrust into increasingly hostile environments.

SVA teams should strategically recruit from this vast array of experienced professionals and integrate fresh faces with new ideas. A staffer new to surgical value analysis can be overwhelmed. At Regional One Health, we have a strategic teambuilding process that includes value analysis education for professionals all along the spectrum, from the novice to the experienced team leader. Inclusion, transparency, and safe communication environments are essential for team growth and success.

One of the most important areas that I focus on with my clients is to establish baseline standards in the form of tracking supply utilization. For every product, procedure, or study, you have a before, during, and after happening with the products utilized. For example, if we are to evaluate a new instrument for use on laparoscopic surgery cases, more than likely there is a product that is already providing that function for the current cases. This product has a performance trend in the cost continuum that we need to tap into to ascertain the level of utilization of the new product during the implementation and thereafter. This way we ensure that we get the results that are expected from our value analysis studies. Plus, if supply utilization increases or decreases dramatically, it can be used as a red flag for good and/or bad quality over the short or long term.

To conclude, it’s time to look beyond how hospitals have employed surgical value analysis teams to work through new products and technologies. Unfortunately, for years, the majority of these teams only focused on new products and technologies. The world beyond new products and technologies is a road less traveled for many SVA teams. The good news is that inevitable evolution is happening at many organizations and value analysis teams should be thinking about incorporating the latest strategies and best practices. This forward-thinking step will give your teams a crucial advantage in the ever-important world of surgical value analysis.

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Join an Elite Group of Value Analysis Professionals Networking — Best Practices — Data Sharing Member Forums — Education — Mentoring

What Are Members Saying About AHVAP? “Great networking forum!”

“I found the AHVAP Foundation and conference very helpful for me to become successful and more resourceful as a Value Analysis professional.”

“Value Analysis in Healthcare has become the ‘go to’ resource for identifying and realizing savings as evidenced by the sheer number of new conference attendees at AHVAP 2013.”

“AHVAP just keeps getting better and better every year!”

Join or Learn More Today

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“So glad that there is education in Value Analysis through AHVAP!” “AHVAP has provided a vehicle to share our daily successes and frustrations.

The networking opportunities at the annual conference are invaluable. I am proud to be a member of our growing organization!”

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Healthcare Value Analysis & Utilization Management Magazine

Utilization Management

Robert W. Yokl

How is Your Value Analysis Pipeline?

Robert W. Yokl, Vice President/COO, SVAH Solutions

There are so many different methods, strategies, and configurations of value analysis teams/committees around the country, but there is one underlying element that every team must have in order to be successful - a good pipeline. This term is a sales terminology that companies use to predict where their sales are going to be in the coming weeks, months, and year(s). In other words, what they are going to expect as far as sales in the future. I guarantee that every healthcare vendor you buy from is tracking these vital facts and more importantly reacting to their predicted shortfalls in order to meet and/or exceed those objectives. This is a report that every value analysis team should be generating/running on a continuing basis in these challenging times, but instead of sales we should be reporting on the savings pipeline. (continued on page 15)

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Utilization Management

Robert W. Yokl

Yes You Can Predict the Future for Your VA Teams/Committees As I mentioned, there are so many different ways that value analysis is being performed in the healthcare supply chain world. About 75% of the teams/committees’ focus is related to cost reduction while maintaining or improving quality.

The other 25% are totally focused on new products and new technologies; these are organizations that can afford to have this luxury of a value analysis team. Most employ VA to reduce costs and that is where the vital pipeline of savings comes into play. Once set up and configured, the value analysis program at your hospital, system, or IDN becomes the engine to drive the savings which you report on your Organizational Savings Reporting.

Value analysis is a powerful process that will allow you to funnel products, services, and technologies through a step-by-step evaluation/study process to reduce costs to the lowest possible level. Your value analysis teams can only look at what you put on the agenda. If you are not looking at high value savings opportunities then you cannot expect to save big. Let’s take an example of a Patient Care VA Team who is currently working on 10 projects and each one is only about $10K in savings potential.

This adds up to a potential $100K in annualized savings in the teams current pipeline. This team should be lining up new projects that will be added to the agendas in the near future in order continue and/or improve the savings results. Without a constant flow of high value savings opportunities target studies, a value analysis teams results will fizzle away.

Either You Are Meeting Your Value Analysis Goals or You Are Not - There is No In-Between At publication of this magazine article, many hospitals, systems, and IDNs are in the last quarter of their fiscal years and some may just be working towards their midpoint of their budget year. This is an important time for CFOs who want to make sure they are on or below budget and on target to start the next year right. As for value/supply chain leaders, you want to know what you have to do to meet your goals for the year end and onto the next year. What the value analysis pipeline report projections will enable you to see is what is left in your pipeline to feed the engine for the next 6 to 12 months. With this report in hand you can see that you were averaging $24K in the first 6 months of

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Utilization Management

Robert W. Yokl

your VA program with a total of 55 projects for a savings of $1.3 million to date. Your savings goal for the year is $3 million which means that you need to have a pipeline of at least $1.7 to $2.5 million in savings and will need 71 to 104 projects to be completed. We recommend that you shoot beyond your goal because not all value analysis studies pan out with the savings we thought we would achieve.

How to Predict the Value Analysis Future One of the most important things we at SVAH Solutions employed about 10 years ago was a simple column added to our value analysis software project tracking the “Projected Savings” field. At the beginning of every value analysis study you should predict/estimate how much savings you will be working towards on this study.

This will feed your value analysis pipeline report moving forward and should be considered a mission critical, must-do task, as no projected numbers means no projected capability. No matter what you are working on, it should have an estimated savings associated to it. If you cannot estimate savings to some degree, then you must ask yourself if you should even be working on a study that you don’t have any idea of what the outcome will be. A good rule of thumb for predicting savings when you are having a difficult time estimating savings is to use 10% of the total annual spend as the savings objective.

Simple, Easy, Yet Highly Effective!

With little work, you can add this valuable element to your value analysis program that will give you a simple, evidence-based tool (your own evidence) to making decisions that will help you reach your value analysis goals each and every year. Whether you are halfway through your fiscal year or just starting out, you can use this report to ensure that you have a solid pipeline of savings, and if you don’t you can take proper action necessary to fill out that pipeline before it becomes a critical problem. Eventually, you will keep your value analysis pipeline full at all times and can demonstrate to your bosses that they can count on your value analysis program to meet/exceed their saving goals each and every year. Remember, we are only as good as our value analysis pipeline that fills our agendas each and every month. If it does not hit the agenda, we can’t make savings happen in value analysis.

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Healthcare Value Analysis & Utilization Management Magazine

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Value Analysis 101

Robert T. Yokl

Find Champions Who Will Guarantee Your VA Team’s Success Champions Should Challenge, Motivate, and Fight for Your VA Team

There is one common thread that I have observed with ultra-successful value analysis teams; they all have champions - at the highest level - to challenge, motivate, and fight for them through the good times and bad.

Even Larry Miles, the father of value analysis, had a champion (his boss) at the General Electric Company when he devised and deployed his VA technique at GE in the 1940s.

How to Find Your Primary Champion First off, your primary champion needs to be from your senior management level (CEO, CFO, COO, CMO, CNO, EVP, VPs, etc.) to be most effective. This is because these individuals get people’s attention and are listened to when they speak. We have generally found that your CFO is a natural champion for your value analysis program because of its obvious cost and quality improvement benefits. This is the person you would first approach with your value analysis program proposal, who then could shepherd it through your administrative team process for approval. This is the same person who would become the chairperson for your value analysis steering committee, so they can continue their guiding of your VA program to its ultimate success.

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Value Analysis 101

Robert T. Yokl

Note: If you already have a value analysis program, you might want to revisit it to ensure that you have a primary champion who supports, defends, and is a booster for your value analysis efforts.

If not, you might want to employ the above process to reinvent what you have been doing.

How to Identify Your Secondary Champions Next, you will need to appoint one champion (or administrative representative) for each of your value analysis teams. The person (appointed by your CEO) would come to every one of your VA team meetings to challenge, motivate, and fight for their value analysis team. They would also be a member of your value analysis steering committee. Their specific responsibilities would include: 

Helping your VA team to side step the political minefields that can damage your team’s image or reputation.



Negotiate with department heads and managers who don’t want to change their behavior or practices for the better. They are a champion of change for your VA team!



Monitor and then intervene if your VA team isn’t meeting its time, budget, and savings targets.



Be a cheerleader if your team needs to be motivated to improve its performance or overcome barriers to its success.



Keep your senior management team informed of the progress of their value analysis team.

I can’t emphasize more strongly how important this position of champion is to your value analysis team. Without this position, we have seen VA team’s falter, blunder, or be ignored by your healthcare organization’s department heads and managers. Don’t let this happen to your value analysis team(s).

Note: If you don’t have champions for all of your value analysis teams or have a value analysis steering committee, now is the time to re-engineer your value analysis program with these two features for maximum results.

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Value Analysis 101

Robert T. Yokl

Characteristics of a Champion A value analysis champion is a unique position since there is no formal job description for this role on your value analysis team. However, there are important characteristics that you should look for and encourage when providing criteria to your CEO for the selection of these individuals as follows: 

Curious to understand how the hospital, system, or IDN’s products, services, and technologies are purchased and employed throughout the healthcare organization.



Defender of low cost/ high quality product, service, and technology purchases.



Campaigner for positive and timely change management within the healthcare organization.



Promoter of better cost, quality, and safety outcomes for your patient population.

These four traits are broad examples of the characteristics of a champion your CEO should be looking for in your VA team’s administrative representative. In short, your champion should enjoy your VA process or they will be bored with your VA methodology and skip coming to your VA meetings.

Every Successful Management Technique Has a Champion Robert McNamara, Secretary of Defense in President John F. Kennedy’s administration, championed value analysis in government, and Bob Galvin, CEO of Motorola, and Jack Welsh, CEO of General Electric, championed Six Sigma in their organizations. These are success stories that wouldn’t have happened without these individuals advocating, supporting, promoting, and defending these new management techniques. It’s the same with your value analysis program at your healthcare organization – you need champions to be ultra-successful. For your healthcare organization to remain competitive, increase profitably, and improve its bottom line year-after-year, you need primary and secondary champions of your value analysis program to support these goals.

It’s the first step to success, but not the only step to supercharge your value analysis program.

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Supply Chain Education

Michael Bohon

Supply Chain Education Is Not an Expense.

It Is an Investment.

Michael Bohon, CPSM, C.P.M., CMRP, Managing Director of HealthCare Solutions Bureau

In the healthcare environment there are so many opportunities for us to spend money in order to improve our organizations. There are the essentials – staffing, facilities, equipment, supplies, etc., especially those in the diagnostic and treatment areas. Also, we are and have been inundated with new technologies whose purpose is to help us do our jobs better in the supply chain and some are successful in doing just that. One of the toughest problems we face is selecting from the myriad of choices and another is trying to spend our money wisely. With many of these we perform a return on investment (ROI) study to determine whether it will be worth our while to proceed or whether the money should be spent elsewhere. This is considered to be especially important with the decisions involving purchases of high dollar sums.

Often neglected are the smaller payouts that can virtually guarantee remarkable ROIs and reductions in our operating costs. On top of that these financial benefits of such investments are repeated over and over. I am referring to investments in the continuing education of your supply chain professionals.

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Supply Chain Education

Michael Bohon

These valuable employees who have a direct effect on your total financial performance often operate with their hands tied because of their lack of opportunity to increase their knowledge and improve their business skills. They often have to rely on one of the following methods to learn more about their functions and how to improve them: • • •

Past academic study – A very good source in general but often does not provide details on how to apply the theoretical knowledge to their specific tasks and responsibilities.

On the job training – A common method, but it sometimes becomes a process of trial and error or learning by your mistakes, which can be costly.

Mentoring – Learning from a more experienced individual can help but depends on how learned they are and whether or not their methods kept pace with recent business advances.

The primary reasons for paying attention to the area of education in the supply chain are: 1. The potentially large ROI that can be achieved through: a. Purchase cost reductions b. More efficient and effective operations c. Elimination of waste of money, materials, and labor 2. The injection of new and broader knowledge into the staff by having them participate in educational programs and providing the potential for sharing what they have learned through cross-training.

3. The long-term goal of developing your staff so they can be better prepared to move up in the organizational structure as opposed to you losing them to other organizations.

There is a fourth reason. Reflect on the fact that the supply chain in a healthcare organization can and should be considered the lifeblood of the business, and its employees are the ones who ensure the smooth and effective operation of its vital functions. All too often that fact is lost or forgotten.

I recall years ago when I was working at a major hospital one of my key team members expressed her frustration about how our work was overlooked and the work we accomplished did not seem to matter to others. I told her to consider that everything she and her associates did every day in the performance of their jobs had a direct or indirect positive effect on other human beings and not everyone can say that about their work.

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Supply Chain Education

Michael Bohon

I also recall a management meeting I attended at a client hospital. The CEO said, “I know you people in the support departments get frustrated when we focus on the nurses so much. They get our attention, the raises and the bonuses, but you have to understand that without a nurse there is no patient.” From the back of the room people heard me say, “Without supplies and equipment, there is no treatment.”

Later I took this thought even further when I was addressing a national healthcare supply chain group. I suggested that the audience take some time to visit the ICUs in their facility and observe doctors and nurses treating patients who are struggling for their lives to recover from illnesses or accidents. The other things that were obviously key to the recovery of the patient were the supplies and equipment located in and around the room. I said, “Unless those doctors and nurses have healing powers that can raise the patient from the bed or the operating table, they need us in the supply chain and the services we provide. No nurse or physician, no matter how proficient, can perform the functions of their profession without the tools we provide them.”

Stepping down from my soapbox I simply want to emphasize to people that the relatively small amount of money required to provide necessary educational programs not only results in the significant savings mentioned before, but also provides those being schooled a greater feeling of self worth and understanding that their organization values them and is willing to invest in them. The opportunity to improve both performance and morale should not be ignored.

I have been developing supply chain educational programs and presenting them to audiences around the country for 15+ years. I still enjoy witnessing the enthusiasm people display while learning new skills and honing current ones.

A few years ago I taught a series of three classes to a group of hospitals in the mid-west on improving their negotiation skills. Imagine the satisfaction I felt when one of the participants came up to me during the second session. She excitedly announced, “Michael, I tried your suggestion on the power of silence in a negotiation recently and it really worked! Thank you for your help.”

Michael Bohon, CPSM, C.P.M., CMRP is the Managing Director of HealthCare Solutions Bureau. For more information on HSCB’s supply chain educational programs contact bohon@hcsbureau.com.

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HEALTHCARE SOLUTIONS BUREAU HealthCare Solutions Bureau’s Seminars and Webinars (At Your Convenience) The HealthCare Solutions Bureau’s Seminars and Webinars is a compilation of instructional programs presented by HealthCare Solutions Bureau (HCSB) that are designed to provide supply chain professionals the tools and guidance they need to excel in their work.

Learn More About the Programs

They include detailed training in the art/science of negotiation based To access details of the seminars on the studies of the Harvard Program on Negotiation and the 40+ offered, please click here years of experience of the instructor, Michael Bohon, CPSM, C.P.M., CMRP and training on the fundamentals of inventory manTo access details of the webinars agement.

offered, please click here

These programs offer learning and insight that will assist an individual to further the progress on his/her career path or show To access the bio of the leadership skills by managing improvements in his/her organizations.

instructor, Michael Bohon, CPSM, C.P.M., CMRP, please click here

Seminars can be arranged to meet your schedule at a location of your choosing. Different formats for the timing of the sessions are listed on the links below.

To access information regarding

past history of HCSB's educational Webinars can be subscribed to individually or in groups (to reduce programs, please click here the cost) including those that are part of a series. Once the fee for the subscription has been remitted to HCSB the subscriber will be provide a link to the webinar(s). They are then able to watch the programs as many times as they wish in a 30 (or 60) day period. They can be viewed at any time by as many people as they wish. The link can only be used by members of the organization that have subscribed to their selection of programs.

Costs are determined by the number of programs in the subscription and the length of time they are available to the subscriber. They are calculated with the limited education budgets available in hospitals having been taken into account.

To obtain information on our customized pricing, please contact HCSB at Volume 5/Issue 1 Healthcare Value Analysis Utilization Management Magazine 25 bohon@hcsbureau.com or&520-904-1192.

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Clinical Value Analysis Value Analysis and Open Payments James Russell, RN-BC, Value Analysis Facilitator, UF Health at Jacksonville

Regular readers of my articles will recognize the term, “Open Payments,” and probably groan with annoyance. If you’ve spent any time with me at a conference, you’ve heard me bring up the topic ad nauseam (hopefully not literally). I have stated, and I maintain, that this new venture offers the field of Value Analysis a powerful tool to combat some of the long-held practices that dilute the effectiveness of our field. Since I learn best with analogies, here’s where we begin: •

Scenario: Your Value Analysis department received a Product Request Form (PRF) from Dr. Jones. He wants your hospital to purchase a new mechanical guide from ACME Spine Company that helps pinpoint accurate anchoring of spinal implants during arthrodesis (spinal fusion) surgery. He submits justification for this $2,000 added expense as better patient outcomes (i.e., less postoperative pain, better mobility at home, and lower rates of readmissions) to the hospital.

Does this sound familiar to any of you (not the product, but the request)? If not, you probably have a better PRF than I do. We ask our requesters for specifics on our form. Especially important is, “What data will we measure to determine the success (or lack thereof) of this project?” The last sentence

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Clinical Value Analysis

James Russell

above is a common attempt by our physicians to answer this question with subjective or ambiguous criteria. Just how do you actually measure those things in terms of real dollars? It’s not easy (and sounds suspiciously like something a vendor representative would say).

Legal Terms: Most physicians receive training in medical school about the Stark Law and the federal Anti-Kickback Statute. These relate to conflicts of interest in the areas of self-referrals. A physician knows he shouldn’t refer a patient to another entity in which he has a financial interest. Open Payments is a bit different. Open Payments is a data repository for payments from medical device and pharmaceutical manufacturers to physicians and teaching hospitals. It requires the companies making those payments (or transfers of value) to report them to the Centers for Medicare and Medicaid (CMS). The entries must be categorized (i.e., Food and Beverage, Travel and Lodging, Speaking Honoraria, Research, etc.). This data is then made publicly available on an annual basis, after an interval where the recipients of those gifts can dispute their legitimacy. The data is published on a searchable public website in June for the previous calendar year: https://openpaymentsdata.cms.gov/search. We have data now from calendar years 2013 – 2015.

Anyone can search this database and determine how much (in dollars) and how many (in separate payments) a physician or a teaching hospital has received from each individual vendor for a calendar year. The data is also downloadable for manipulation and distribution. I think the best case for using the tool is made by the tool itself. Use the link and go play. Look up your favorite teaching hospital (academic medical center). You might be surprised at the many thousands of dollars they receive annually from these companies (some even receive millions). Look up some of the physicians you know. Again, it might be surprising to see how many times a pharmaceutical representative has taken your favorite doctor out for “food and beverages” adding up to many thousands of dollars over a year. Unsurprisingly, you may find they are equal opportunity guests of these companies, going out with Vendor A one week and their competition the next. Lastly, look up some well-known device manufacturers and pharmaceutical companies. For the big ones, we’re not talking about thousands, but millions in payments to doctors and hospitals. Some are in the tens of millions…and even hundreds of millions…in just one year. No wonder a pill costs so much!

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Best Practices

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Value Analysis Resources

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Case Studies

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Clinical Value Analysis Articles

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Interviews/Authoritative Opinions

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Educational Articles

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Utilization Management Articles

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Evidenced Based Value Analysis

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Clinical Value Analysis

James Russell

Ramifications: I once attempted to negotiate implant pricing with a well-known vendor and had them explain that their prices were so high (they were way out of line when benchmarked) because they funded many activities for our School of Medicine. I had them clarify. They mentioned a million -dollar cadaver lab for the medical students to practice in, that they completely funded. What? You mean that’s rolled up into the price of my implants? “Yes,” they said. “We have to get our money back, don’t we?”

I had another company tell me they’d have to stop paying for a physician’s travel (in the tens of thousands of dollars) if I wanted them to lower their pricing. What? Really? Why am I paying for that stuff?

Let’s come back to our scenario. Let’s presume we have a Value Analysis Committee comprised of the usual suspects (Dr. Jones’s colleagues, nurses, supply chain folks, finance folks, operational folks, etc.) and he is expected to present his request.

Would this committee want to know whether or not Dr. Jones had a financial investment in ACME Spine Company? Shouldn’t this be disclosed as a matter of routine? I would submit that most doctors are pretty good at this and don’t see a need to hide it. If Dr. Jones was involved in the creation of this product, and receives royalty payments from ACME, I think he’d be pretty open about that to the committee. He’d have to refrain from getting those payments when the device was used by your hospital, but does his potential conflict of interest rule out the product? I don’t think so.

I’ve had physicians explain this to me in pretty convincing terms. I can hear Dr. Jones saying, “Look, I was part of the design team for this thing. I know it’s the best thing on the market, because I did my homework. Why wouldn’t I want the best thing on the market for my patients?” Pretty good speech.

As long as he’s open about it to the committee, and doesn’t get royalties, and the committee agrees that the evidence supports using it…why not?

Let’s circle back to Open Payments now. What if, in the actual meeting, you pulled up the internet on your screen (you know you’re projecting a PowerPoint, don’t deny it) and went to the Open Payments website and searched Dr. Jones. Why not?

What if ACME Spine Company has provided $10,000 to Dr. Jones for speaking engagements? What if they’ve spent another $10,000 in travel and lodging and food for Dr. Jones…all in the last year?

Does this dilute his message of doing his homework? Does he have the same gifts from other companies? Is this information at all interesting to the committee? I’m betting it would be.

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Clinical Value Analysis

James Russell

Recommendation: I’d advocate for including an Open Payments search with every new product request from a physician. I suspect the committee would like to know if there could be any appearance of impropriety. I’m not suggesting that these gifts indicate anything untoward. I’m saying that bringing this information out in the open indicates a transparent process when evaluating products. If your hospital decides to move a seven-figure spend from one vendor to another, and the new vendor has provided significant transfers of value to your hospital or some of the doctors involved, doesn’t that look a little fishy? The spurned vendor may claim your hospital was bought by lavish gifts to the physicians involved in the decision. I’ve even had some vendors file a Freedom of Information Act (FOIA) claim to get our decision making data (including meeting minutes). How would you feel if a reporter asked you why you chose what you chose? Remember, this is public data, out there for all to see.

This is not just about physicians. If your hospital might be embarrassed by the public reporting of millions of dollars in gifts from these companies, perhaps it shouldn’t accept those gifts in the first place! What if your hospital receives millions of dollars in tax revenue from your local community?

Might they not question why it’s also receiving substantial payments from pharmaceutical and device manufacturers as well?

As we move ever onward to evidence-based practice and letting evidence guide our decision making in value analysis, I’d submit that Open Payments can be a valuable tool to be used on that journey. If we make our decisions based upon the right product for our patients at the right price for our institutions, there’s really nothing to hide. If we are beholden to outside influences, because they provide hidden contributions that we don’t talk about…perhaps it’s time to clean up our practices.

Once everything’s out in the open (and it certainly is with Open Payments), it can actually be quite freeing to stop worrying about how things would look on the evening news.

James Russell is a Value Analysis Facilitator at UF Health, 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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CliniTrack™ Value Analysis Software System Finally, a System that is Truly Designed for Managing the Entire Value Analysis Process for Your Hospital, System, and Value Analysis Committees/Teams

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The Last Word Stumbling Around Vs. Targeting Your Clinical Supply Utilization Savings It Can Be Like Taking the Elevator Vs. the Steps to Your Destination

When I first started out in supply chain management we didn’t use a lot of metrics to analyze our supply chain expenses. However, we knew if a certain department was over or under their budget. Yet, there was very little to tell us why this was happening. I’d just get a visit from the CFO asking why supply expense was out of line and we would scurry around looking for an answer. Was it a volume issue? Was the department using different products than budgeted? Usually, I didn’t have the answers to these questions, so I hoped by the next month the anomaly had gone away and the problem forgotten. Not a good way to do business.

Measurement Became More Scientific As my career progressed into consulting so did our supply chain expense management profession’s measurement ability. We started using Supply Cost per Patient Day (the problem here was the longer

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The Last Word

David Hinkle

the length of stay, the better the measurement looked), so we eventually progressed to Supply Cost per Case Mix Adjusted Index per Adjusted Discharge. A great global measurement, but not specific enough to be actionable. It was not until we started employing activity-based metrics, such as, Supply Cost per Surgery Case, Pharmacy Supply Cost per CMI Adjusted Discharge, or Supply Cost per Cath Lab Procedure that we finally had some directional information. Unfortunately, this was not enough information either. We knew where to look for departments responsible for upwards to 75% of the total spend, but what were the reasons for the expense changing and what about the other 25% of the departments’ expenses? Not a perfect system, but much more scientific than just stumbling around.

Measurement Became More Targeted Fast forward a few years and I have now discovered that you can deep dive into an individual department’s supply expense performance with a clinical supply utilization management power tool.

This tool enables you to drill down to the line item product usage (at ground level) in each hospital department and then target the waste and inefficiencies in their supply streams. This is a great leap forward from stumbling around and then hoping to identify unfavorable department variances and eke out savings opportunities too.

Don’t Rely on Old Methodologies This new and better clinical supply utilization management methodology is something I’ve been waiting to see my entire career. One that can not only identify the why of any budget variance in any department, unit, or entity, but also target my best supply chain opportunities throughout my client’s hospital, system, or IDN. Why waste your time trying to figure out these mission critical questions when new technology has taken all of the guesswork out of the utilization equation. It can be like taking the elevator vs. the steps to get to your destination.

David Hinkle, FACHE, CMRP is an independent Supply Chain Consultant with over thirty years of supply chain operations and consulting experience. He is currently a Licensed Affiliate of SVAH Solutions providing sales promotion and product implementation assistance. You can contact David at dhinkle@pinnacleconsultingservices.org.

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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?

Clinical Departments Are Not Cost Management Averse Clinical departments are not cost management averse.

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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