Healthcare Value Analysis & Utilization Management Magazine - Volume 7 Issue 2

Volume 7/Issue 2

Healthcare

Leading Cost and Quality Strategies for the Healthcare Supply Chain

Magazine

Featured Article:

Pursuit of Value Analysis Best Practice: Are We There Yet?

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Contents

Healthcare Value Analysis & Utilization Management Magazine

4 FROM THE PUBLISHER’S DESK

By Robert T. Yokl

“The Investment in Knowledge Pays the Best Interest.”

Healthcare Value Analysis & Utilization Management Magazine is published Bi-monthly by SVAH Solutions®

6 FROM THE MANAGING EDITOR’S

DESK

P.O. Box 939, Skippack, Pa 19474

By Robert W. Yokl

What Are We Missing if We Are to Secure All Loose Ends in Our Supply Chain Costs?

Phone: 800-220-4274 FAX: 610-489-1073 bobpres@ValueAnalysisMagazine.com

www.ValueAnalysisMagazine.com

9 FEATURED ARTICLE

By Maureen Hazen-Fritsky, Amy Carroll, and Robert Andrzejewski

Pursuit of Value Analysis Best Practice: Are We There Yet?

————————————

Editorial Staff Publisher

20 VALUE ANALYSIS 101

Robert T. Yokl

By Robert T. Yokl

Team Member Selection and Team Building

bobpres@ValueAnalysisMagazine.com

————————————

24 UTILIZATION MANAGEMENT

Managing Editor

By Robert W. Yokl

How Triangulating Your Supply Value Analysis Studies Destroys Speculation, Lip Service, and All Other Push-Backs You Encounter

Robert W. Yokl ryokl@ValueAnalysisMagazine.com

————————————

26 HEALTHCARE VALUE ANALYSIS ACADEMY

By Robert W. Yokl

How Do You Speed Up the Value Analysis Process?

Patricia A. Yokl ————————————

Editor and Graphic Design

28 VALUE ANALYSIS ADVISOR

By Robert T. Yokl

Danielle K. Miller

The Power of a Value Analysis System to Complement Your Selling Process

33 Getting It Right

By Robert T. Yokl

Utilization Management: The Devil is in the Details

Volume 7/Issue 2

Senior Editor

www.ValueAnalysisMagazine.com

Copyright 2019 SVAH Solutions. All rights reserved. Reproduction, translation, or usage of any part of this work beyond that permitted by Section 107 or 108 of the 1976 United States Copyright Act without permission of the copyright owner is unlawful. For permission, call, fax, or e-mail Robert W. Yokl, Managing Editor. Phone: 800-2204271 E-Mail: ryokl@valueanalysismagazine.com for approval to reprint, excerpt, or translate articles.

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From the Publisher's Desk “The Investment in Knowledge Pays the Best Interest.”

Benjamin Franklin Robert T. Yokl

Too often, I see value analysis practitioners “winging it” as opposed to investing in value analysis education so that they can understand the proper way to address a particular value analysis challenge. For instance, I have seen VA practitioners approve a GPO contract because it has an excellent price instead of performing a functional analysis to determine if the product, service or technology is needed at all. To paraphrase Benjamin Franklin, this investment in value analysis knowledge pays the best interest for you and your healthcare organization. The purpose of value analysis education is to: 1. Understand the preferred VA protocols in all cost, quality and safety issues you might be faced with.

2. Improve your critical and creative thinking so you can more readily look for lower cost alternatives to what you are doing now.

3. Develop solutions for product, service or technology challenges facing your customers.

4. Learn to ask the right questions to understand how a product, service or technology is employed at your healthcare organization.

5. Learn change management skills to help VA practitioners change the behaviors of their customers.

From my standpoint, value analysis education is the key to unlocking new ideas on how to go about your value analysis job instead of creating your own job description, learning on the job by trial and error, or being educated about value analysis from a coworker that hasn’t been trained in the classic tenets of value analysis either. In summary, the reason VA education is mission critical today in healthcare is that value analysis is more than getting the best price at the pump!

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Sometimes It’s Hard to Ignore What An Automated System Can Do for Your Supply Chain Organization

Volume 7/Issue 2

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From the Managing Editor’s Desk What Are We Missing if We Are to Secure All Loose Ends in Our Supply Chain Costs?

Robert W. Yokl

I am very happy to see all sorts of focused value analysis teams in our healthcare supply chain world.

Most organizations have the traditional Surgical and Clinical Value Analysis Teams in place today, but we are now seeing teams such as Cardiology, Orthopedics, Lab, Radiology and many more across major categories in hospital and health systems’ major operating costs. Even better, there is a rise of Purchased Service Value Analysis Teams at many healthcare organizations that cover the areas that were once left untouched. All of this is great, but what are we missing if we are to secure all loose ends in our supply chain costs?

What Are We Missing to Lock Down Any and All Savings Once and For All?

The answer is simple: We are missing a Supply Utilization Value Analysis Team where the focus would not be on converting contracts, evaluating new product requests, fixing problems, or dealing with recalls. This team would focus on utilization and consumption, or the increases in costs not related to price. They would need to focus on the world after price, because what happens after we have the right product at the right price in the right department at the right time? It goes into the hands of our customers!

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From the Managing Editor’s Desk

Robert W. Yokl

Once a product is in the hands of our customers, anything can happen, and it does. Why is this?

Because any analysis is a retrospective analysis based on previous purchase history spend in 99.7% of the reviews. To implement any change, be it contractual, value analysis, standardization or other, we look at the previous 12 months and then project our savings moving forward. Unfortunately, the moving forward part is a whole new ball game and just because you secured a better price does not guarantee that your changes are not going to affect other things.

When Are We Going to Stop Filling a Leaky Bucket?

In any product category, whether it be newly implemented or an existing category, there can be over-use, under-use, waste, inefficiencies, policies and procedures, value mismatches or anything else that can and does affect your supply utilization costs. But no one is doing anything about this at most organizations - they just keep filling the leaky bucket with more and more price savings with the hopes that it stays fuller than what is leaking out in a year. Then, they start the process all over again the next year and so on and so forth and you have our current state of supply value management.

Has the Time Come for Supply Utilization Management Value Analysis Teams?

The time has come for healthcare organizations to formally acknowledge and attack supply utilization cost savings on an ongoing basis. We all have been part of value analysis teams where we have started looking into a contract conversion or value analysis study where we found a huge unexpected savings due to utilization/consumption. What would happen if you had a team with established volumebased reporting to attack all supply utilization overruns on an ongoing basis? Your costs savings program will finally lock down all costs once and for all!

Best price may still be king in our value analysis world but supply utilization management is the queen of all cost savings and to totally ignore major savings opportunities without a concerted aggressive review of these areas is crazy. Look at all the savings we were once not getting from purchased services because this was previously ignored as a major contract savings area. Utilization is no different and should be your next area with a standing value analysis team with solid reporting to continually attack these costs on an ongoing basis.

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It’s a Fact….

The More Organized You Are with Your Value Analysis Program…

...the More You Save!

CliniTrack™ Value Analysis Manager gives you the automated tools, reporting, and knowledge library to help make the savings game much easier for you and your Value Analysis Teams See how CliniTrack™ Value Analysis Manager can help take your Value Analysis Program to a whole new level!

www.CliniTrackManager.com Volume 7/Issue 2

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Featured Article Pursuit of Value Analysis Best Practice: Are We There Yet? Maureen Hazen-Fritsky, RN, MHA, Independent Healthcare Consultant Amy Carroll, RN, MBA, CVAHP, Nuvance Health Robert Andrzejewski, MSE, Independent Management Consultant

Introduction How do we merge our value analysis processes? That was a question proposed by the value analysis manager at Nuvance Health, a newly created health care system consisting of seven hospitals from Western Connecticut Health Network and HealthQuest that serves residents across New York and Connecticut.

The first step was to research best practices for value analysis. Research consisted of reviewing 21 articles and conducting value analysis staff interviews via questionnaires/phone. The goal was to use these findings to assist with the creation of a system value analysis process.

According to Merriam-Webster, best practice is defined as a procedure that has been shown by research and experience to produce optimal results and that is established or proposed as a standard suitable for widespread adoption.

Achieving best practices should help organizations mature their value analysis process to achieve increasingly greater process rigor, physician engagement, and savings. To follow are a highlight of eleven value analysis best practices that were identified.

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Featured Article Value Analysis Best Practices 1. Value Analysis Team Maturity Level •

• •

Assess the hospital/system’s level of maturity with value analysis. There are various published value analysis maturity scales; pick one that meets your needs. Examples of maturity scale focus areas for review can be: • Price focused • Cost reduction with standardization • Quality assurance and waste reduction • Team focus • Outcome driven • Use of evidence • Team structure Value analysis team maturity improvement should be monitored routinely Within the selected focus areas, indicators should be created. An example is below:

Fig. 1 Value Analysis Maturity Assessment Matrix Volume 7/Issue 2

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Featured Article 2. Leadership • • •

Obtain strong executive oversight and support for the value analysis process Take ownership and champion the idea of value analysis as a culture and way of business Should ensure the work gets adequate attention and remove any barriers

3. The Team/Members • • •

Value Analysis team members should receive training in the concept of value analysis to include change management techniques and appropriate use of available tools Establish “champions” as the mobilizers of change Communicate, promote, and support team decisions

4. Team Structure •

Value analysis needs a structure to achieve goals and objectives. Hospitals interviewed and literature reviewed reinforced experiences that all organizations are structured differently, but whatever the structure the goals remain the same — patients, outcomes and savings. There does not appear to be a “best practice” structure in the literature. Although, there are some specifics within the organizational structure that are considered best practice and should be included.

•

According to HealthTrust, Value Analysis is intended “to provide an interdisciplinary forum consisting of representatives from the clinical and non-clinical areas for the systematic review, evaluation, and decision making regarding clinical products and equipment that is consistent with ‘best practice’ and quality clinical care.” Approximately 64% of the hospitals interviewed are primarily only looking at clinical items.

•

Value analysis authors stated, “Having the opportunity to visit many medical centers and speaking with numerous value analysis experts, one of the most important links in the value analysis organizational structure that is commonly missing includes a steering committee.” The executive steering committee’s function is to guide and direct value analysis teams and create an environment that will support the process and change. Approximately 39% of the hospitals interviewed do not have any oversight/steering committee.

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Featured Article 5. Physician Involvement

6. Accountability •

Develop a culture of shared accountability • Structure aligned incentives and work side-by-side to drive impact • Develop accountability measures for stakeholders (individual and group) and recognize success

7. The Process • • • •

• •

Do not make the process too difficult or users will find a way around it Utilize team meeting time wisely • Stay focused and have data prepared in advance Do not get slowed down by any one initiative Maintain a proactive, not reactive, value analysis process • Examine what products are used within procedures looking at cost, quality, and outcomes • Increase outcome measurements to include: Patient, financial, and workflow Incorporate evidence-based practice into the review process Automate new product requests and tracking

8. Data • •

Identify objective metrics that are indicators of both process and outcome success Create a foundation of robust accessible data to rely on • Have real time data in an organized, structured, and cleansed format

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Featured Article •

Consider internal, external, and GPO-based solutions that can provide decision support around cost, quality, and outcomes

9. Knowledge Management •

Maintain a centralized database to be shared with internal and external collaboration partners so not to continuously reinvent the wheel

10. Communication

11. Continuous Monitoring •

Monitor, monitor, monitor • Ensure work continues beyond decision and implementation • Establish guidelines/criteria for which initiatives you will track until you are sure the opportunity is optimized and changes are sustainable

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Featured Article Survey Results Summary Thirty-one hospital value analysis representatives answered a survey regarding their current value analysis practices. Below are the results:

Hospital Region

Number of Value Analysis Teams (not including ad-hoc )

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Featured Article Hospital/System Bed Size

Number of Staff Dedicated to Value Analysis (not including part-time staff from various departments, i.e. finance, decision support, materials management)

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Featured Article Do You Primarily Look at Pricing of Products and Practices?

Do You Have Difficulty Getting Physicians Involved with the VA Process?

Does Your Value Analysis Process Focus Primarily on Clinical Items?

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Featured Article

Do You Look at Outcomes When Appropriate?

Do You Look at Evidence-Based Research When Appropriate?

Does Your Value Analysis Team Report to an Executive Oversight Team?

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Featured Article Conclusion During the value analysis representative interviews, it was obvious many people understand where they should be for best practice but struggle to get there. A common theme was lack of administrative support and/or resources.

Hospitals must adapt to the constantly changing environments which affect their supply chain. To be prepared and effective, a structured value analysis process must be implemented. Such processes and structures may be unique to organizations but as value analysis teams are created, their leaders should look at standard sets of best practices to fit into each organization’s operations.

Strive to achieve then exceed best practices!

Amy Carroll, RN, MBA, CVAHP Amy is the manager of Clinical Quality Value Analysis at Nuance Health, a health system of seven hospitals in CT and NY. She has over 20 years of clinical experience and has worked in Value Analysis for four years, focusing on standardization, cost savings, and total cost of care. She can be reached at amy.carroll@wchn.org

Maureen Hazen-Fritsky, RN, MHA Maureen is an independent healthcare consultant. She has 30 years of clinical, managerial, education, and consulting experience. Maureen specializes in supply chain/ product utilization and value analysis from identification through implementation of ideas. She can be reached at mhazenfritsky@aol.com.

Robert Andrzejewski, MSE Robert is an independent management consultant with over eight years of experience in analytics, healthcare, and engineering. He specializes in delivering sustainable results in operations, purchased services, supply chain, and capital assets management. Robert can be reached at randrze2@gmail.com.

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Value Analysis 101 Team Member Selection and Team Building Robert T. Yokl, President/CEO, SVAH Solutions

“Coming together is a beginning, keeping together is progress, and working together is success.”

Henry Ford All winning teams are a combination of attitudes, talents, and traits matched with the right leadership to give them the vision, values, goals, objectives, and “can do” attitude; a team that takes responsibility for its actions and pride in its accomplishments. Over the last 25 years, we have documented and observed the ideal competencies or what outstanding value analysis team leaders and team members do more often, in more situations, with better results. To identify the individuals in your healthcare organization who also exhibit these same competencies for your value analysis team(s), we would suggest that you employ a 360-degree feedback mechanism in assessing your value analysis team leader and team member candidates’ qualifications prior to membership on

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Value Analysis 101

Robert T. Yokl

your value analysis team(s). Have the candidate, his/her direct report, customers, and colleagues rate his/her value analysis competencies on a scale of 1-10 prior to final selection as a value analysis team leader or team member. The reason for doing so is that you only see one face of this individual, but by having them assessed by numerous individuals with whom they interact, in many different venues, you can truly identify who is the right candidate to be involved in your value analysis program. Here are more specifics on how to make your value analysis team member selection foolproof.

Identification of Value Analysis Team Candidates The first step in your selection process for new or replacement team leaders and team members is to have your Value Analysis Steering Committee members identify a team leader, administrative representative, facilitator, recorder, and ten team members for each value analysis team that you will be implementing. In addition, you will need to identify alternates for your team leaders and five team member alternates if for any reason your primary candidate can’t fulfill their duties.

360-Degree Selection Process The next step in the selection process is to send a questionnaire to these individuals’ direct report, one customer, and one colleague to rate them on the ideal competencies (see figures 1 and 2) they need to be an ideal candidate for your value analysis team(s). Give the rater one week for a response to these questionnaires. They should be prepared by and returned to your Value Analysis Coordinator or Manager. Naturally, your Value Analysis Steering Committee members can be one of your raters, if they have direct contact with any of these individuals on a day-to-day basis.

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Value Analysis 101

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Team Member Evaluation System We have shown below in figures 1 and 2 sample consolidated rating sheets for VA team leaders and team members that are to be completed by your Value Analysis Coordinator or Manager once he/she has received the questionnaire back from your three raters. These sheets need to be tallied to reflect three ratings (the minimum number of ratings for statistical relevance) for each candidate. Then have your Value Analysis Coordinator or Manager tally an average rating for each competency and a total overall rating for the candidate. The ideal VA team leader or team member candidate will have an overall rating of eight or higher. If for any reason your Value Analysis Coordinator or Manager doesn’t receive a response back from any or all the responders to your questionnaire, then they are required to call raters to try to have a phone rating if possible. If all else fails, send a new questionnaire out to new raters until you have three ratings for each candidate.

Figure 1: TEAM LEADERS (Rate Candidates 1-10 [10 being highest rating])

Ideal Competencies

Rating 1

Rating 2

Rating 3

Avg. Rating

Motivator

8

7

6

7

Organized

9

9

7

8

Team Builder

7

6

8

7

Enthusiastic

10

10

10

10

Results Oriented

9

7

9

8

Communicator

8

8

8

8

Welcomes Challenges and Change

9

9

7

8

Anticipates Problems & Resolves Them

6

7

9

7

Acts as Role Model

8

7

9

8

XXXX

XXXX

XXXX

8

Overall Rating:

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Figure 2: TEAM MEMBERS (Rate Candidates 1-10 [10 being highest rating]) Ideal Competencies

Rating 1

Rating 2

Rating 3

Avg. Rating

Analytical Thinker

9

7

8

8

Organized

10

10

10

10

Reliable/Dependable

8

9

9

9

Enthusiastic

8

8

8

8

Takes Initiative

9

9

8

9

Computer Literate

8

8

8

8

Welcomes Challenges and Change

8

7

7

7

Looking for Growth and Recognition

9

7

7

8

Acts as Role Model

8

8

6

7

XXXX

XXXXX

XXXXX

8

Total Rating

Final Selection Criteria Based on the total overall scores that your raters have given the candidates (that you identified in step 1 as VA team leaders or team members), you will confirm your ideal candidates for your value analysis team that have total overall scores of eight or above. If any candidate has a total overall score below eight, then you need to start the selection process over again until you have identified four VA team leaders and ten team members that have ratings above eight.

In summary, the importance of this selection process can’t be overemphasized. From our experience, if the right people with the right competencies aren’t carefully selected up front, your value analysis team(s) will never have the leadership and skill level that is required to maintain and sustain your Value Analysis Program over the long term.

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Utilization Management How Triangulating Your Supply Value Analysis Studies Destroys Speculation, Lip Service, and All Other Push-Backs You Encounter

By Robert W. Yokl, Sr. VP, Operations — SVAH Solutions

I was working with a client’s value analysis team and one of their value analysis project managers came back and reported that after further review there was no savings opportunity on a hospitalwide product line. We don't need to proceed any further with the study. The VA project manager sited that the nursing units had X-amount on hand, and this met the exact requirements for their testing. It sounded clinically evidenced-based. It was accepted by the leadership of the VA team and the study was closed out. It did not make sense to me though.

A little background here: They were conducting this study because the hospital’s utilization had increased by 33% from the previous fiscal year and their patient days had been the same or slightly less than the previous year. How can utilization increase 33% when patient days is flat? That did not make sense, especially since no policy or vendor change had been made in that time period. So, what was it?

The good news was that I quickly mentioned this to the team leaders, and they agreed that we needed to reopen this. I went about calculating numbers from a three-pronged approach. By cost per patient day adjusted for CMI, by overall spend, number of units used by patient day, and then num-

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Utilization Management

Robert W. Yokl

ber of units used as compared to the national usage average. Not all patients require this product on the nursing floors.

Turns out, this hospital was using 51% more in the number of product units than the average of their cohorts and 160% more than the best practice hospitals in their benchmark best practice cohort.

Overall cost per patient day, CMI adjusted, they were using 72% more, and just straight up cost per patient day (no CMI adjustments) they were 93% higher. The key here was hitting this from all angles to make sure that we got this right and that none of the customers or stakeholders could talk away the savings opportunity. We now knew the savings were real with certainty because we triangulated all the numbers and every result showed more savings opportunities.

The value analysis project manager clearly missed something. The point here is one of education and perseverance as this world of consumption & utilization management is still new to many in the supply chain world. By not being able to find out the reason for running over by 33% (trigger point of the study), we were leaving the door open to costs escalating even further. Worse, it would have possibly been left alone for years since, "Value Analysis reviewed this product category and found nothing."

Let's face it, for a true value analysis study to be performed (like the example above) we have to first prove that the juice is worth the squeeze before supply chain, a VA Team, or a VA Manager will venture to put in the effort that is needed to find out the true why's. We could also just accept the push-back that we get and save ourselves a lot of work, but that does not do anyone any good nor does it save the organization any money.

As you noticed, I did not need to mention the major product category in this article because you can do this with just a few adjustments on any product, service, or technology that you decide to work on.

You do need to start to set up systems to track your utilization and develop your benchmarking capabilities. You are going to need these moving forward. Start to build, buy, or borrow your systems now and they will pay dividends beyond your imagination.

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Healthcare Value Analysis Academy How Do You Speed Up the Value Analysis Process?

By Robert W. Yokl, Sr. VP, Operations — SVAH Solutions

The one thing that every one of us has that is equal is the amount of time that we must spend at our jobs every day. To me, one of the most overlooked savings in the supply chain world is “time savings” when it comes to managing our value analysis process at our healthcare organizations. For anyone in the supply chain or value analysis game this is an endless loop of similar but uniquely different and highly important projects that we work on every day. To make savings and quality happen we must complete/implement more VA studies which does make it a bit of a numbers game. The more studies you can work on and complete, the more savings and quality improvements you can achieve.

There are limits to how much one can do without burning out our VA Coordinators, committees/ teams, and support staff working with them. I have outlined below ways to improve that will gain back valuable time that could make a major impact on your value analysis world.

•

Find a Process that Always Leads You to the Right Results – One thing I learned years ago was the classic tenets of value analysis that were taught by Larry Miles, the father of value analysis. We have tweaked, perfected, and enhanced these tenets over the years into a sound process that truly makes the value analysis process steps a no-brainer in every value analysis study (supplies, services, and technologies). Remember, value analysis is the study of function and the

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search for lower cost, and equal or better-quality alternatives. Your study process should always be your checklist and guide!

•

Stay on Course – I cannot tell you how many times I have worked with VA Project Managers who have been pulled off course in many ways that ultimately cost them major delays in their studies. This could be a sales rep making a shiny offer, a stakeholder laying down a major unvetted must-have requirement, department heads putting the blocking moves on working with you, or just about anything else. You cannot let these things get you derailed from your original path.

When that happens, make them part of your study in the process step that they need to be addressed. You don’t need to stop your study cold because a vendor just gave you a 21% discount which would double your savings opportunity. Get it in writing/spreadsheet and then make it one of your alternatives if it meets your requirements at the right time in your process. So many people stop doing VA and like a dog with a bone start chasing the big savings too early in the process.

•

Set Goals and Don’t Stop Until You Achieve Them – The majority of value analysis studies are started with the presumption of, “Let’s save as much as we can,” instead of laying down a solid thought-out goal of, say, 12% to 15% or $120K to $150K ($1 million annual spend). Why is this important? Well, with the “let’s save as much as we can” mindset, you may only find $50K or 5% and if you don’t have any savings goals you may just stop right there and not look for anymore. But if your goal is to save three times that (15% or $150K), then you will keep going and keep looking for the best alternative that will meet your goal. Without the goal, you will not be looking for more dollars and thus undoubtably will be leaving big bucks on the table in just about every study.

•

Not Utilizing Technology to Its Fullest – The almighty spreadsheet is the number one tool used in the value analysis world. It is very versatile, but it is limiting as well. Most use the templating method for working in VA, whereby we create a model for certain aspects of the VA Study and then import new data in, each and every time and manipulate it from there. This sounds great but you still must spend all the time importing, vetting, and working the data for this new study. Why not have this template worked into a database query that is automatically completed for you instead of reinventing the wheel with your templated process? Why not do this for all of your templated VA spreadsheets to save even more time?

I could go on and on with the time savings strategies for VA but the key here is to learn to take a step back from time to time and see where you can save time (not shortcut) while improving the quality of the VA Studies that you are delivering. With more time, you can bring better value to the value analysis process at all levels. Value analysis is more about engaging your customers and stakeholders, not just about crunching numbers.

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Value Analysis Advisor The Power of a Value Analysis System to Complement Your Selling Process Robert T. Yokl, President/CEO, SVAH Solutions

If you work for almost any sales organization you have been trained to follow a certain sales process (e.g., Miller-Heiman, Sandler, Dale Carnegie, etc.) that provides you with a reliable, repeatable and auditable methodology to ensure your sales success. However, with too many competitors looking and sounding alike, you need a differentiator to make you stand out from the crowd.

Value Analysis System Can Complement Your Sales Process To prove my point, last Monday, a dermatologist told me that she doesn’t have time to meet with sales reps who are selling stuff she can’t use in her practice. Yet, she always has time for medical device sales reps who bring a value proposition to her that makes sense. That’s how you, too, can differentiate yourself when you need to grow or just maintain your market share by becoming a value creator!

That’s where a value analysis system shines! It can complement your sales process by opening up a whole new world of savings, quality, and safety opportunities through value analysis studies.

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Value Analysis Advisor

Robert T. Yokl

same value analysis studies will provide you with those unique value propositions that will generate even more sales for you.

Close The Door to Your Competition We know from personal experience that sales reps make a sale, then rarely look back to see if what they are selling met the requirements for the customer’s intended purpose or if their product, service or technology was implemented properly.

Consequently, our research has shown that 26% to 46% of the time, the product, service or technology that was sold was wasted, misused, misapplied, or a value mismatch for their customers. This is where you can close the door on your competition by conducting value analysis studies that will surface these problems. This will enable you to provide a better value proposition for these same customers.

Learn How to Become An Expert in Healthcare Value Analysis & Supply Utilization Management Beginner, Intermediate and Advanced Programs Available

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Volume 7/Issue 2

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Volume 7/Issue 2

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Healthcare Supply Chain Best Practices Podcast

Now Over 300,000 Listens!

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Generate Actionable Bottom Line Savings Open Up a Whole New World of Savings Beyond Price Lead Your Organization to the Next Level of Supply Chain Performance Provide Solutions and Tools to Save You Time, Money, and Effort

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Purchase Cost Is Just the Tip of the Iceberg

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Reining in Your Multimillion Dollar Purchased Services

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Comparative Value Analysis Analytics Will Maximize Your Performance 5 Biggest Myths About Healthcare Supply Utilization Management 4 Things to Make Your Cost Management Job Easier

Listen online at https://www.svah-solutions.com/podcasts/ Or Find Us On iTunes Volume 7/Issue 2

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Getting It Right

Utilization Management: The Devil is in the Details The Major Contributor to Cost is in Your In-Use (or Consumption) Cost!

If you think you have nailed down all of your supply chain expenses with your GPO and local contracts and that now you can lay back and enjoy the view from your window, you have forgotten that price only represents a very small percentage of the Total Lifecycle Cost of the commodities you buy in the real world of supply chain management. The major contributor to your Total Lifecycle Cost is in your inuse (or consumption) cost!

The Law of Diminishing Returns Worse yet, the more time and energy you and your staff spend chasing after price savings, the higher your labor cost will be to achieve the same or lower return on investment as prior periods. In the end, it becomes cost prohibitive to continue to chase after this small return on your investment. On the other hand, if you and your staff invest the same time and energy to manage and control your in-use cost, you can save 7% to 15% on your total supply budget by removing waste and inefficiencies from your supply streams.

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Getting It Right

Robert T. Yokl

The Devil Is In the Details If you start to track, trend and analyze your purchases over their useful life, as our clients do using our UtilizationDashboard™, you will discover unfavorable patterns that need to be investigated. For instance, (1) office supplies that are 3x the cost (not price) of those of your peers, (2) trash bags, the in-use cost of which has increased 27% over the last three quarters, or (3) I.V. catheter usage that has been trending high for one year. To ignore these symptoms of waste and inefficiency would be dangerous to your healthcare organization’s financial health.

Price Will Become Irrelevant In the new value-based care economy we all live and work in, the price of a product, service or technology will become irrelevant! What will be relevant, vital and mission critical will be the obtaining and sustaining of low cost/ high quality outcomes for all of your healthcare organization’s cases, procedures, tests, etc., since the healthcare business is quickly moving towards a fixed price model for all services.

This goal can only be accomplished by removing all waste and inefficiencies from your supply streams, since you could have the best prices in your region, but the highest in-use cost which would cancel out your outstanding pricing.

We just ran into this situation the other day, where a hospital we were working with had excellent prices for almost everything they were buying, but then we uncovered more than $1.9 million in excess in-use costs that cancelled out this hospital’s market advantage in their region. Don’t let this happen to you!

Total Lifecycle Cost Management It isn’t unusual for supply chain professionals to be fixated on price savings, since this has been our world for 100 years. However, now as our profession is growing and maturing, we must take on the responsibility of Total Lifecycle Cost Management. This means there is a continuum of responsibilities that we have at a product’s beginning, middle and end of life that can mean the difference between your healthcare organization maintaining its profitability in these challenging times.

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It’s Not Too Late...

To Rescue the Supply Utilization Dollars That Are Drifting Away From Your Bottom Line

Why Lose Any Dollars If You Don’t Have To? Learn Today How You Can Rescue All of Your Utilization Dollars and Never Let It Damage Your Bottom Line Again.

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WWW.UTILIZERDASHBOARD.COM www.ValueAnalysisMagazine.com

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Want to Learn More About How You Can Help Your Organization Achieve 7% to 17% in Additional Supply Utilization Savings Beyond Price? Read Our Special Reports to Find Out How. Volume 7/Issue 2

Healthcare Value Analysis & Utilization Management Magazine https://www.svah-solutions.com/special-reports/

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