Healthcare Value Analysis & Utilization Management Magazine - Summer 2013

Insights, Best Practices, and Advanced Strategies You Can Use To Up Your Value Analysis Game

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In This Issue: ===============================================================================================

Page 9—VA leadership Begins With Selection of Leaders

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Page 15— Quality Can Sometimes Decrease Quantity

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Page 22— How Many VA Teams Do You Need?

Summer 2013

Healthcare Value Analysis Magazine

Published by Strategic Value Analysis in Healthcare—www.StrategicVA.com

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Summer 2013

Healthcare Value Analysis Magazine

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contents

Healthcare Value Analysis Magazine Healthcare Value Analysis Magazine is published quarterly

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

VA Leadership Begins with Selection

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

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

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

9 Value Analysis Leadership Begins

Quality Can Decrease Quantity

With the Selection of Leaders: You need the right leaders with the right attitudes, skills, and temperament

Robert W. Yokl ryokl@ValueAnalysisMagazine.com

————————————

Quantity: It takes a thorough analysis to ensure that quality doesn’t cost more

Senior Editor

22 How Many VA Teams Do You

————————————

Need?: This is a universal question that this article answers specifically

Editor

sistance: Learn the breakthroughs to success

33 Is Poor Communication Slowing Your VA Process?: Tips and tools to enhance your value analysis process

Summer 2013

Managing Editor

15 Quality Can Sometimes Decrease

26 Don’t Stop VA Because of Re-

How Many VA Teams?

————————————

Healthcare Value Analysis Magazine

Patricia A. Yokl

Danielle DeShong Copyright 2013 Strategic Value Analysis® in Healthcare. All rights reserved. Reproduction, translation or usage of any part of this work beyond that permitted by Section 107 or 108 of the 1976 United States Copyright Act without permission of the copyright owner is unlawful. For permission call, fax, or email Robert W. Yokl, Managing Editor, Phone: 800-220-4271, FAX: 610-489-1073, E-Mail: ryokl@valueanalysismagazine.com for approval to reprint, excerpt or translate articles.

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From the Publisher's Desk

Value Analysis Leadership is the #1 Key Factor to Your Value Analysis Success Robert T. Yokl

I have worked as a trainer, coach, and facilitator for value analysis teams for over 26 years. The one constant I have observed is that the #1 key factor in a value analysis team’s success is their team leadership. I define value analysis team leadership as the team leader, champion, and facilitator. If any of these three individuals lack the vision, commitment, and administrative skills that are necessary to propel their value analysis team to savings success, then their team will experience suboptimal performance. This isn’t a theory, but a fact in any business environment!

In my seminars and workshops I often compare a value analysis team to a business unit of a corporation that will be subpar or will ultimately fail if their leaders aren’t enthusiastic, engaged, and proficient in their area of responsibility. I have seen value analysis team leaders who have missed most of their team meetings, made promises they never intended to keep, and never challenged their team members to be better than just good. Eventually, these VA teams self-destruct!

On the flip side of the coin, I have been impressed with value analysis team leaders who do their homework, rarely miss a meeting, and then coach their team members (inside and outside their meetings) to reach new and higher levels of savings, quality, and safety performance. It’s just like any other business endeavor; if your leaders put in the time and effort, and engage their team members on a one-on-one basis, you will immediately see improvement in your value analysis team’s performance.

To improve your team leadership you must ask yourself what kind of team leaders you have now: weak, preoccupied, and self-serving, or caring and goal oriented. Once you have honestly answered this question, you have taken the first step on the road to improvement or will have validated that your team leadership is on the right track. If your assessment is that you need to change your team leadership, then by all means, you must do so...NOW! Otherwise, your value analysis team will continue its suboptimal performance which is a waste of your team’s intellectual assets.

Robert T. Yokl can be reached by phone (800-220-4274) or by e-mail at bobpres@StrategicVA.com with your questions, comments or counter-points to his editorials, or anything else that peaks your interest in this issue.

Summer 2013

Healthcare Value Analysis Magazine

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2. Centralize all purchase service contracts: We recommend that all of your purchase service contract documents be archived and administered by your materials management/supply chain department. If the workload justifies it, you will need to hire a contract administrator to manage, control, analyze, bid or negotiate these contracts. However, this very small investment, if required, will yield a high ROI in a very short time. Or, archive w/BenchPlus!

3. Benchmark all purchase service contracts: This will ensure that your purchase service contracts’ total lifecycle costs are within acceptable limits. How could you know if there are savings opportunities if you don’t quantify them and have a roadmap to start saving? This shouldn’t be a one time event, but instead a continuous process. Or, BenchPlus can do this for you, too!

Summer 2013

Healthcare Value Analysis Magazine

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From the Managing Editor’s Desk

No Short Cuts to the Top! Robert W. Yokl

I just finished rereading the book “No Shortcuts to the Top” by our most famous American mountain climber, Ed Viesturs. It has been an inspiring book for me when it comes to life and business. If you have never heard of Ed, he is the first American to summit the fourteen 8,000 meter mountains in the world without bottled oxygen, which 99.8% of the population cannot do. So, why am I drawn to Ed’s success story and how does it relate to hospital value analysis?

Mountain climbing is a very dangerous sport and there are only a few hundred true professionals who climb some of the tallest mountains in the world. Ed was part of that class of climbers who ascended mountains at heights where airplanes cruise (25,000 to 29,000 feet). Ed developed a set of rules that he lived by on the mountains and while at home. He always did his homework and trained his body for peak performance before every climb. He did not want to get caught on a mountain not knowing important information or not being physically prepared for a crucial climb. Ed was ALL-IN every time he tackled a big peak. His most important rule was that he did not take chances with his life on questionable areas on mountains where many others did. Many of those unnecessary risks ended up costing people their lives. With Ed, it was better to turn around and come back another time than to risk his life in order to climb one of those big peaks. It took Ed 18 years and 30 expeditions to reach the top of the fourteen 8,000 meter peaks.

In the value analysis world, we can envision that our value analysis studies can be looked at as climbing that insurmountable mountain in order to obtain the quality and cost results for our organization. Plus, as with Ed, once you get to the top of the mountain you have to climb down the mountain safely in order to move on to the next mountain challenge. In our case, we have to not only find the savings and get the buy-in of our clinicians and staff but also successfully implement our recommendations throughout our organizations, all while gaining the buy-in of our customers to this change. We must also realize that not every value analysis study is going to be successful and we may have our own turnarounds before we reach the summit, but we can always come back and attack these studies again another day.

The big take away from Ed Viesturs’ elite example is to develop a set of success principles (rules) that you always work from, and not to compromise your systems in the name of short cuts to the top. Although, it might not be our lives that are endangered when we take shortcuts, it may be the quality of patient care or our hospital’s bottom line that may suffer if we don’t uncover all the quality or savings improvements on a value analysis study. As supply/ value analysis professionals, we are the elite group who needs to lead our healthcare organizations into the next level of savings and quality improvement which is critical to the future for all.

Robert W. Yokl can be reached by phone (800-220-4271) or by e-mail at ryokl@StrategicVA.com with your questions, comments or counter-points to his editorials., or anything else that peaks your interest in this issue.

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Healthcare Value Analysis Magazine

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Value Analysis News AHVAP Announces 10th Annual

OIG Special POD Fraud Alert

Conference - October 23-25

The Office of Inspector General (OIG) has issued a number of guidance documents on phy-

www.AHVAP.org The Association of Healthcare Value Analysis Professionals has announced their 10th annual National Educational Conference and Vendor Showcase “The Future is Now!” to be held on October 23-25 at the Chaparral Suites Scottsdale, Arizona. The association has an outstanding lineup of continuing education programs and is another great opportunity for value analysis professionals to network and exchange ideas. This year’s program includes:

sician investments in physician-owned distributorships (PODs) that sell implants to hospitals. The alert focuses on the specific attributes and practices of PODS that they believe could contribute to a fraud and abuse risk or pose dangers to patient safety.

The OIG is particularly concerned that physicians who invest in these PODs and have their hospital purchase from them for their procedures may be in violation of the “antikickback” statues to protect patients from inappropriate medical referrals or profiteering at



The psychology of decision making



Clarifying workplace communication



What happens after the contract is signed



Resource utilization management

PODs, profit distributions are not made in



Maximizing CQVA efficiencies

proportion to ownership interest, or coercion



Suite success: Executive collaboration key toVA program savings

is used to induce hospitals to buy from these

their expense.

In particular, the OIG is concerned when physician-owners have a large investment in these

PODs. The reason that the OIG has put a spotlight on

AHVAP 2013 Conference

these PODs is because of their proliferation in

Sponsorship Opportunities If you would like to become a sponsor for AHVAP’s 2013 conference and vendor showcase your products or services to key decision mak-

the marketplace and the risk of abuse that is high when physician-owners are the sole users of the devices sold or manufactured by their PODS.

ers throughout the USA, then get sponsorship

For more information on this important topic

information here and sign up today!

visit OIG alerts.

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Healthcare Value Analysis Magazine

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Are You Focusing on What Matters Most?

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Slippery Slope We often talk about utilization

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Why this matters is if you have obtained the best price and then standardized on a commodity, but your utilization of this same category of purchase is off the charts you are losing all of the savings that you have gained to date.

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Summer 2013

Healthcare Value Analysis Magazine

UtilizerDashboard.com 8

Feature Article Value Analysis Leadership Begins With The Selection of Your VA Leaders You need the right leaders with the right attitude, skills, and temperament

All great organizations, divisions, or units have great leaders (called by many different names) to plan, organize, manage, and control their operations and activities. It’s no different with value analysis teams; if you don’t have great leaders, your team will never reach its full potential.

There is no substitute for great leadership, even if you have a well-defined value analysis process, committed team members, and your executive management team’s support. It’s like a ship without a rudder, it will drift in every direction but forward! That’s why the selection of the right value analysis leaders with the right attitude, skills, and temperament is mission critical to your value analysis team’s success.

Value Analysis Leaders After helping our clients establish, refine or reinvent their value analysis teams for over 20 years, we have developed a winning value analysis leadership organizational structure that follows this selection model: 

Team Leader: The team leader or pilot of your value analysis team is an active participant in the discussions and content of your meetings, leads the team inside and outside of meetings, develops and follows a written agenda, schedules the meetings, communicates with team members, and coaches and guides team members’ actions. The characteristics of this individual’s attitude, skills, and temperament should be as follows: motivator, organizer, team builder, enthusiastic, results oriented, communicator, welcomes challenges, anticipates problems and resolves them, and acts as a role model. In doing so, the team leader will: >>>

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Healthcare Value Analysis Magazine

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Feature Article 

Develops and follows the agenda for all meetings.



Leads the group discussions.



Monitors project manager’s progress on their respective Value Analysis Studies.



Reports savings from the team to the VA Steering Committee and/or Senior Management.



Audits value analysis studies for completeness to ensure that no quality issues or dol-

“There are no clear-cut rules regarding facilitation, but taking action to resolve problems is always the best course of action.”

lars are left on the table.  

Rejects studies or new product requests that do not fit into the scope of the team.

Facilitator: The facilitator’s role as a navigator for your value analysis team is to navigate the team through their team meetings and value analysis process as they experience conflicts and roadblocks that need to be managed rather than ignored. In doing so, the facilitator will: 

Allow the team to meet and interact in a structured manner.



Encourage all team members to be active and participate.

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Help and coach team members with their projects and find win/win solutions in all of their deliberations.

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Coordinate pre- and post-meeting logistics and activities.

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Make sure team members are using the value analysis process.

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Listen, observe, and intercede to ask clarifying questions.

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Help to provide direction on management of team and projects.

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Focus the energy of the team on the common goal of reducing cost, improving quality, and promoting safety.



Suggest alternate methods and procedures to move the VA process along.

There are no clear-cut rules regarding facilitation of meetings and your value analysis process, but taking action to resolve problems that have been identified is always the best course of action that can be taken by a facilitator. The characteristics of this individual’s attitude, skills, and temperament should be as follows: patient, curious, diplomatic, conciliatory, inventive, people oriented, and good listener and questioner. >>>>

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Healthcare Value Analysis Magazine

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Feature Article 

Recorder: We are all familiar with the traditional role of the scribe or communicator, who records the minutes that are required or desirable as records for most value analysis meetings. This gives this individual a passive role in all value analysis teams. In our model, this role is transformed into a communications director for your value analysis team. In this role, the recorder, standing at a flip chart will: 

Document long-term memory by recording the main points of discussion on a flip chart for all team members to view.



Help the team to focus on a task by providing a physical point of attention.

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Ensure an instant record of a meeting’s content and process for all to see.

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Remember team members’ ideas, so you know they have been heard.

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Enable team members to ensure that team ideas are being recorded accurately.

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Help prevent endless repetition by making team members aware that a topic has already been covered or resolved.



Provide a graphic display (a visual aid) to

“The role of the is transformed communications for your value team.”

recorder into a director analysis

assist in the retention of information discussed or ideas being conveyed. 

Make sophisticated problem-solving methods possible, since techniques or tools to solve the problems at hand can be visually displayed, so that all team members can actively participate in the exercise.



Record an idea without the name of contributor, which depersonalizes it and transfers “ownership” to the team.



In addition to the above responsibilities, records the minutes of the meeting, distributes them, and reminds the team members of future meeting dates and times by e-mail, telephone or fax. The recorder is also responsible for reminding team members of any reports that are due.

The characteristics of this individual’s attitude, skills, and temperament should be as follows: Patient, cooperative, accurate, good speller, flexible, and detail oriented.

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Feature Article 

Administrative Champion: Your administrative champion or politician should be a member of your healthcare organization’s executive management team. This way, you can be assured your team will have the administrative support and guidance required to overcome political and administrative challenges. The role and responsibilities of your administrative champion are as follows: 

Guide the team through the political and administrative mine fields it will be entering with your value analysis program.



Inform the team when it needs CEO or administrative staff’s approval for any change it is contemplating.



Act as a liaison between other

“Your Administrative Champion will guide your team through the political and administrative mine fields.”

standing teams or committees that your value analysis team should gain approval from. 

Keep your CEO and the executive management team fully informed on the activities of your value analysis program.



Facilitate and problem solve, when the need arises, on any value analysis study or investigation with customers’ organizations to move the projects along to a successful conclusion.

The Administrative Champion becomes a advocate of value analysis throughout your healthcare organization, while at the same time looking for opportunities to give your value analysis team positive exposure to your board of directors, executive management team, department heads and managers, media, and the public at large.

By employing this very effective project management strategy of having an administrative champion on every value analysis team, your value analysis team(s) then becomes selfmanaging, more productive, and somewhat politically insulated. The characteristics of this individual’s attitude, skills, and temperament should be as follows: Enthusiastic, good listener and questioner, supportive of value analysis teams goals and objectives, proactive in solving problems, and a change agent. >>>>

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Volume II, Issue II, Summer 2013

Feature Article Selection Process

It is the responsibility of your value analysis steering committee (if you don’t have one, see “Steering Committee: A Value Analysis Prerequisite” in Winter 2013 edition of HVAM) to select your team leaders. It is recommended that your team leader be selected from your department heads and managers, your facilitator from your supply chain staff, recorder from your secretarial pool, and your administrative champion from your executive management team.

Ensuring Continuity We recommend that a team leader’s term of office be for three years, since it is a very time consuming responsibility to effectively manage value analysis teams. Although, many team leaders elect to continue their leadership role beyond three years because of their commitment to the healthcare organization’s val-

“We suggest that the handoff to a new leadership team be gradual with the incumbent being coached by his or her predecessor for at least three months.”

ue analysis program.

We also suggest that the handoff to a new leadership team be gradual with the incumbent being coached by his or her predecessor for at least three months. This will ensure a smooth and almost seamless transition of team leadership as not to disrupt your team’s productivity and performance.

Leadership Isn’t An Accident As you can see, from the value analysis leadership organizational structure which we have outlined in this article, leadership isn’t an accident. It is planned for, cultivated, and grows if you have the right people with the right skills and temperament filling these positions. It’s just like another successful business unit; if you have the right leadership team, there is no limit to what you can accomplish in a very short time frame. Excellent leadership will also keep your team(s) at peak performance over the long-term. Θ

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Clinical Value Analysis Quality Can Sometimes Decrease Quantity James Russell, RN-BC, MBA, Value Analysis Facilitator VCU Health System, Richmond, VA

Vendors will often make claims on the superiority of their items on the quality front to try to justify the fact that their items cost more than what you’re currently buying. Sometimes they’re even right! It takes a thorough analysis, both before and after a project, to assess the validation of those claims.

Utilization is often touted as the next frontier in value analysis. Utilization, I would submit, has always been a part of a thorough decision-making process regarding the dual goals of increasing quality while decreasing costs. Consider a project at the Virginia Commonwealth University Health System (VCUHS) involving nonsterile exam gloves.

Hypothesis VCUHS was having the following quality problems associated with the incumbent glove: 1. Staff was experiencing frequent ripping and tearing of gloves when donning, requiring them to use more gloves than necessary to find a pair that met their safety requirements. Often, their fingers would go right through the end of the gloves or the cuff would tear when pulled tight.

2. The incumbent vendor had repackaged their product, compressing the same amount of gloves into a smaller box. This caused the gloves to clump together

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Clinical Value Analysis inside the box, often resulting in several coming out of the box when only one was pulled. Worse yet, gloves frequently fell on the floor and were thrown away.

By purchasing a higher quality exam glove, packed in larger box, VCUHS would alleviate both quality issues above, resulting in a decrease in the number of exam gloves used per patient encounter. This would improve customer satisfaction with the product (clinicians), address safety issues with the product (from the holes), and could potentially decrease the overall costs to the health system (by decreasing usage).

Baseline Data Two data sets are important in any value analysis project - expense and volume.

According to the data in Table 1, the annual expense

“Two data sets are imat VCUHS was $850,000. Since many products are portant in any Value project, packaged differently from vendor to vendor, reduc- A n a l y s i s ing the costs to “each” price is often helpful. In this expense and volume.” project, one glove costs $0.04336, or a little over four cents. Doing the division, you can determine the volume used annually, 19.6 million gloves.

An additional piece of data, not required in all projects, is a normalizing factor.

In some cases, that could be patient days (a common statistic to all hospitals), or it may be device days (a statistic frequently used to determine infection rates). In the exam glove project, since the items were used both inside the hospital and out in the clinics, the normalizing factor was Equivalent Patient Days (EPD’s) - 204,000. This is determined by multiplying the inpatient days by an outpatient factor based on clinic visits, to account for all gloves used system-wide. This statistic is also referred to as Adjusted Patient Days. Normalizing the data this way enables you to eliminate the effect of fluctuations in the number of patient encounters (census).

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Clinical Value Analysis Lastly, by dividing again you arrive at the volume of gloves per EPD, or 96.07.

This means that during an average patient experience at the health system, 96 exam gloves would be used.

Table 1: Normalizing Factor Examination Gloves

Non-Sterile Exam Gloves 12 months prior to project

Annual Spend

Average “Each” Price

Annual “Each” Volume

Annual Equivalent Patient Days

$850,000

$0.04336

19,600,000

204,000

Volume / EPD

96.07

Project Steps After analyzing the baseline data, several vendors were chosen to participate in the initial process of searching for a higher quality exam glove. Many of these vendors came from the contractual participants offered by VCUHS’ GPO. Each vendor was required to provide quality data on their product. This included things like fingertip and palm thickness, cuff length, and quantity of gloves per box.

An important factor was called “Breakthrough Time.” The exam gloves needed to be tested against certain medications, like chemotherapy, to determine how long a clinician could wear the gloves and be safely protected from the medication coming through the glove. While the exam gloves were not designed to meet all chemotherapy requirements, it is an important method of gauging the level of testing a manufacturer has invested in their product.

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Clinical Value Analysis After analyzing the data, clinical evaluations were performed by hundreds of clinical staff, assessing issues such as: 

Fingertip sensitivity during venipunctures for blood draws and peripheral IV starts.



Comfort level, after prolonged wearing.



Number of allergic reactions to each brand.



Whether the gloves tore when donned (fingers or cuffs).



Whether more gloves than needed came out of the box when one was pulled.

After analyzing the clinical evaluation results, a vendor was chosen and the con-

version was made.

Outcome After the conversion to the new glove, periodic assessments were performed to determine that the expected quality improvements materialized. Sometimes, a product can perform differently in an evaluation than it does after it becomes the incumbent. In this case, the staff reported the clumping issue related to smaller boxes was eliminated. They also reported a significant decrease in the episodes of ripping and tearing while donning. Allergic reactions to the gloves were unchanged from the previous glove.

A year later, the data was compelling when compared to the baseline. As shown in Table 2, the number used had decreased, despite an increase in the patient census (EPD’s). After normalizing, VCUHS was using about 10 fewer exam gloves per patient encounter with the new vendor, amounting to more than 1 million fewer gloves used per year. This decrease in utilization accounted for a decrease in overall spend, despite an increase in the cost per glove and the increase in census. Not only did the number of gloves used per EPD decrease by over 10%, the annual health system expense decreased by $35,000.

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Clinical Value Analysis Table II: Comparison of Examination Glove Study Before/After Results Non-Sterile Exam Gloves

Annual Spend

Average “Each” Price

Annual “Each” Volume

Annual Equivalent Patient Days

Volume / EPD

12 months prior to project

$850,000

$0.04336

19,600,000

204,000

96.07

12 months after project

$815,000

$0.04406

18,500,000

216,000

85.65

Old spend – New spend = Cost Savings Utilization Return On

$850,000 - $815,000 = $35,000

Investment Formulas

(Old Volume / EPD – New Vol. / EPD) / Old Vol. / EPD = % changed (96.07 – 85.65) / 96.07 = 10.8% (utilization decrease)

All elements of the project hypothesis have been satisfied. The number of gloves utilized did indeed decrease as a result of converting to a higher quality glove. This decrease in utilization also resulted in an annual cost savings, despite buying a more expensive glove.

Summary In a project such as the one described above, a good value analysis professional must look at more elements than cost alone. The cost of an item will never be ignored and must always be part of a thorough project analysis, but assessing changes in utilization can lead to some very interesting conclusions about “getting what you pay for.”

Jim Russell is a Value Analysis Facilitator for Virginia Commonwealth University Health System and has more than 25 years of nursing experience, specializing in critical care and psychiatry. He's been a Staff Nurse, Charge Nurse, Clinical Coordinator, Nurse Manager, Director, and Chief Nursing Officer. He worked for many years in the for-profit community healthcare sector and also has several Academic Medical Centers on his resume. Jim sat for 5 years on the Nursing Advisory Board for a HealthTrust, performing Value Analysis for nursing related products and represented more than 70 hospitals. He is currently on several Advisory Councils and Special Interest Groups for UHC and Novation. When not at work, he can be found rolling around with his hyperactive rescue Husky. You can contact Russell with your questions or comments at jrussell2@mcvh-vcu.edu Summer 2013

Healthcare Value Analysis Magazine

Listen to the Special Extended Audio Podcast of James Russell and Managing Editor Bob Yokl Listen Here 19

AHVAP Perspective Nila Getter, 2012/2013 President and Dee Donatelli, 2013/2014 President AHVAP Editor’s Note: We would like to offer a very special welcome to our first AHVAP Perspective Column in Healthcare Value Analysis Magazine. Our ongoing goal with AHVAP is to bring a higher level of recognition to value analysis in our industry while continuing to bring educational resources to the healthcare value analysis and supply chain practitioners.

We would like to share some exciting things going on at the association as well as some new enhancements we are making with AHVAP’s web site, programs and educational offerings, such as:

AVHAP 10th Annual Conference—Scottsdale, AZ – Our Conference Planning Committee has been working very hard to bring you an outstanding program for this year’s AHVAP 2013 Annual Conference. They have lined up a great group of speakers for this year to cover the latest and most important subjects that our members want to learn about. The subjects include Utilization Management, Evidence Based Value Analysis, Key Collaborations, and much more. Remember, this is not only a great educational conference but a great networking and mentoring function where the very best of the best value analysis practitioners will be to share their insights and best practices with you. Learn more about the whole agenda at Visit the Conference Link Here

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AHVAP Perspective Special Pre-Conference Training at AHVAP Annual Conference – We are thrilled about our new Value Analysis 101 and 201 programs that will be offered as a pre-conference program on October 23rd in Scottsdale, AZ. These programs are developed and presented by our senior AHVAP members Barbara Strain, Colleen Cuisick, Terry Nelson, Gloria Graham, and Jim Russell. You will not want to miss these if you are attending AHVAP 2013! For more information Visit the Conference Link Here .

New Industry Business Education Collaborative Program (IBEC)– AHVAP has been working with a number of vendors such as ECRI as partners for the past two years and has now formalized a program for more vendors to join AHVAP under our Industry Business Education Collaborative program. With the success of our ECRI IBEC partnership, AHVAP is now accepting new vendors to be IBEC program partners to further the education of our partner organizations and AHVAP membership. If you are interested in becoming an Industry Business Partner, Please contact our AHVAP representative Laurie Krueger at lauriek@ewald.com.

New Board Members Elected – We would like to welcome our newly elected board members; Mary (Beth) Potter - President-Elect, Julie Ware - Secretary, Kumbia Lewis – Central Regional Director, Shannon Candio - Northeast Regional Director, and Sonja Glass Southeastern Regional Director. The new board members will join our continuing board members; Dee Donatelli - President, Nila Getter - Past President, Melanie Miller - Treasurer, and Cheri Berri - Western Regional Director. We would also like to thank our outstanding board members for their service; Barbara Strain - Past President, Cindy Christofanelli - Central Director, and Gloria Graham - Eastern Regional Director.

Please visit AHVAP’s website at www.AHVAP.org to become a member of one of the fastest growing and knowledgeable organizations in healthcare.

Summer 2013

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Value Analysis Teams How Many VA Teams Do You Need?

At most healthcare organizations, the answer is — less is more!

We are often asked how many value analysis teams a healthcare organization should have to ring the towel dry on savings and improve quality and safety. Our answer is always the same; it depends on your hospital, system or IDN’s size, scope, and supply chain budget.

As a general rule, we like to see value analysis teams organized around three product lines: clinical supplies, surgery supplies, and support services. This is because these three categories of purchase represent all of the supply chain expenses that fall under the responsibility of a supply chain management department. Although, this is a simplistic answer and needs to be elaborated and qualified based on, as I mentioned, the size, scope, and supply chain budget of your healthcare organization.

Free-Standing Hospital You may not realize it but most hospitals, up to 250-beds, can effectively manage and control their supply chain expenses with just one value analysis team. We discovered this fact after establishing clinical, surgical, and support services teams for hospitals this size only to collapse them after one year when they ran out of projects. So, don’t think that you need more than one team to save more money!

As you move up in hospital size (350, 500 or 1,000 beds) we recommend

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Value Analysis Teams that you still form a clinical, surgical, and support service teams, but add new value analysis teams based on their product line’s annual spend (e.g., cardiac rhythm management, interventional radiology, and off-site clinics). We made the decision to add these same value analysis teams at a 690-bed hospital because of the huge spends in these product lines. Note that we suggested these new value analysis teams for no other reason than their annual spend. This is because less really means more focus, control, and savings than having 20 value analysis teams that someone thought would look good on paper.

Analytics Approach “An even better way to identify precisely what value analyly what value analysis teams you should sis teams you should launch is launch is by their potential savings opportu- by their potential savings nities. This is how we now establish and se- opportunities.”

An even better way to identify precise-

lect value analysis teams for our clients.

Here’s how it works: We employ our value analysis analytics process to uncover the best savings opportunities (e.g., price, standardization, and utilization) by product line and then list them by the appropriate (clinical, surgical, support services, etc.) value analysis teams. On average, this value analysis analytics process identifies about $22,033 per occupied bed in savings. More importantly, each value analysis team is allotted 2, 3 or even 5 million dollars in projects to investigate.

As you can imagine, this value analysis analytics process takes all of the guess work out of this important decision, eliminates dry holes, and provides at least 18 months of projects for your various value analysis teams to work on. We have also found that by repeating this value analysis analytics process on a quarterly basis we can keep our clients’ savings funnel packed full with new projects for many years to come. >>>> Summer 2013

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Value Analysis Teams Multi-Hospital System The value analysis team structure we recommend most often to multi-hospital systems is a “hospital-based” model. Meaning, each hospital in the system establishes their own value analysis program following the guidelines we have already provided for “free-standing hospitals.” The reason for this structure is that no hospital in a system has the same product, service, and technology requirements. If you try to dictate from your corporate office what your hospitals must absolutely buy, you are costing your system money (see Did You Know Standardization Can Cost You Money? article in our spring issue for more details).

This hospital-based value analysis program is then managed by regional value analysis committees (depending on the size of the system) that report to a corporate value analysis oversight committee. Each

“If you try to dictate from hospital would have a value analysis repre- your corporate office what sentative assigned to the regional committees your hospitals must absolutely buy, you are costing that would be chaired by a regional materials your system money.” manager. The corporate oversight committee

would be chaired by the vice president of supply chain. Its membership would consist of the regional materials managers who chair their own regional value analysis committees. This is the decision-making body that would set the ground rules for the operation of the hospital-based teams and regional committees.

There are other multi-hospital system models that have numerous corporate value analysis teams riding herd over their supply chain expenses. They tend to be dictatorial and GPO contract driven, and really don’t lend themselves to the classic value analysis methodology we have promoted in this magazine for close to a year.

What is most important in all of these models we discussed is that when deciding on how many VA teams you require to reduce your cost — less is really more!

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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 Summer 2013

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Value Analysis 101 Don’t Stop VA Because There Is Resistance You must learn to break through barriers and overcome opposition In each issue of HVAM we will provide our readers with the one basic proven and time-tested tenet of value analysis to assist you to refine, enhance, and advance your value analysis processes. If you have any questions on this lesson, please contact us at bobpres@StrategicVA.com.

One of the sayings around our office is, “If value analysis was easy, anyone could do it.” The truth is that value analysis isn’t easy, especially when your customers erect roadblocks and try to stop you from doing your VA job. The secret to success in value analysis is not stopping your value analysis process because of excuses, manipulation or down right Machiavellian tactics that can throw you off course. You must be unstoppable!

Stop-ability Factor Tens of thousands of dollars (sometimes millions) are lost each year at hospitals, systems, and IDN’s when their value analysis process is stopped because of barriers and opposition put in the path of value analysis practitioners by their customers.

This isn’t a new phenomena. Larry Miles, the father of value analysis, talks about this frequently occurring while he was a value analysis engineer at General Electric in the 1940s. His famous quote was, “You can’t do value analysis if you’re going to let everything stop you.” Larry further stated, “There is a stopper that causes everything to stay the way it is, for better or for worse. But once you break through that, then very often your hands are on 50 percent or 60 or 70 percent of the cost. I mean that much of a reduction. So your main job (as a value analysis practitioner) is now to Summer 2013

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Value Analysis 101 expect these stoppers, look for them, and be a little excited when you see them because now it’s out in the open.” What Miles is talking about here is that there are big savings hidden behind these barriers and walls that your customers are putting up to keep you from finding their secrets.

We can relate to what Miles is saying since we have seen this aberrant behavior on every value analysis consulting assignment we have undertaken over the last 20 years. Value analysis practitioners stop their value analysis process at the first signs of resistance. It can happen when a customer makes a statement like, “The Joint Commission has mandated it,” or, “We need this extra port for infection control purposes.” Yet, when you investigate these claims 90% of them are unfounded or just plain wrong.

Just A Starting Point One of Miles’s philosophies was, “When you come up with a stopper, you’re

“You can’t do value analysis if you’re going to let everything stop you.”

just starting. That’s when value analysis starts.” That’s why you need to verify all of the claims made by your customers. One of the first things I learned in my long consulting career is that I couldn’t take customer claims, statements, or statistics at face value. I had to vet them!

For instance, when we tell clinicians their utilization is up on oxisensors, I.V. catheters, stents, etc., we are frequently told that this is happening because their census is up. We have learned that this is one of the default answers often heard from clinicians to confuse and cloud this issue. We then tell them that all of our utilization metrics are case adjusted for volume, thereby smoothing out their census’ increases or decreases for any given period of time. This usually gives these individuals a reality check and then they are ready to talk about why their utilization is beyond acceptable limits. The moral to this story is to never accept any customer’s excuse, claim or explanation that doesn't make sense to you unless it is proven!>>>> Summer 2013

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Value Analysis 101 Don’t Lose Money Naturally, there are value analysis studies that don’t achieve savings, quality or safety improvements, but these are rare occurrences. Based on our own experience, we have documented savings, on average, of 26% on every value analysis study we or our clients have conducted over the last six years. The reason for this ultra-high savings yield is that we insist the value analysis practitioners we coach have a specific “indisputable” reason for stopping a value analysis study.

I can remember that we were certain a client of ours was using a disposable patient bathing system that was costing them three times the lifecycle cost (not price) as other hospitals with the same operating characteristics. Only to discover, after we visited their patient floors, that this hospital had no showers in their patient rooms, only shared showers. So, most patients couldn’t take a shower, necessitating their high use of disposable bathing systems.

This is what we are talking about when we

“Based on our own experience, we have documented savings, on average, of 26% on every value analysis study we or our clients have conducted over the last six years.”

say you need specific “indisputable” reason for stopping a value analysis study. Otherwise, I can guarantee that you are losing money (26% on average) if you stop your value analysis studies prematurely.

Don’t Skip Tough Studies There is a tendency to skip tough value analysis studies, especially physician preference items. Yet, this is where the big savings reside at your hospital, system or IDN. You might say that tough VA studies denote virgin territory since no one has looked at these categories of purchase for years — maybe never. Generally, what keeps us from attacking these tough VA studies is the fear of upsetting someone. >>>>

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Value Analysis 101 In reality, most physicians respond favorably to good data. So, if you can build a solid case for change with their own data you are halfway home to the completion of your VA study. If you still find resistance to your data presentation, then as Miles says, “You can generally find somebody who is on the same side of the fence as you.

Find him (or her) and let (them) help you with (your VA study).” A good place to start is with your medical director. He or she can usually suggest an ally that can remove roadblocks and barriers that have been put in your way.

Don’t Stop In short, value analysis is a game of inches. You most likely won’t succeed on your first, second or even third effort. Yet, you must not stop your value analysis study for any reason unless you find a specific “indisputable” reason to do so. Along the way, you must learn to break through barriers and overcome opposition because there is gold at the end of your journey just waiting for you to mine and extract.

On-Site, Fully Customized 1, 2 or 3 Day Advanced Value Analysis Training Program Can Help Your VA Team(s) Increase Savings by 300% or More “This (training) program offers a different perspective on value analysis than the GPO based programs. It can offer a recipe – complete with tools for the development or revitalization of a (VA) program.” Betsy Miller, Value Analysis Manager, Shands Healthcare

www.StrategicVA.com/TrainingOnSite.htm or E-mail bobpres@StrategicVA.com for On-Site fees Summer 2013

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Leadership Interview Value Analysis Leadership Interview Brooke Berson, R.N., Director, Clinical Resource Management Duke University Health System, North Carolina The following edited interview was conducted by Robert W. Yokl, Managing Editor, Healthcare Value Analysis Magazine

Brooke Berson, R.N, is a graduate of Duke University’s Fuqua School of Business with a Master’s in Business Administration. Berson has held the position of Director, Clinical Resource Management at Duke University Health System, North Carolina, for 13 years. Berson is a founding member of the Association of Healthcare Value Analysis Professionals and is an active member of AHVAP’s marketing committee.

(HVAM) Can you tell us a little bit about your background and how you got into value analysis?

(BB) After graduating from nursing school in 1985, I immediately went into bedside nursing and in 1987 started ICU nursing. I came to Duke in 1988 and have worked probably in every ICU but my most recent experience, and longest experience, was in the surgical ICU. I went to business school in the 1990’s and from that experience wanted to parley what I knew and the business acumen I had gained at business school into a new profession. I didn’t want to throw away all that I had learned, so I wanted to incorporate my experience in nursing with what I was going to do. I didn’t want to completely switch away from patient care. There was a job in purchasing Summer 2013

and my first title was clinical resource utilization specialist, which was an industry title for value analysis at that point. There was a new supply chain executive, and she had a clinical resource specialist at her previous IDN. She hired me and I became Duke’s first value analysis professional.

When I started with the job, I basically had to write my own job description which was very challenging. I found myself at a job coping with definitions that I knew nothing of. At that time, I didn’t know what value analysis was. It was a challenge to even get my arms around it.

(HVAM) Who were some of your early mentors in value analysis and how did they help make you the value analysis professional that you are today?

(BB) I saw some value analysis articles >>>

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Leadership Interview written by Cindy Christofanelli, Sally Simpson, Barbara Strain, Kate Miller, Jan Neworth, and Melanie Miller (founding members of AHVAP) and reached out to them by phone and e-mail.

They were instrumental in helping me learn the language of value analysis and the supply chain, as well as provided me with guidance, templates, policies, etc.

eficial. We look at our past purchases and where the industry is going in the future to give us a baseline. For example, we looked at cardiac output monitors, which were invasive in the past, but now are noninvasive. This gets us thinking about what the technology will be in the future and how we can use this information from articles and literature HVAM) Back in 2003, “We started an informal group of to leap frog to anyou were a founding value analysis practitioners in July other technology, so we're not conmember of the Asso2000 with the goal of making AHVAP stantly changing ciation of Healthcare into a professional group. We had our standards with Value Analysis Proour first informal meeting in Chapel every piece of fessionals. What was that the genesis for you to Hill whereby everyone agreed to equipment form a new associa- start a formal group. By 2003 we had comes on the market. Our comtion?

100 members of AHVAP! “ mittee also uncov(BB) We started an ered an issue with informal group of value analysis practitioners in cardiac output monitors that even the manufacJuly 2000 with the goal of making AHVAP into a turer didn’t know about. Duke won an award beprofessional group. We had our first informal cause we found this defect in the monitors. meeting in Chapel Hill whereby everyone agreed That’s why I think evidenced-based value analyto start a formal group. By 2003 we had 100 sis is really root cause analysis. It’s not so much, members of AHVAP. At the time, I didn’t foresee “I want this,” and, “Why?” It’s, “What are the the success that AHVAP is today. In the early outcomes?” days, under the leadership of Kathleen Stickane, Cindy Christofanelli, Melanie Miller, and Barbara (HVAM) What are some of the most important Strain, AHVAP flourished through expanded skills you feel are necessary to become successmembership, formalizing the structure, and sign- ful in value analysis? ing an agreement with an association management company.

(HVAM) Could you give us examples of some of your most recent value analysis successes?

(BB) We have a technology committee with several physician members that has been very benSummer 2013

(BB) The most valuable value analysis skill I have is being a nurse, but I understand that a lot of value analysis professionals aren’t nurses. While this isn’t a hard and fast rule, it has helped me in my profession. Also, my business school education has helped me to expand and apply>>>

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Leadership Interview the concept of value analysis to even my hospital’s service agreements. Lastly, the skills I have acquired in organizing, networking, and benchmarking all have helped me to understand the efficacy of the products I buy and how this relates to our patients and their safety, and to our front line staff.

(HVAM) What do you think some of the biggest challenges facing value analysis professionals are and what should they be doing to overcome these challenges?

(BB) The biggest challenges I see is one, not having your healthcare organization engaged, top down, in saving money and improving quality outcomes. Second, not having your clinicians driving your evaluation process. Too often, procurement is leading product changes. I think there are organizations where purchasing comes in and dictates what’s going to happen, and then it’s a big challenge to win over your clinicians to the strategies and tactics of value analysis. Clinicians can be won over not by encouraging them to save money, but by helping them understand the marriage between product purchasing and evidence-based practices .

scientific evidence-based value analysis is a brilliant idea, since it mergers clinical and product efficacy and cost together. We have been doing scientific evidenced-based reviews at Duke for some time. These two practices are where I see value analysis practitioners going over the next 5 to 10 years to continue to save money.

“Clinicians can be won over not by encouraging them to save money, but by helping them understand the marriage between product purchasing and evidence-based practices.”

Want to Network with the Top Value Analysis Professionals?

(HVAM) It’s been 10 years since AHVAP was formed and since then value analysis has really come into its own. How do you see VA in the next 5 to 10 years?

(BB) That’s a good question because that’s what we are all thinking about. Pricing has just about been exhausted and will remain so. We now need to look at utilization, which isn’t a new concept to generate new savings. I also believe that Summer 2013

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Value Analysis Techniques

Two-Part Series

Is Poor Communication Slowing Your VA Process?

Tips and tools to enhance your VA communications and productivity

By Wanda-Dupree Lane, RN, BSHA, MaED, Clinical VA Coordinator, The Regional Medical Center, Memphis, TN

Effective communication is crucial to the value analysis process. Though vital, it presents a stumbling block for many value analysis programs. Assessing the effectiveness of your team’s communication is the first step in improving processes and enhancing productivity. Though communication challenges vary by team, I have found that improvement can be simple if you start with asking good questions.

Start with asking good questions Begin by evaluating your team’s communication skills using self-assessment, productivity benchmarking, and customer feedback. The first step is polling your staff members and stakeholders with a brief questionnaire. Include clinicians, physicians, materials management staff, embedded vendors, support staff, and the executive team in this process. Customize according to your facility needs, but sample questions could include: 

Do you understand the Value Analysis process?



How satisfied are you with the current Value Analysis process?

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Value Analysis Techniques 

How could this process be improved?



What do you most like and dislike about the current process?

Analyze the responses looking for patterns. Repetitive comments or criticisms

are the best indicators of gaps in your process. An informal survey of VA professionals revealed the primary repetitive complaints from staff members were time lapse between product request and availability, and communication regarding progress during conversion. Both of these complaints relate to ineffective communication, though only one specifically states this. The first issue regarding the timeframe between request and availability can be addressed by updating the requestor during the process. Simple communication reassures the requestor that they are valued and heard.

Productivity Benchmarking The next step is productivity benchmarking. Begin with a simple tracking tool to note the amount of time used each day in repetitive communication. For example, do you repeat the same information to several departments or are you repeatedly requesting information from vendors or staff? If so, you are losing valuable time and productivity. A simple way to track this time is to estimate in minutes the time used for verbal requests by phone, crafting email requests for information, and unscheduled face-to-face conversations. Create a spreadsheet (figure 1) using 5, 10, 15, and 30 minutes blocks of time. Assign each repetitive communication task a time value. Using the spreadsheet, track each task for a minimum of one week.

Do this exercise objectively and thoroughly for the pre-determined time-frame.

One suggestion is to do this exercise during the week preceding or following your value analysis meeting. If you want more detail regarding your communication gaps, merely be specific on your tracking sheet. Label each column with specific information such as ,“vendor request” or “clinician question.” This spreadsheet will allow you to see patterns of behavior and make communication gaps visible fairly quickly.

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Value Analysis Techniques A side note is that by tracking this lost time, you can quantify your productive time or request better communication tools.

Figure 1: Value Analysis Productivity Benchmark Spreadsheet

Categories

5 minutes

10 minutes

15 minutes

30 minutes

Email notification\clarification Phone (in-house) notification\clarification Phone (vendor) notification\clarification Unscheduled face time

Finally, if you find that you receive complaints regarding a lack of information or if you are frequently “putting out fires� that could have been prevented by effective communication, these tips will help you.

The next consideration is perception. Like perspective, perception is unique to the individual colored by life experience, age, temperament, and other influencing factors. Perception is reality with regard to communication. Proven repeatedly in diversity classrooms and training sessions across the country, perception is a deciding factor influencing workplace communication. When information is supplied frequently and objectively, trust develops and productivity is enhanced. Conversely, if a person perceives that their request is ignored, delayed or devalued, it will reflect poorly on your VA process. The key to avoiding such issues is to perfect your communication process, focusing on transparency and objectivity.

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Value Analysis Techniques The final consideration is the person’s position of power. When communicating in a group, sensitivity to each person’s position invites candor and objective feedback.

For example, if your meeting includes stakeholders from the clinical and managerial staff, director level and executive team, acknowledge that the staff members may feel uncomfortable or intimidated when speaking out. It is imperative that your meeting be considered a safe environment for frank discussion. Each opinion must be acknowledged and valued to enhance communication. To foster this sense of safety, a contract may be drafted stating that this is a decision-making group and each team member will be asked to give frank opinions from a unique perspective. Assure them that they are valued and chosen because they have expertise in their area. Consider conflict a benefit, as it fosters discussion and information-sharing when appropriate and respectful.

Communication toolkit The most valuable tool for improving communication is the template. Develop templates like figure 2 for communication tasks based on the feedback from your surveys and productivity spreadsheets. If one of the survey items reveals an information gap regarding time between request and availability, develop an email template with specific information included and set a reminder to inform the requestor bi-weekly.

Note: The second installment of this two-part series will be published in the Fall Issue of our HVAM magazine.

Wanda-Dupree Lane is the Value Analysis Coordinator at the Regional Medical Center at Memphis, TN. Wanda has been a registered nurse for 26 years, vendor representative for five years, and business owner for several years. During that time, Wanda has watched healthcare perceptions and actions change with a unique perspective. In her current position, Wanda has enjoyed watching her hospital’s Value Analysis program grow and develop.

The program continues to evolve, seeking new and innovative ways to meet customers’ needs and provide the best possible care in the most fiscally responsible manner. You can contact Wanda with your questions or comments at WLane@The-MED.org, or call her at 901-545-8662.

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Healthcare Value Analysis Magazine

Value Analysis Analytics The New Low Hanging Fruit Is Supply Utilization Why Aren’t We Jumping On These Juicy Low Hanging Savings Opportunities?

Most healthcare organizations are still operating on a VA model that is strictly focused on group purchasing (GPO) for price savings. Most value analysis teams are caught up in making these GPO savings happen along with evaluating their new product requests for their healthcare organization. Now don’t get me wrong, there is still savings to be generated from working with your GPO on price and standardization savings opportunities. But, the savings is not the big juicy low hanging fruit that it once was 5-7 years ago. The healthcare market has matured to the point where we are not getting the savings out of our supply chain that we once achieved.

Paradigm Shift The systems that you employ for price and standardization compliance are doing their jobs and driving out the price savings but they are not built for managing utilization (the new low hanging fruit) based on your hospital’s departmental volume fluctuations. So you have the best price and best standardization but your costs still seem to rise because you are not addressing the supply utilization aspect of your Summer 2013

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Value Analysis Analytics supply chain organization. This is all about the consumption, in-use methods, and waste and feature rich/poor selections your departments create on a daily basis that

now consume the majority of the cost increases in our supply chain expenses today.

For example, a hospital thought they had their surgical gloves under control, based on our utilization dashboard system reports, and was one of the best performers in our benchmark database. They were doing very well on surgical gloves until their group purchasing organization contracted with a different manufacturer than >>>

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Value Analysis Analytics their incumbent vendor and the hospital was required to switch to the new vendor.

It happens every day.

The good news was that there would be a 10% price savings so their hospital’s value analysis team went about their normal evaluation to finalize and implement this new contract. From a usage standpoint, the hospital knew from their reports that they utilized 3-6 pairs of gloves per surgical service procedure so they were able to calculate their savings based on the annual usage.

After the contract had been implemented the hospital continued to track after their cost per surgery procedure in their dashboard to validate that the expected 10% price savings was achieved. They were shocked to discover that not only were they not saving the 10%, but their surgical glove cost had shot up by over 28% per procedure or a net loss of 38% of their total surgical glove spend.

Upon further investigation, the supply chain department found that their pricing and standardization was still in place per the new group purchasing contract.

The problem was that the hospital was simply now using more surgical gloves on the new contract (5-8 pairs of gloves per surgical procedure) as compared to the previous annual usage of 3-6 pairs per procedure over the previous year.

Unintended consequences The new contract was implemented faultlessly but something was causing their surgical glove utilization to go up 38% more than expected. After an investigation, it was uncovered that the surgeons and OR staff began double gloving more often than they had done in the past because the new glove did not feel as durable as the previously contracted glove.

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Value Analysis Analytics This was an unintended consequence of this change, but because they were tracking the utilization before and after this change, they were able to address this lack of confidence issue with a little help from their new vendor to bring the utilization back in line to the previous year’s utilization standards.

What would have happened if this hospital’s value analysis team did not track after their surgical glove utilization? You guessed it, they would have increased their surgical glove spend dramatically, yet believed that they saved 10% over the next 2 years when in reality their new contract ended up costing them an additional 28% at a combined loss of 38%.

Don’t go down this road. Always, as this hospital did, validate --by tracking, trending and measuring -- your savings on all of your value analysis projects (e.g., price, standardization, and utilization) since the unintended consequences of not doing so can be catastrophic.

New low hanging fruit As this case study suggests, while price savings are still possible at your healthcare organization the new and better savings opportunities (7% to 15%) are in your supply utilization misalignments. Therefore, you need to be particularly vigilant when you make any change in the products, services or technologies you are buying at your hospital, system or IDN. Θ

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Evidenced-Based Value Analysis

Use Healthcare Technology to Add More “Value” to Value Analysis Dee Donatelli, RN, BSN, MBA, Sr. Vice President, Provider Services, Hayes, Inc.

There are many definitions for value analysis, but I think we could all agree that value analysis in healthcare today is a creative analytical study and evaluation of the function of a product, service, or technology. The objective of any value analysis exercise is to determine the lowest cost approach that will provide an equivalent or better performance or outcome.

Adding more value With the pressures affecting healthcare today, it’s time to add more value to the process. To do so, we need to bridge the evidence gap and start using a systematic and objective evidence-based approach, a process we call evidence-based value analysis (EBVA).

I’ve talked in previous columns about how using EBVA to assess and compare the clinical value, as well as the operational and financial impact, of new and existing health technologies takes traditional value analysis to the next level. A good starting point to better understand the scientific and clinical evidence of a product’s value is health technology assessment (HTA).

HTA is the systematic and objective evaluation of the technical performance, safety, clinical efficacy, effectiveness, cost, cost-effectiveness, organizational implications, social consequences, and legal and ethical considerations of the application of a >>> Summer 2013

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Evidence-Based Value Analysis health technology, in most cases a drug, medical device, or clinical or surgical procedure. Many experts describe HTA as a bridge between evidence and policy-making since HTA provides stakeholders with accessible, evidence-based information they can use to make decisions about which health technologies to adopt, which to eliminate, and how to efficiently allocate scarce healthcare resources. More importantly, HTA enables hospitals to identify and stop using interventions that are unsafe or ineffective or that have an unfavorable benefit/risk ratio.

HTA fit So where would HTA fit into your current value analysis process? You can incorporate HTA anywhere in the course of evaluating the products, devices, services, and interventions we use to deliver care to patients, but I would suggest that HTA become the foundation upon which you build your EBVA process. “Does good evidence exist?” is the first question you need to answer before you can proceed with decision making. HTA could help VA teams to determine whether they should proceed at all.

Often times, the lack of evidence is as much a determining factor as the presence of good evidence. Once the HTA is completed, the team can proceed with financial and internal business analyses. Here’s why you should link HTA and value analysis: 

To improve patient safety and clinical outcomes: A systematic review of the research may pick up warning signs and identify those technologies that will need closer monitoring.



To promote efficient utilization of resources: The United States has the most expensive healthcare in the world, but our outcomes are not commensurate with our spending. Studies have shown that in certain regions of the United States, there is no correlation between the dollars spent on healthcare and health outcomes. We need to achieve better clinical outcomes for the money we spend. >>>>

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Evidence-Based Value Analysis 

To support strategic technology planning and reduce conflict: With the numerous requests for new and expensive technologies, many of which are made based on clinician preference, the use of evidence to determine cost-effectiveness is essential. Let evidence become the neutral ground you use to make decisions, set priorities, diffuse conflict, and provide justification for strategic planning decisions.



To guide the appropriate implementation of

“HTA can be the bridge that health technologies: A systematic approach enables you to add greater value to value analysis in can identify up-front issues such as training your organization.” and credentialing, compatibility, patient

flow, and turf battles, and ensure smoother adoption of new technology. 

To maximize cost-effectiveness and achieve sustainable goals and financial viability for the organization.

HTA can be the bridge that enables you to add greater value to value analysis in your organization. This will allow you to acquire health technologies that yield high-quality care at a sustainable cost and avoid or eliminate ineffective or unsafe technologies. It is possible to improve patient care while achieving greater financial viability.Θ Ms. Donatelli has more than 30 years of experience in the healthcare industry, with expertise in the areas of supply chain cost reduction and value analysis. Before joining Hayes, Ms. Donatelli was Vice President of Performance Services at VHA, Inc., where she provided executive leadership and direction for VHA’s consulting services, including Clinical Quality Value Analysis. She is a Certified Material Resource Professional (CMRP) and a Fellow of the Association for Healthcare Resource and Materials Management (AHRMM).

She the current president of AHVAP, the Association of Healthcare Value Analysis Professionals. Dee can be reached at ddonatelli@hayesinc.com for questions or comments.

Hayes, Inc. (http://www.hayesinc.com), an internationally recognized leader in health technology research and consulting, is dedicated to promoting better health outcomes through the use of evidence.

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Isn’t It Time That You Stop the Utilization Cost Overruns from Melting Away Your Bottom Line?

Did You Know That Utilization Cost Overruns Can Effect Over 78% of Your Most Important Products, Services, and Technologies and Represent 7% to 15% of Total Supply/Purchase Service Budget?

Find Out How You Can Quickly Stop Your Utilization Cost Overruns from Damaging Your Bottom Line Sign Up for a FREE No Obligation Test Drive of Utilizer® Dashboard to Show You Where Your Utilization Savings Are Hiding in Your Supply Chain Summer 2013

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Benchmarking

The Future of Benchmarking Elevate your benchmarking for greater accuracy, reliability, and insight A recent survey by CAPS Research (co-sponsored by Arizona State University) of supply chain leaders indicated that there is a shift in benchmarking for greater accuracy, reliability, and insight because: (1) Analysis and summary of important metrics is regularly pulled up the hierarchical structure for review by executives, and is appearing more frequently in the C-suite, (2) Data has made a significant move toward a more prominent and visible place through the entire organization, and (3) Business (including healthcare) climate volatility is putting immense pressure on supply chain management to provide richer, longer-term views of operational efficiencies, internal customer alliances, and supplier relationships. So what does this mean for your own supply chain expense and operational benchmarking efforts?

Elevate your benchmarking Up to this point in time, supply chain benchmarking has been limited almost exclusively to price at most healthcare organizations. While price benchmarking is a good starting point to understand the principles and practices of benchmarking, to stay relevant, you need to elevate your benchmarking beyond price. This is what your senior management is looking for; more efficiencies in your supply chain operations to contribute to their bottom-line. These new layers of benchmarks will require even greater accuracy, reliability, and insight so that they are credible and actionable. The first layer of new benchmarks you need to develop is supply utilization. This is without a doubt the most important benchmark you can employ, next to price, >>>> Summer 2013

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Benchmarking to increase your savings yields by 7% to 15%. Why is this important? Based on our research, most healthcare organizations have less than one percent in new savings left to be achieved for most hospitals, systems and IDN’s.

Just the other day, we performed a PriceCheck for a new client of ours and found that they only have .05% in new savings to rein in before they have no new price savings whatsoever. On the other hand, we identified 11% in new supply utilization savings for this client to keep their savings machine humming. I’m sure you can relate to this story.

“Based on our research, most healthcare organizations have less than one perIt is now mission critical that supply cent in new savings left to be chain professionals develop metrics to enable achieved for most hospitals, them and their value analysis team(s) to “dive systems, and IDN’s.”

Deep Dive

deep” inside their supply chain expenses to begin new conversations with their department heads and managers. For instance, if you are running $1.90 per CMI patient day on your isolation gown utilization and your peers are averaging $1.33, this gives you an opportunity to talk to your nursing personnel about why your hospital is different. Also, shadow your isolation gown customers to understand their current policies, nuances, and practices. By following this path, it won’t take you long to determine the reason for this utilization misalignment. This is what we are talking about when we say “dive deep” into your supply chain expenses. This can’t be done by sitting behind your desk; it requires a proactive approach to root out these unnecessary and unwanted costs.

Best Practices In this era of healthcare reform, it’s becoming even more critical to identify your peers’ best practices and best-in-class indicators to dramatically improve>>>>

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Benchmarking your supply chain expense management performance. Remember, the classic definition of benchmarking is the search for best practices.

This is why we advise our clients on best-in-class practices we have observed when they are investigating any particular commodity group. If our clients are investigating their I.V. sets’ consumption irregularities based on their unfavorable metrics, we always make our clients cognizant of the fact that 87% of the time their time labels practice (i.e., not labeling at all) is the culprit. This makes our client’s savings job much easier, and yours too, when you have a best practice check list to guide you on everything you buy.

How can you acquire this same information? When you have identified a peer hospital that has a lower in-use cost than your hospital, like our example of isolation gowns, make sure you understand in depth how your peer hospital is making this happen. In our isolation gown case study, we have discovered that this hospital uses reusable cloth isolation gowns vs. disposable to achieve their low cost of $1.33. This usually is the reason why your costs are much higher. Once you share this information with your isolation gown customers, it shouldn’t be too hard to initiate a pilot study to determine if this is your problem.

Road Less Traveled What we have described here isn’t what the typical hospital, system or IDN is doing today. It is the road less traveled by most supply chain organizations. Yet, it is the future of supply chain expense benchmarking. No longer will price benchmarking alone keep your savings machine humming. Only by elevating your benchmarking with new layers of data, metrics, and a best practice library will you be able to move to the next level of savings performance. More importantly, it will make it easier for you to justify or sell your customers on the need for change — now! Θ Summer 2013

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The Last Word Crucial Conversations and How to Have Them Alan Edwards, Regional Director of Supply Chain, Adventist Health System, Tampa, FL

“Today’s supply chain leader faces more day to day pressure than ever before. We’re pressed to identify savings opportunities for our organizations, and more importantly to turn them into realized savings. We’re under pressure to lead key initiatives such as value analysis programs, standardization and utilization efforts, and physician alignment strategies.”

Keeping that quote in mind, let’s zero in on value analysis, standardization and utilization efforts, and physician alignment strategies. Challenging on their own, collectively they can be a bit overwhelming. In addition, each will more than likely require you to test your skills at having a crucial conversation with one or more individuals at some point.

According to “The Book of Lists” the fear of public speaking ranks number one in the minds of the majority of people. For me that doesn’t hold true. Maybe it’s the fact that I’m an extrovert, or the fact that I fear other things more deeply. Snakes, tornadoes, scary movies, and bumpy airplane rides all rank on my “Top 5” list of fears. But holding down the #1 spot on the list would have to be “crucial conversations.” They can be paralyzing, gut-wrenching, or stressful. They can be difficult to plan and even more difficult to execute. There are times I’d rather stick a pencil in my eye than have “one of those talks.” But as a leader, it’s my responsibility to recognize when, where, and how to hold a crucial conversation; albeit a direct report, >>> Summer 2013

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The Last Word a colleague, a physician or even my boss.

What do we know about crucial conversations? I’ve held many over the years and have found they are best held face to face. While email and telephone calls may seem like a way to “cut to the chase” and get it over with, I’ll explain later why they’re not the best choice. They’re also defined by the participants. What may seem “crucial” to you may be low risk or low priority to others. On the other hand, if the stakes are high, emotions can run even higher. And much like me, most people don’t like them.

Unless you’re extremely fortunate, I think it’s safe to say you’ll end up facing a crucial conversation at some point in your professional journey. When you do, you should be well prepared in advance. I’d like to share how I plan for “tough talks” with physicians and executives. Hopefully you’ll be able to tailor this strategy into something for your leadership and management “tool kit.”

When dealing with physicians, I utilize a checklist of sorts. It keeps me on track in planning and holding the conversation with the physician. Here are the key elements:  Acknowledge physicians are intelligent individuals driven by fact, not emo-

tion:  Physicians practice “Evidence-Based Medicine”  Supply Chain Professionals practice “Evidence-Based Management”  Ask yourself the really tough questions first:  Do I have the <blank> to have this conversation?  Authority  Credibility  Personality  Reputation  Respect Summer 2013

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The Last Word  Prepare in advance and ask more questions:     

Why am I having this conversation in the first place?

Am I the right individual to even have this conversation?

What is the outcome I want? For the other person?

What is my BATNA? (Best alternative to a negotiated agreement) What am I willing to take “bottom line?”

 Scout the other individual(s):  History with the organization  Political Clout  Likelihood to partner If you find yourself on shaky ground with any of these points, it’s important to give pause and consider discussing with a peer or a mentor. You want to be fully prepared for the actual conversation, and more importantly to achieve what you set out to do.

While having a crucial conversation with a physician can be challenging, having one with an executive in your organization can be even more taxing. Now it’s “in the family” so to speak and can have a direct impact on relationships, credibility, and long term success. Again, I use a checklist type approach in planning the conversation. A mentor I had early in my career told me, “Plan your work and work your plan!”  Be a Realist:  Know Individual Executive Staff Members       Summer 2013

Most believe in Evidence-Based Management Identify your CHAMPION! Learn where they stand on the “tough” issues Identify potential pitfalls Identify “sacred cows” Understand their personality profile Healthcare Value Analysis Magazine

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The Last Word

 Know what’s at stake for yourself  > Personally  > Professionally  Prepare in advance:  Why am I having this conversation in the first place?  What do I want from the executive?  Guidance?  Support?  Approval?  Action?  Draft a plan:  What’s the problem?  What’s the plan to fix it?  What do you need from the executive?

Your plan may rock on paper but remember this; “It’s all in your delivery.” When you get face to face with the individual(s) you’re holding the crucial conversation with, the way you present your position will heavily influence the response you’ll receive. Giving ample thought to the following points during the planning phase will help you position yourself for a favorable outcome.

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The Last Word  Presentation content:  Must be clear, concise, and accurate  Must include the problem, the recommendation, and the ask (i.e., the end result you want)  Decide on a presentation style:  Conversational  Written  Provides a guide to walk you through the conversation  Ensures important points are not omitted  Affords a way to revisit the conversation if questions arise, eliminates con-

fusion

It’s my hope that “crucial conversations” are not high on your list of fears. But if they are, try using this approach to help move it down the list. In today’s healthcare environment, we’re going to need all the tools we can get our hands on to achieve success.Θ

Alan Edwards leads the Regional Supply Chain Management efforts for Adventist Health System’s (AHS) Tampa Bay Division. He has more than 30 years of progressive achievement in managing customer oriented operations in healthcare and non-healthcare channels. His full-circle supply chain expertise includes contract administration, spend analytics, strategic sourcing, forward and reverse logistics, distribution, inventory control, warehouse operations, and value analysis. He is a seasoned team builder with the ability to bring diverse groups, such as clinical and non-clinical departments, professional and non-professional staff, and providers and suppliers, together to achieve success for all parties. Alan speaks nationally on topics such as leadership and management, strategic sourcing, marketing supply chain, value analysis, and vendor management. He has an Associate’s Degree in Logistics; a Bachelor’s Degree in Human Relations and Business and is a certified LEAN Green Belt. You can reach Alan with your questions or comments at Edwards, Alan Alan.Edwards@AHSS.ORG.

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Turning Skeptics into Believers!

Even our Utilizer® Dashboard clients were at first skeptics until they saw the results of their new and better savings opportunities A typical Utilizer® Dashboard client can yield as much as 7% to 15% in supply utilization savings in less than one year!

Are you a skeptic or a believer?

Over the last 6 years, SVAH has helped leading healthcare organizations realize new and better savings - beyond price and standardization - in the range of 7% to 15% from budget.

ardization initiatives, but utilization can now explode your savings by as much as 67% to 79% vs. just price savings alone.

We have the documented proof to back up this extraordinary claim.!

Prove Positive

Our Clients Were Skeptics

A typical hospital normally saves 1%, 2% or 3% on their total spend with price or stand-

All of our Utilizer® Dashboard clients were skeptics, until they saw the results for themselves,

and are now experiencing these new and better savings.

Breakthrough Savings If you are looking for a breakthrough in your savings yields, there is no time like the present to sign up for a “demo” of our Utilizer® Dashboard. We even guarantee up to 3:1 ROI to protect your investment!

Sign up for a FREE Demo at Summer 2013

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