Healthcare Value Analysis & Utilization Management Magazine - Volume 2 Issue 1

Healthcare

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

Volume 2/Issue 1

Magazine

Value Analysis Evidence In This Issue: =========================================================================================== ====

Page 11—How Do You Define Evidence-Based Value Analysis in a World of Many Truths?

Page 41—The New End Game!

Volume 2/issue 1 Published

Healthcare Value Analysis Magazine

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

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You Don’t Need To Turn Your Organization Upside Down to Uncover the Millions of Dollars in Savings Still In Your Supply Chain

But You Do Need to Have a Utilization Management System to Find the New Low Hanging Fruit...Supply Utilization Let us help you to quickly and easily identify and then implement millions of dollars of savings right in your own back yard.

It’s now mission critical that you do so!

WWW.UTILIZERDASHBOARD.COM Strategic Value Analysis in Healthcare WWW.UTILIZERDASHBOARD.COM Volume 2/issue 1

Making Savings Easy for You!

Healthcare Value Analysis Magazine

27 Years as a Trusted Leader in Supply Value Analysis and Utilization Savings Strategies

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contents

Healthcare Value Analysis Magazine Healthcare Value Analysis Magazine is published quarterly

by Strategic Value Analysis® in Healthcare

How Do You Define EvidenceBased Value Analysis In a World Of Many Truths?

P.O. Box 939, Skippack, Pa 19474 Phone: 800-220-4274 FAX: 610-489-1073 bobpres@ValueAnalysisMagazine.com

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

Editorial Staff Publisher

26 Why Do We Need Value Analysis

None of Us Are As Smart as All of Us

Teams to be Successful? Although most healthcare organizations have value analysis teams or committees, did you ever consider disbanding your teams?

Robert T. Yokl bobpres@ValueAnalysisMagazine.com

————————————

Managing Editor Robert W. Yokl ryokl@ValueAnalysisMagazine.com

29 Who Should Be Your Value Analysis Team Leaders? Individuals need to be selected for their expertise and leadership qualities.

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Senior Editor Patricia A. Yokl ————————————

39 Keeping Value Analysis Analytics

Meeting the Challenges of Reform Through a Stronger Value Analysis-Supply Chain Partnership Volume 2/issue 1

Simple: Less is more when it comes to telling a story with your analytics reports.

41 The New End Game! Life cycle cost is the forgotten goal of all of our cost and quality challenges.

Healthcare Value Analysis Magazine

Editor Danielle DeShong-Miller Copyright 2014 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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Editorial Board The following supply chain and value analysis professionals contribute editorial ideas, comments, and advice on HVAM’s editorial calendar, articles, and surveys: 

Barbara Strain, Director of Value Management, University of Virginia Health System, Charlottesville, VA



James Russell, Value Analysis Facilitator, Virginia Commonwealth University Health System, Richmond, VA



Patrick Stewart, Director of Materials Management, Shore Memorial Hospital, Somers Point, NJ



Peg Tinker, Senior Director, Performance Services, VHA, Phoenix, AZ

Our Job Is To Make Your Benchmarking Job Easier

If you aren’t aware of it, benchmarking is your key to becoming the BEST OF THE BEST in supply chain/ value analysis. However, very few supply chain/ value analysis professionals have the time, resources, or comparative data to be successful at this discipline. Let us do the heavy lifting for you!

www.StrategicVA.com Strategic Value Analysis in Healthcare, Skippack, Pennsylvania 27-Years as a Trusted Leader in Supply Value Analysis and Utilization Savings Strategies

Making Savings Easy for You! Volume 2/issue 1

Healthcare Value Analysis Magazine

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From the Publisher's Desk

Evidence is One Key to Your Success in Value Analysis Robert T. Yokl

We are a skeptical group in healthcare! This attitude is brought about by the medical and scientific training we have received in our schooling. We are also creatures of habit which is one of the strongest influences on our behavior in and out of the workplace.

Therefore, to change our behavior or others’ we need irrefutable evidence that what we or they have been doing for years might not be the best for our patients, staff, and our healthcare organization’s bottom line.

For instance, for years we have been told to wash our hands after contact with a patient or visiting a restroom to prevent cross-infections; however, as a group, numerous studies have shown that there is a very low compliance to this evidence-based best practice. To this end, I recently read where the head of infection control petri dished all of his medical staff at their monthly medical staff meeting and then shared the results at their next meeting.

Don’t be so eager to accept your department heads’, managers’, or even physicians’ excuses as fact.

Test their assumptions fully, before agreeing with their explanations!

The biggest excuse or justification that we hear from department heads and managers when presented with unfavorable cost data is that the increase in their expenses is due to their census or procedures jumping on a particular category of purchase (e.g., gloves, oxygen sensors, underpads, etc.) when, in fact, our data usually shows that their census or procedures are actually down for the period in question. Don’t let this census or procedure game take you off balance. Remember this rule: Accept but verify what they are telling you.

In the new healthcare economy we work in today, only the most efficient, effective, and progressive healthcare organizations will survive. If you aren’t regularly changing minds and hearts with evidence-based data, case studies, and original research then your hospital, system, or IDN is at risk of failing.

You could have guessed it, the diseases found on theses physicians’ hands was astonishing and set in motion a change in the physicians’ behavior that in a very short time contributed to exceptionally high hand washing compliance by physicians at this hospital. What hapWith this said, no longer can we let wasteful and pened here: irrefutable evidence was presented to these physicians that couldn’t be ignored, denied, or talked inefficient practices stand. They must be challenged eveaway. This is what strong evidence can do for you, too! ry day to rid our healthcare organizations of unneeded and unwanted costs. We are now in a low margin busiToo often, department heads, managers, and ness where every penny counts. Keep this in mind when physicians will try to justify their costly, and sometimes, a department head or manager tells you that what he or irrational practices with double-talk. Make sure you she is spending on a certain product or service doesn’t have irrefutable evidence that shows that their current amount to a hill of beans. practice is outmoded, out-of-date, and needs to change.

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Do You Believe in Pink Elephants?

Neither do we!

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Find Out Where Your Organization’s Utilization Stands Today www.StrategicVA.com/UTILIZER.htm A Software-As-A-Service brought to you by Strategic Value Analysis in Healthcare, Skippack, Pennsylvania 27-Years as a Trusted Leader in Supply Value Analysis and Utilization Savings Strategies—Making Savings Easy for You! Volume 2/issue 1 Healthcare Value Analysis Magazine 6

From the Managing Editor’s Desk Paradigm Shift—Integrating Utilization Into Our Value Analysis Programs Robert W. Yokl

I know what you are thinking, “Paradigm shift really?” The 90’s are calling Bob and we want our progressive change phrase back. But all kidding aside, there is a major change happening with our healthcare world and the emphasis on even bigger and bolder savings opportunities are now required.

There is nothing wrong with how value analysis teams have been operating to date but we need to expand the focus of our teams if we are to capture this new, bigger, and more important savings opportunity - utilization.

The new model for value analysis teams will be a 40-2040 Model.

We have been reading about it in all the major supply chain publications - Utilization Management of Supply and Purchase Services is the next big thing in cost and quality management in our healthcare supply chains. Utilization is gaining acceptance as the next level of big savings in your hospital’s supply chain. The key challenge is bridging the gaps between current supply chain and value analysis programs to achieve the significant savings that utilization management can bring to your hospital’s bottom line.

The 40-20-40 Model is a new shift in how our value analysis teams must do business today. There is a 40% focus on new products, a 20% focus on contract conversions, and most importantly 40% on utilization.

This new shift in utilization is to revisit high dollar areas in which we have already contracted, implemented product changes, and/or fixed product problems. The savings ratio is too high not to integrate utilization into these major areas of our supply chain.

Most value analysis and supply chain programs and/or value analysis studies do, on occasion, find significant utilization savings on contract. The key to utilization management is finding ALL of the significant savings available to you in your supply chain instead of the contract you happen to be working on at the time.

What we are missing is how we turn the occasional “utilization finds” into a consistent system that complements your supply and value analysis program while bringing the major savings and quality results in the short and long term.

With a 40-20-40 approach you are not adding to your workload, you are shifting part of your focus to new areas. You need to formulate this shift by educating your value analysis team members, your management, and your clinicians to get them on board with the new utilization management challenge. Let’s face it, the days of fixing everything with a fancy contract change or price bid are pretty much over. We must now look inside our contracted products and services where the big savings dollars are hiding in the form of utilization misalignments, over-consumption, product mismatches, and feature rich products. Remember, you can’t find the savings unless you are looking!

Let’s face it, most value analysis programs are not geared toward finding utilization savings opportunities. They are very product centric with a major focus on facilitating new product requests and facilitating changes via contracting or product failures at our hospitals.

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Value Analysis News FDA Finalizes UDI System

Cerner, Epic Dominate EMR healthcare market

The U.S. Food and Drug Administration announced a final rule for the unique device identification system (UDI) to give an exclusive identifier for all medical devices. They are now requesting comments from the clinical community.

Why is this important to value analysis practi-

Chances are that if you work at a 200-bed hospital or larger, your hospital’s new EMR system is either Cerner or Epic, since they have captured three-fourths of the large hospital EMR contracts as reported by KLAS research.

If you are interested in how our industry is struggling with this issue (i.e., new EMR system) you can read the full report at Klasresearch.com/klasreports/#krms/48/0.

tioners? First, it will help you with your product What Do Medical Students Think About Their Future in Healthcare?

recalls since you will have a unique number to search for in your databases. Second, it will help you in the classification of your products in your MMIS and EMR system, since the FDA will provide you with a naming scheme and unique product numbers to catalog your products and then charge for them.

A new report conducted by Epocrates which surveyed 1,000 medical students in 50 states finds that: 

The Affordable Care Act will result in them practicing more preventative care, offering expanded patient coverage, but they will spend less time with their patients and lose clinical autonomy.



76% felt uninformed about the Act.



28% felt informed or somewhat informed about the Act.



Only 17% plan to go into solo or partnerships after their internships.



37% expressed dissatisfaction with the practice management training they received in medical school.

In addition, the FDA has mandated that manufacturers must show their lot or batch numbers, expiration date, and manufacturing date on their labels.

Manufactures of Class III or high-risk medical devices are required to comply within one year.

Class II or moderate-risk device manufacturers must comply within three years, and Class I or low-risk medical device manufacturers, if covered under this regulation, will have five years to comply.

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The Future of Supply Chain Expense Management is Now! “Every so often an idea, innovation, invention, and revolution appear in the marketplace that changes the game forever. We call these breakthroughs ‘Game Changers’ or the rules or variations that change the game enough that a new or different game emerges.”

Healthcare organizations are now facing big challenges in lower revenues, more patients and value-based purchasing to name a few. How can supply chain professionals meet these challenges when their price savings are slowly disappearing? The simple answer is Supply Utilization Management that can open up a whole >>>>>>>

Volume 2/issue 1 The

Value Analysis Magazine Future of SupplyHealthcare Chain Savings—www.UtilizerDashboard.com

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The Future of Supply Chain Expense Management is Now! new world of supply chain savings about utilization management”, not that you never knew existed. about price. Naturally, this was music to our ears, so we asked him why he No Longer a Theory believed this to be true.

Supply Utilization Management is no longer a theory or hypothesis. Our intensive research, comprehensive studies, and hundreds of client engagements over the last 15 years have proven beyond a doubt that Supply Utilization Management is a new disciple that all supply chain professionals need to master if their healthcare organizations are to continue to achieve double digit supply chain savings in the future.

It’s Time to Innovate A few years ago, we met for an introductory meeting with a new materials manager at one of our Utilizer® Dashboard client hospitals whom we have been servicing with our Value Analysis Analytic services for 10 years.

Better Time Investment

He then said that he had found, after decades as a materials manager, that it was a waste of time for him to haggle with his vendors to save a few pennies off his expense budget when The agenda for this meeting was for his GPO contracts achieve 98% of the us to demonstrate our Utilizer® Dash- savings available on price for his hosboard and talk about the value analy- pital. sis coaching and training we have On the other hand, if he invested the been providing under our subscrip- same amount of time in uncovering, tion service. However, this discussion investigating, and implementing his soon spun off in another direction utilization misalignments he could when this materials manager stated save hundreds of thousands of dolto us, without prompting, that supply lars a year. chain management today “is all

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Healthcare Value Analysis Magazine

The Rest of The Story This materials manager didn’t know us, our products, or our services before our meeting, but we found ourselves on the same page with him before the meeting was over.

It’s no surprise to us that more and more materials managers are thinking and acting the same way as this supply chain professional when it comes to reducing their supply chain expenses.

See The Light They are letting their GPOs do what they do best, reduce their acquisition cost, thereby freeing up their time so they can focus on utilization misalignments where their best supply chain savings opportunities reside.

Take Action If you, too, see your price savings disappearing, now is the time to request a FREE “test drive” of our Utilizer® Dashboard at:

UtilizerDashboard.com A Software-As-A-Service brought to you by Strategic Value Analysis in Healthcare, Skippack, Pennsylvania 27-Years as a Trusted Leader in Supply Value Analysis and Utilization Savings Strategies

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Feature Article

Robert T. Yokl

How Do You Define Evidence-Based Value Analysis In a World Of Many Truths?

Evidence-Based Value Analysis is a hot topic in supply chain circles, but what does it really mean? Generally, evidence means facts or information indicating that a belief is true or valid. The key word here is “facts” or proof that is reliable! Otherwise, why would you use it?

Reliable Proof We define reliable proof in a number of ways: empirical or observed, researched or investigated, and self-evident or obvious.

Let’s break these reliable proofs down one at a time:



Empirical

or

Observed:

This involves the accumulative effect of seeing data that consistently points to an anomaly in a product, service, or technology’s supply streams as compared to your peers or your own historical data. Examples could be using 10x your peers’ usage of floor gloves, or observing an increase of 27% in your floor glove usage in just one quarter without any increase in your census. We see this as reliable, evidenced-based proof that you have an opportunity to save money or improve your quality.

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Feature Article 

Robert T. Yokl

Researched or Investigated: These are the traditional, original published investigations that are performed by a trustworthy and unbiased source that has researched a product, service, technology or current best practice and discovered a new or better recommended best practice, validated the worth of a current best practice, or examined new modalities entering the healthcare marketplace.

James Russell described this methodology in his HVAM clinical value analysis article in our fall 2013 issue where he discussed how his hospital used published research to change their practice on sequential compression sleeves, which generated a significant ROI (return on investment) by converting from higher cost thighhigh sleeves to lower cost knee-high sleeves.



“Evidence means facts or information indicating that a belief is true or valid.”

Self-Evident or Obvious: If you observe with your “own eyes” that something is wrong with a current practice at your healthcare organization, and this practice is contributing to waste and inefficiency, then this is evidenced-based data you can use to make necessary changes. For instance, one of our clients observed that their emergency department had standardized on neonatal oxygen sensors at a higher cost than using adult oxygen sensors. This is a self-evident and obvious wasteful practice and should be changed.

These three definitions are the foundation of evidenced-based value analysis

and should be the anchor for all of your value analysis studies. If you don’t have data to reliably prove a case for change – why would you do it?

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Feature Article

Robert T. Yokl

Sources of Evidence The best sources for evidence-based information needs to be original research, unbiased research, large sets of data, and research relatable to your situation. Let’s review these sources in detail:



Original Research: Too often, we rely on compiled secondary research (i.e., research and analysis of other published studies) or even excerpts of research to base our value analysis decisions on. This can be hazardous to our value analysis studies since you are relying on second hand information to make your decisions. To avoid this prob-

“The best source of evidence is original research.”

lem, make sure you obtain the original research on all your VA studies to ensure you aren’t missing anything important!



Unbiased Research: Consider the source of your evidence. Then, discount, but don’t eliminate, any source that is being paid by a manufacturer who has performed a study. The research could be fair and accurate, but it certainly couldn’t be considered unbiased since it was paid for by a manufacturer who was hoping, praying, and paying for favorable results.



Large Sets of Data: Small studies that are limited to just one or a few subjects or observations can be too insignificant to be reliable. You need large numbers (the larger the better) to replicate the studies’ observations to ensure they are repeatable and accurate. Note: Double-blind studies, with large numbers, are the most accurate and reliable studies, but difficult to find in the hundreds of healthcare supply chain categories we buy day in and day out.

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Feature Article 

Robert T. Yokl

Relatable Research: If the published study you have found isn’t specifically designed and relatable to your situation, don’t use it. We have discovered that even research on comparable brands of products can be misleading. You need to be product specific to ensure the most relatable and reliable research.

Sometimes, we ignore the above criteria when searching out evidence to make our case, which can actually weaken our case if our customers perceive that our research is biased, flawed, or unreliable. Don’t make this mistake! Be careful in the selection of your evidence resources.

No Evidence What do you do when you have no evidence? Often times, there is no empirical, published or obvious evidence that a new product, service, technology or practice is reliable or proven to work. A good example of this happening is with a closed I.V catheter system that one of our clients was buying. We couldn’t find published research or another client of ours buying this system. As we saw it, our client’s options to obtain reliable proof on this product’s efficacy were as follows:  Discontinue the use of the I.V. catheter until published research is available, or…  Gather their own empirical data to prove manufacture’s claims In this situation, our client opted to gather their own empirical data to prove this I.V catheter’s efficacy since the infection control theory behind the closed system made sense to their nursing staff. This was an appropriate decision, since this hospital’s own experience favored more research before a final conclusion was made on this product.

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Feature Article

Robert T. Yokl

Better Information I was once told by a mentor of mine that any problem I had had been researched by someone who found the answer. All I needed to do was search them out. This is the same with evidence. You can either find a source that has already researched the area you’re interested in investigating, or by default, you can perform your own studies.

Either way, you are accumulating better information and data to make informed decisions about the products, services, or technologies you are buying. The bottom line: leaving your product, service, and technology selection decisions to chance, emotions, or opinions isn’t an option any longer! You need to make these decisions with reliable data!Θ

Isn’t It Time We Let Employees and Staff Know Just How Much of Your Hospital’s Money They Are Wasting?

No one at your hospital will admit that they are wasting your hospital’s money, but that’s just what happens every day of every week of the year. When we try to do something about it, we hear the following excuses:

   

“We can’t make changes that will risk patients’ lives.”

“We have been doing it this way for years, why change now?”

“I don’t believe the benchmarks, since we are different.”

“We are too busy to make any changes!”

These excuses are holding back positive change at your hospital. As Larry Miles (the father of value analysis) teaches, “These excuses have no validity; they’re horrible shadows, things to stop action, to resist change and improvement.” Larry goes on further to state, “It’s like saying that cost doesn’t matter.”

Who gives these people the authority to say cost doesn’t matter? To deny this fact is, as Larry states, an “example of careless, sloppy misstatement and careless thinking.”

We have found that the biggest reason for waste and inefficiency in hospitals is that it isn’t the customers’ money they are wasting. It’s like Monopoly money that doesn’t seem to have any meaning to your customers. To change this costly attitude you must raise your customers’ consciences so they Volume 2/issue 1

realize how much money their department and your hospital is losing by their non-actions.

We believe you need to show your department heads and managers the economic pain they are causing themselves and your hospital by their non-actions. We are able to do this by showing our clients’ department heads or managers our Utilizer® Dashboard graphic presentations of their waste and inefficiencies which jump off their computer screen. It’s very impressive.

They can’t believe what they see in the graphs, statistics, and trend lines they watch develop. This shows them how out of step they are with their peers. Just recently, we showed a hospital how their usage of underpads was 5x their peers’, which made their heads turn.

No one ever said that changing minds and hearts was easy, but it gets much easier to do when you can show your customers the economic pain (graphically) they are causing themselves and their hospital because of their non-actions.

It might not be your customers’ money, but it sure puts a guilt trip on them when they see how much money their hospital and their department is losing because of their wasteful practices. In some situations, it can be tens of thousands of dollars a year being lost. Now, that will get anyone’s atten-

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Clinical Value Analysis NONE OF US ARE AS SMART AS ALL OF US James Russell, RN-BC, Value Analysis Facilitator VCU Health System, Richmond, VA

One of the best things about being a Value Analysis Facilitator is the ability to help shine a light on other efficiency-minded folks in an institution. At the Virginia Commonwealth University Health System (VCUHS), some of the best Value Analysis ideas come from the front line staff that use and/or order our supplies. Encouraging the staff to be on the lookout for cost-saving ideas or standardization opportunities can reap great rewards for a Value Analysis program. The secret is to share as much credit for a successful outcome as possible, which encourages even more creative ideas to come.

Communications One way to prompt staff in general to contribute their ideas and observations is to publish a newsletter. The Value Analysis department at VCUHS publishes a newsletter quarterly that includes updates on the newest items added to formulary, interviews with various supply chain professionals, and stories about individual staff members who’ve made contributions to the Value Analysis cause.

A simple example of this process involved Lisa Cash, a Nurse Manager Support Assistant (NMSA) in the Surgical Trauma Intensive Care Unit (STICU). At VCUHS, NMSAs are indispensable members of the healthcare team who are often involved in Volume 2/issue 1

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Clinical Value Analysis

James Russell

Support Services departments to address concerns quickly. Having strategic people like this throughout an organization can help provide the Value Analysis department with many sets of eyes and ears, allowing small problems to be rectified before they become big ones.

One day, while in the supply room, Lisa noticed there were two different types of blood tubing on her shelves. They were from two different manufacturers, but appeared very similar. She challenged Value Analysis to figure out why she had “Coke” and “Pepsi” on her shelves, thinking that it wasn’t very efficient. Just this small query was

“One way to prompt

enough to set a project in motion. After exami-

staff in general to contribute their ideas and observations is to publish a newsletter.”

nation of the data, it turned out she’d discovered a bit of muda (LEAN terminology for waste).

It turned out that the hospital formulary had two different types of blood tubing through-

out the facility, but usually only one or the other in an individual department. After examination of each type of tubing by the experts in the Blood Bank Laboratory, as there were minor differences in the filter sizes, it was determined that standardization could occur to either item. One item cost 50% more than the other. VCUHS used about 10,000 of these items annually, with an 80% skew toward the more costly item.

The facility standardized to the lower cost item and realized an annual cost savings of $15,000. In the grand scheme of Value Analysis projects, this may not seem like a large amount. However, the fun part was giving Lisa the credit for the savings.

The qualitative ROI of publicizing and applauding her efforts was similar suggestions by other members of the hospital staff from all over the facility. Even more encouraging was the positive response to the entire process from all concerned.

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Clinical Value Analysis

James Russell

Respect For an individual staff member, to have an idea (or even a complaint) that is listened to, investigated, and followed up on, is a gesture of respect and a showing of appreciation for their concerns. For the Value Analysis department, it is a free resource of thousands of eyes to catch other opportunities to improve processes, reduce waste, standardize, and achieve savings. Not only is this a win-win situation…it is fun to reward folks for good ideas!

Recognition Value Analysis created an award (made a certificate from a Word template), bought a small gift card, and threw her a surprise celebration on her unit with her colleagues (and her

“Not only is this a win-win situation…it is fun to reward folks for good ideas!”

bosses!). A picture was taken and placed in the Value Analysis newsletter, extolling her exceptionally keen eye for detail. The quantitative Return on Investment (ROI) of Lisa’s keen eye was $15,000 in cost savings.Θ

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

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AHVAP Perspective

"We are eager to work together with AHVAP on the development of professional resources and events for members so they have tools to help drive organizationThe Association for Healthcare Resource & Materials wide goals.” Visit www.AVHAP.org or www.AHRMM.org Management (AHRMM) and the Association of for follow up announcements.

Healthcare Value Analysis Professionals (AHVAP) are pleased to announce a collaboration to develop and cross- Look for AHVAP at the Spring IDN Sumpromote education, information, and resources that will mit, April 7-9 in Orlando, FL. support clinical and supply chain teams in healthcare orThe AHVAP team will be led by President Dee Donatelli ganizations in their transition to new payment models. at the IDN Summit. AHVAP will be hosting a booth at the

AHVAP and AHRMM Announce Collaboration

There are clear synergies between the two organizations and the collaboration between AHRMM and AHVAP is intended to help members of both associations better prepare to manage new complex payment mechanisms and to meet diverse patient safety and quality goals. Representation from each association will sit on Education Committees to establish mutual and advanced learning opportunities that will be provided to the members of both organizations.

IDN Summit to share the knowledge and experience of AHVAP with all of the vendors and IDNs at the summit.

Dee Donatelli will be leading an Idea Exchange at the IDN Summit – “Clinical Integration Track: Trends in Clinical Initiatives.” Clinical integration is becoming pervasive, and recent research of more than 100 communitybased hospitals and health systems found that a full 77% of respondents said clinical integration initiatives are occurring in their respective markets. Yet, one of the most telling trends revealed by the survey is that a great deal of uncertainty exists among respondents about both the imAs the healthcare delivery model is undergoing a major pact of clinical integration networks and what is needed transformation, AHRMM is building the Cost, Quality, to achieve clinical integration success. and Outcomes (CQO) Movement, which calls for a more Learn from this group that conducted this research to holistic approach to the correlation between cost gain insight into the trends in clinical integration and bet(supplies, procedures, services), quality (patient care and ter understand how to improve financial margins with services provided, patient satisfaction, quality of care), clinical integration strategies. You’ll also hear from Life and outcomes (financial reimbursement driven by out- Care on how they were forced to focus their resources standing clinical care at the appropriate costs) as opposed during a difficult period by finding expense reductions to approaching each independently. Both AHRMM and utilizing improved clinical initiatives. Learn More Here!

AHVAP recognize that value analysis processes are essential to driving the CQO goals. "We are looking forward to AHVAP Rolls Out a New Website Design working collaboratively to advance our professions,” stat- for 2014 ed Dee Donatelli, President of AHVAP. "With so much to AHVAP website has been redesigned with a myriad of accomplish, together we can achieve a much greater im- new features and capabilities that will be rolling out throughout the year. Look for new levels of education, pact on CQO!” best practices, forums and How-To-Articles, Networking, "We are at a critical time to be able to expand supply and a whole lot more in 2014 from AHVAP. Visit the new chain and value analysis professionals’ influence and in- site today! www.AHVAP.org crease their impact on the overall success of healthcare organizations,” said Annette Pummel, AHRMM’s Chair.

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

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

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

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

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

Join or Learn More Today

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

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

WWW.AHVAP.ORG

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Leadership Interview Value Analysis Leadership Interview Dee Donatelli, Sr. Vice President, Provider Services, Hayes, Inc.

Dee Donatelli is the current President of the Association of Healthcare Value Analysis Professionals. She is also a Certified Material Resource Professional, Fellow of the Association of Healthcare Resource Material Management and an active member of AHRMM’s Education Committee (HVAM) Could you give us a little background on your history in healthcare and how you got into the supply chain and value analysis world?

(DD) I am currently the Sr. Vice President, Provider Services at Hayes Inc.; an evidence-based research and clinical outcomes company where I am responsible for providing innovation, leadership, and direction in the growth and expansion of products and consulting services in the provider sector. This includes providing the overall strategic and operational direction for research, development, and sale of new products and services. I started my healthcare career as a Registered Nurse and then a Director of Supply Chain more than 30 years ago.

Over the past two decades I had worked as a consultant focused in the areas of supply chain cost reduction and value analysis process improvement and redesign.

Before joining Hayes, I was Vice President of Performance Services at VHA, Inc. where I provided executive leadership and direction for VHA’s consulting services, including VHA’s Clinical Quality Value Analysis. I also was in a leadership role initiating clinical consulting at Owens & Minor as well as a manager at Cap Gemini Ernst & Young. I have degrees in social work, nursing, Volume 2/issue 1

and an MBA. I’m also a Certified Material Resource Professional (CMRP) and a Fellow of the Association for Healthcare Resource and Materials Management (AHRMM). And, I currently serve as president of AHVAP, the Association of Healthcare Value Analysis Professionals and sit on the Annual Conference Education Committee for AHRMM.

(HVAM) As you said, you are the current 2013/14 President of the Association of Healthcare Value Analysis Professionals which just celebrated the 10th Annual Conference in Scottsdale, AZ. What does it mean for an organization like AHVAP to pass such an important milestone?

(DD) It has taken less than a decade for an informal network of individuals dedicated to value analysis in healthcare to grow into an association of nearly 300.

Through this network we continue to provide education as well as resources and growth opportunities for members. With continued support and membership, the next 10 years will provide professional standards and credentialing. An association is only as strong as its members, and AHVAP is growing stronger every year.

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Leadership Interview (HVAM) As the President of AHVAP, the Voice of Healthcare Value Analysis, what are some of the important leadership messages and initiatives from AHVAP you would like to share with our readers?

(DD) If you are working in value analysis in healthcare you need to be a member of AHVAP since it is the only professional association representing value analysis professionals. As cost reduction mandates increase in healthcare, all hospitals, systems and IDNs must improve their processes. Value analysis is that platform for doing so. As the Association of Healthcare Resource and Materials Management focuses on cost, quality, and outcomes, value analysis is the process improvement tool to accomplish these initiatives.

In 2014, AHVAP will introduce professional standards, learning modules, and eventually credentialing for all healthcare value analysis professionals. AHVAP is and will become a strong voice to represent value analysis in healthcare and its professional membership.

(HVAM) Should healthcare C-Suite Leaders be treating value analysis on the same level as Lean Management, Six Sigma, CQI and alike?

(DD) Value analysis actually should be the platform upon which other process tools are maximized, such as Lean Six Sigma, etc. The question is, where should value analysis reside with hospitals and systems? Traditionally, value analysis has reported to supply chain, which for many organizations works well. However, with the increasing demands for higher quality and reduced cost, perhaps it is time for some healthcare organizations to re-evaluate where value analysis should report. With quality always paramount the need for clinical leadership is greater than ever. AHVAP supports the professionals dedicated to quality and outcomes and strives for cost effective management regardless of the place on the organization chart.

Volume 2/issue 1

(HVAM) Like any major discipline there are emerging subset best practices and systems such as Evidence Based Value Analysis and Utilization Management. Could you tell us how you think these new VA best practices will impact the Healthcare Supply Chain?

(DD) Gone are the days that a clinician can simply “demand” a new technology. As value analysis professionals, we must research and understand the clinical as well as financial impact these new and emerging technologies will have on our patients as well as our own institutions. AHVAP continues to strive to edu-

“Value analysis actually should be the platform upon which other process tools are maximized.” cate members on the best process approach to evaluate a request for new as well as review the continued need for current practice. The goal always should be on the best practice and outcomes in the most cost effective way.

(HVAM) What is your view of the future of value analysis in the healthcare industry today?

(DD) The future of value analysis has never been brighter. If a healthcare organization does not have a consistent, unbiased, process driven approach to buying anything they will likely not survive the rapid changes upon the healthcare industry. It is up to value analysis professionals to demonstrate the process improvement approach that value analysis can bring to their organizations, in an effort to survive the challenges facing us today and in the future.

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Leadership Interview (HVAM) Your firm is one of the industry leaders in Evidence-Based Value Analysis. What are some of the advanced strategies you are employing that you would recommend to your fellow supply chain and value analysis practitioners?

(DD) Hayes, Inc., is dedicated to providing unbiased evaluations of evidence. With this said, I believe as value analysis professionals we need to better understand the difference between evidence and information. Then, we need to educate others on this topic.

Far too often, I see healthcare organizations making decisions based upon information (much of which is very biased) or not taking the time to research the evidence at all. We must slow down the process, not stall it, but rather research it to make the best informed and evidenced-based decisions possible. It is time we have value analysis professionals lead the charge as patient advocates to question not only how we are making decisions, but why. Evidence is only one piece of the value analysis puzzle but, in my opinion, the basis upon which we make well informed and researched decisions.

(HVAM) What advice would you give a new Value Analysis Practitioner who just started in the field?

(DD) Good luck and join AHVAP, where other professionals can provide wisdom and support, since it is a jungle out there. You know the word “team” really stands for T-Together, E-Everyone, A-Achieves, MMore.

HVAM) What impact do you see AHVAP making on the healthcare industry in 2014 and beyond?

(DD) Networking, professional standards, education, and credentialing.

(HVAM) How do our readers learn more about or join AHVAP (Association of Healthcare Value Analysis Professionals)?

(DD) Go to our new website (www.ahvap.com), and then reach out to a member, and network, network, network. You are not alone. Make AHVAP your professional organization. Join a committee and become involved. You have much to offer and even more to gain. Θ

Top 5 Missed Savings Opportunities in the Hospital Supply Chain Today.

1.

Utilization Savings—The big savings are there but they are outside the comfort zone of many in our industry. We are still very price focused and it will take some time for our industry to recognize the big savings opportunity that is sitting right in front of us, ripe for the picking. The road less traveled may be the road that bears the biggest and best fruit!

2. Value Analysis Savings—We are missing out on value analysis savings every day because of a multitude of reasons, but the top reason is because we focus too much time on new products and services and not enough time on looking at our long term product categories that we purchase year in and year out.

3. Purchase Service Savings—Many in the healthcare supply chain feel that this is not their job, but as the resident purchasing and value analysis experts at our respective organizations we must become more involved in these huge dollar expenditures or our organization will continue to lose big dollars without our expertise. Value Analysis and Supply Chain best practices can and should be applied to purchase service contracts for big results.

4. Reusable—We have an aversion to using the reusable, yet in our daily lives we use reusables everywhere. If you have a solid sterile processing department, why not utilize reusables wherever possible. If your manufacturer sells them then they are a viable option that should be part of your product evaluation/value analysis studies.

5. Reprocessing—This is catching on at many organizations throughout the country but even when you start with a reprocessing program it takes a lot of discipline to maintain the compliance levels once you have achieved them.

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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 A Software-As-A-Service brought to you by Strategic Value Analysis in Healthcare, Skippack, Pennsylvania

Volume 2/issue 1 Healthcare Value Analysis Magazine 25 27-Years as a Trusted Leader in Supply Value Analysis and Utilization Savings Strategies—Making Savings Easy for You!

Value Analysis Success Story Why Do We Need VA Teams To Be Successful?

Gennifer Baker, MSN, RN, CCNS, Director of Nursing Practice & Lori Wilson, CMRP, Director of Materials Management, HHS, Decatur Morgan Hospital

Although most healthcare organizations have value analysis teams or committees, did you ever consider disbanding your teams or committees for another value analysis model? This was the decision that Huntsville Hospital Health System (HHS), a community-based 941-bed health system located in Huntsville, Alabama, and the fifth largest publicly owned not for profit health system in the nation, made about three years ago to create more cost savings, less hassle, and better outcomes.

New VA Model This wasn’t a shoot from the hip decision, but a strategic decision to obtain more buy-in, cooperation, and evidence-based decision making from HHS’s clinical staff. Prior to this new value analysis model, HHS’s multi-disciplined value analysis team met regularly to review and approve new product requests. Often times, many of HHS’s value analysis committee’s buying decisions were influenced by price. Creating a review process that analyzes cost AND clinical value produced not only better financial outcomes for the organization but better clinical, safety, and quality outcomes for the patients and staff.

Under HHS’s new value analysis model, no longer would highly paid staff members need to sit through long meetings that often were ineffective, time consuming, and counterproductive. >>> Volume 2/issue 1

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Value Analysis Success Story This was a situation where decision makers were possibly guiding practice outside of their scope of expertise. Under HHS’s new value analysis model one of two actions would set a meeting in motion. Either purchasing would need a clinical/nursing review or nursing would need a purchasing review. At this point the Director of Materials Management, serving as the Value Analysis System Coordinator, and the Director of Nursing Practice would facilitate the appropriate action on a case-by-case basis.

“Under HHS’s new value analysis model, no longer would highly paid staff members need to sit through long meetings that often were ineffective.”

Typically, this would mean that the Value Analysis System Coordinator and Director of Nursing Practice establish an ad-hoc team of stakeholders and experts who either touched, had insight into, or trained staff on the proposed product and who would now evaluate the appropriateness, effectiveness, and relative value of the new product and/ or address their clinicians’ concerns about an existing product.

For example, HHS’s Value Analysis System Coordinator recommended a lower cost central line dressing kit she believed was a functional equivalent to establish standardization compared to the high price kit the hospital was using. This proposed kit was without the bells and whistles their clinicians were accustomed to. The Director of Nursing Practice, agreeing that this seemed like a good idea, formed a central line dressing kit ad-hoc team represented by stakeholders and experts of this product line.

The Director of Nursing Practice requested that those attending the meeting, “Bring your evidence to the table and leave your opinion at the door.” After much discussion, negotiations, and peer review, the clinicians in attendance were able to value-justify the change. We must admit that everyone wasn’t happy, but all left the meeting satisfied with the outcome that had been validated by the clinical evidence and trending results over time.

“Bring your evidence to the table and leave your opinions at the door.”

Big Picture It should be noted that the value analysis program at HHS is not a stand-alone process. It is organizationally linked to HHS’s hospital-wide task forces (i.e., operating room, cath lab, quality, etc.), which HHS’s chief supply chain officer sits on.

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Value Analysis Success Story These task forces, acting as steering committees, give guidance to the value analysis process, assign projects to it, and coordinate numerous value analysis projects for the Value Analysis System Coordinator and Director of Nursing Practice.

“No time is wasted on non-essential meetings or costly multidiscipline VA Committee Meetings.”

Looking at the bigger picture, the value analysis process has also coordinated projects with HHS’s nine affiliated hospitals, such as, patient charge system, sharing product success, trade show, and peer to peer interaction. One such project was to encourage field trips between HHS’s clinicians and their affiliates’ staff to share their best practices, which we hope to expand over the next few years.

Evidence-Based Was this a good decision to change our value analysis model? Well, let’s look at the evidence. Although our value analysis model is different from many other hospitals and systems, we still look at the cost, quality, safety, and above all else, hard evidence before making any and all product decisions.

We also have greater buy-in and cooperation from our clinicians since they are making the decisions on what products they will use. This process has also created greater awareness for our nursing staff of what things costs, how they are employed, and what options are available to them.

It also has provided quicker decision making without twisting arms. In addition, no time is wasted on non-essential meetings or costly multidiscipline VA committee meetings.

“Financially, our savings have escalated by 10% to 30% overall since we changed our value analysis model!”

Surprisingly, most of our agenda items can be handled with virtual meetings or just e-mail correspondence. Financially, our savings have escalated by 10% to 30% overall since we changed our value analysis model! And very few backdoor requisitions are floating around our hospital or system. This then has created even greater compliance to policies and procedures which has been a bonus for our VA process.

Yes, we would say the change in our value analysis model was worth the time and effort we have put into HHS’s new VA model. However, it might not be right for every healthcare organization, but you will never know unless you try it. That’s what VA is all about - experimentation until you get it right!

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Value Analysis Teams

Robert T. Yokl

Who Should Be Your Value Analysis Team Leaders?

Individuals need to be selected for their expertise and leadership qualities

We are seeing more and more healthcare organizations that are selecting their department heads and managers to lead their value analysis teams. Why? Because these individuals bring the expertise and leadership qualities to maximize your hospital’s value analysis goals and objectives in any given year. But there is more to this story…

Why Not Supply Chain?

If this is the trend in healthcare today, then where does supply chain management fit into this picture? In the old value analysis model, supply chain ran the show, but those days are behind us. We now need to give ownership of our value analysis programs to our department heads and managers, since they control their budgets – we don’t! They can make saving happen – we can’t!

They actually use the products – we don’t!

This doesn’t mean you give total control of your value analysis program over to your department heads and managers, but instead delegate some of your authority to these individuals to make savings and quality improvements happen. It’s a balancing act that works best when supply chain professionals take on the new roles of facilitators, coaches, and trainers for your value analysis teams. Here’s how it works.

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Value Analysis Teams

Robert T. Yokl

Instead of leading your value analysis teams yourself, you select a department head or manager to lead your teams. If it is a clinical team it would be led by a clinical department head or manager, and nonclinical teams should be led by a nonclinical person. Then it is you and your staff’s job to facilitate these team meetings.

Tip:

Another good technique that we have successfully

employed for years is to make sure your team leaders don’t have ownership over the commodity team they are managing.

For instance, you wouldn’t select an operating room director as team leader for an operating room team because they will protect their turf. It’s just human nature to do so.

By facilitate, I mean you provide all the help your team leaders need to get this hard work done. It could be helping to prepare agendas, clarifying issues, keeping track of savings, assisting with analysis, etc., everything and anything that can move your value analysis agendas forward.

Coaching Works The most important new role for value analysis professionals is to coach your team leaders and team members on a just-in-time basis to improve their performance. For instance, when a team member is off track on their project, you need to take on the responsibility to coach them through the issues that are holding them back from completing their study.

It could be that the team member doesn’t know how to approach a customer with their savings proposal or they have been shot down the first time they talk to a customer about changing their practices. It’s your job to give them advice and guidance to breakthrough their impasse. This is where you can be the most help and influence in the success of your value analysis teams.

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Value Analysis Teams

Robert T. Yokl

Too often, the real problem is that team members don’t know where to get started on their projects. This is where you can be most helpful in showing them a path to take from beginning to end. That’s why it is so important to have a defined value analysis process for your team members to follow so you know when they are on track or when you need to have an intervention.

Need Process As I just mentioned, coaching works best when you have trained your team leaders and team members in a defined value analysis process. This way you know

“Coaching works best when you have trained your team leaders and team members in a defined value analysis process.”

when a team member is off course and needs your help.

We call our value analysis methodology the 6-Step Value Analysis Funneling Process which provides the value analysis team members that we train with a beginning, middle, and end to their value analysis study. There is no wiggle room on what a team member is responsible for when they start their value analysis project.

We find even with a defined VA process team members can get off track easily. That’s why we have value analysis software to monitor what team members are doing so we can intervene and get them back on track. I remember a VA project manager for lab supplies who wanted to take trips to other hospitals to see what they were doing with their lab supplies; that was nipped in the bud when we saw what she was proposing, since this was way beyond the scope of her study. We wouldn’t have known this fact if she didn’t have a defined value analysis process to follow, which we were monitoring.

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Value Analysis Teams

Robert T. Yokl Training Works In addition to facilitating and coaching, your next most important job is training your team leaders in your team protocols and value analysis process. Why is this mission critical for your value analysis teams? Because everyone thinks they know how to save money – but in reality, they don’t!

We have a two-day VA training program to teach our value analysis methodology to our clients’

team leaders and team members, and from time to time some students still don’t get it. That’s why we continue with just-in-time training sessions (individual and group) when we discover what our students missed, misunderstood, or ignored in our classroom training.

When you understand that value analysis begins and ends with training, your facilitation and coaching job will become much easier, since everyone will get it and you can take your hand off the throttle a bit.

If you don’t have a VA training program now, you are limiting your team’s success, because even the simplest tasks can be done better with extensive professional training.

New World I hope that I was able to convey to you with these observations that there is a new world of value analysis that we have entered into in the 21st century that requires new roles for value analysis practitioners (facilitator, coach, and trainer) to be successful. This is a

“If you don’t have a VA training program now, you are limiting your team’s success.”

world where you take a back seat to your department heads and managers, but don’t lose control of your value analysis outcomes.

Feel assured that you are still responsible for the success of your value analysis program, but the strategies and tactics you employ today to make savings happen with value analysis need to be more in tune to participating management than the supply chain command and control model we have been employing in yesteryear. It’s new, different, and yes, more successful!Θ

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The Ultimate Supply Chain Radar System!

Missing Utilization Savings Opportunities Can Do Damage to Your Bottom Line if Not Detected!

FINDING THE NEXT LEVEL OF BIG SAVINGS DOESN’T HAVE TO BE DIFFICULT WITH THE RIGHT SYSTEM TO DO THE HEAVY LIFTING FOR YOU!

IV Sets

Lab Test Kits

SCD Sleeves Exam Gloves

Hand Soaps

Blades & Burrs

Office Supplies

Transcription Pacemakers

Endomechanical Closers

Oxisensors

Patient Warming

ISO Gowns Anesth-Spinal

Defib Pads

Davinci Robot Supplies Laundry/Linen

Electrosurgical Supplies

Lab Reagents

Coronary Stents

Ablation Catheters Urologicals

Orthopedic Softgoods

Skin Prep

IV Catheters

Grafts & Tissues

Telecom Services

Respiratory Masks

Infection Control Wipes Neurostimulators

LET US SHOW YOU HOW EASY THE NEXT GENERATION OF BIG SAVINGS CAN BE WITH A FREE “NO OBLIGATION” TEST DRIVE OF THE LEADING SUPPLY UTILIZATION MANAGEMENT SYSTEM IN Volume 2/issue 1 HEALTHCARE TODAY!

www.UtilizerDashboard.com

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Value Analysis 101 (Basics)

Robert T. Yokl

Functional Matrix Can Make Your VA Job Much Easier You need to know what your customer is looking for in new products

We might not realize it, but value analysis has a 70-year history and during that time value analysis practitioners worldwide have developed new tools to help their colleagues to improve the outcomes of their value analysis studies. One of the most powerful tools we have developed to improve our clients’ value analysis studies is a FUNCTIONAL MATRIX. A functional matrix helps healthcare organizations functionally analyze bundled products, compare functional alternatives, or evaluate new requests from their customers.

Functional Approach Function is what a product, service, or technology does to make it useable. A vacuum cleaner’s primary function is to “collect dirt”, a pacemaker’s primary function is to “pace heart”, and so on and so forth. A secondary function is what a product, service, or technology does in addition to its primary function, and an aesthetic function (or feature) is nice, pleasant, and desirable, but not always functionally required to get the job done.

These are the basic constructs of functional analysis by which you can easily dissect bundled products, compare alternatives, or evaluate new purchases, as we have done in figure 1 on the next page with a pacemaker functional matrix by comparing competitive products that one of our clients is now buying. Note that pacemaker #1 and #2 are functional equivalents, meaning that they are exactly the same.

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Value Analysis 101 (Basics)

Robert T. Yokl

Figure 1: Pacemaker Functional Matrix (Note: Data provided is hypothetical, and doesn’t reflect actual pacemaker pricing or specifications)

MfG.

Product #

Cost

Primary Function

Secondary Functions

Aesthetic Functions

Pacemaker #1

900234

$5,000

Pace Heart

None

1.

6.4mm thin

2.

Action Protection Interval

3.

Auto Sleep

(Single Chamber)

Response Pacemaker #2

222-456

$5,990

Pace Heart

None

(Single Chamber)

Pacemaker #3 (Dual Chamber)

X7554

$5,395

Pace Heart

None

1.

6.4 mm thin

2.

Action Protection Interval

3.

Auto Sleep Response

1.

Modes Switching

2.

Event Recorder

3.

Switch Lead Polarity

Best of all, our hypothetical hospital can save $990 on each pacemaker they implant if they standardize on pacemaker #1 vs. #2 since, as I said, they are functional equivalents. Do you see how easy it is with a functional matrix to determine if you are duplicating products in your formulary or if there are lower cost alternatives to what you are buying now?

Bundled Products One of the most difficult areas to identify savings opportunities is with bundled packs and kits. However, it can be much easier to do so if you employ a functional matrix to analyze the components of your packs and kits, as we have done with an OB pack (figure 2) to determine savings opportunities. First, you will note that 86% >>>>>> Volume 2/issue 1

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Value Analysis 101 (Basics)

Robert T. Yokl

of the pack’s cost are in just two items (overwrap table cover and setup table cover).

This is where you should spend your time looking for lower cost alternatives for these two items. It doesn’t matter that there are other items in the pack. THIS IS WHERE YOUR SAVINGS RESIDE! Any additional time spent evaluating the other items in the pack would be disadvantageous.

Figure 2: Disposable OB Pack Functional Matrix Components

= 86%

Cost/%

Primary Function

Secondary Functions

Asestic Functions

Overwrap Table $3.50/43% Cover 44” x78”

Cover Back Table

Cover Pack Contents

Ziploc Bag

Setup Cover

3.50/43%

Cover Back Table

Cover Pack Contents

Ziploc Bag

Absorbent Tissue Towels

1.00/14%

Absorb Fluids

None

Tissue Separators

14” x24” Total:

$8.00/100%

Two New Rules To sum up this lesson on functional matrixes, we would like to recommend two new rules for you to follow when you are evaluating new or existing bundled products, services, or technologies, as shown in detail in figure 3 on the next page.

You will note that the graphic lists the two new rules and also gives examples of products that fall into these categories of purchase to assist you in deciding when to employ a functional matrix.

This technique will enable you to evaluate and then search for lower cost alternatives on these products and others. The list is not all inclusive, but we feel it is a good starting point to give you a feel for how the rules will work at your own healthcare organization.

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Value Analysis 101 (Basics)

Robert T. Yokl

Figure 3: New Rules for Utilizing Functional Analysis

Make Your Job Easier The goal with this lesson was to make your value analysis job easier with a new value analysis tool that we have used for over two decades to help our clients get better at functional analysis.

As you know, sometimes all it takes is one new tool to up your value analysis game. Trust us when we say that this one new tool can help you make a giant leap forward in your value analysis savings initiatives. Try it – you will be surprised by the outcome!

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Why Is Everyone and Their Grandfather Now Offering Purchase Service Expense Reduction Services?

Because It Is Easy Savings for Them to Achieve While They Charge You a Big Dollar Percentage of Savings Stop Giving Away Your Hospital’s Money in Outrageously High Contingent Fees and instead go with a low cost Software-As-A-Service that gives you the big savings and support you need to achieve and sustain your Purchase Services for the short and long term. This should not be a one-time event!

BenchPlus™ Purchase Service Utilization Manager Is Your Low Cost Solution to Managing the Complex High Dollar Purchase Service Spends Pinpoint Savings Fast - High ROI - Proven Savings Implementation Support No Contingent Fees - Reliable Best in Class Benchmarks Strategic Value Analysis in Healthcare

Start Today by Finding Out Where Your Purchase Service Utilization Savings Reside

27 Years as a Trusted Leader WWW.BENCHPLUSMANAGER.COM in Supply Value Analysis and Volume 2/issue 1 Utilization Savings Strategies Healthcare Value Analysis Magazine 1-800-220-4274 38

Value Analysis Analytics

Robert W. Yokl

Keeping Value Analysis Analytics Simple Less is more when it comes to telling a story with your analytics reports

I cannot tell you how many meetings I go to and make my key points with just one or two slides for an entire spend category of purchase. My customers get it, their senior management gets it, and their doctors get it as well.

In this world of highly visual analytic software and reporting capabilities it is very easy to fall into what I call the “Esoteric Trap”. The Esoteric Trap is the mindset that our co-workers, colleagues, and bosses get when they think of the term “analytics”, or in our case, value analysis analytics. They think we have to have this super robust series of charts of all kinds to make our points to our evidence requesting doctors and clinicians. They believe that we need to wow them with these esoteric charts that tell them anything and everything under the sun, when that is just not the case.

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Value Analysis Analytics

Robert W. Yokl

When you understand the value analysis analytics world more succinctly it is getting the most out of the least amount of charts in order to make your business case for change. If I show a chart that can tell me where exactly a hospital stands on their cost per davinci robot supplies per case and then follow that slide up with a benchmark chart of where they stand with their peers, right away my client hospital realizes that they are way over the benchmark cohort curve and are doing something majorly different in either managing their costs or managing the procedures that are using the davinci robot.

The example above is in simplistic terms, a simple example that takes a very esoteric machine, the davinci robot, and isolates the instruments utilized into a simple calculation for the surgical management and doctors to see where they stand. Up until they engaged us, they were not tracking this cost and basically thought of the davinci as a loss leader in many respects because from a marketing standpoint they had to have it. Just because you have to have it and it may incur some losses does not mean that you should totally disregard the cost per procedure on these highly expensive instrument attachments.

Value analysis analytics is about making the key business points for change use the least amount of reports or slides to support your business case. Less is more with VA analytics.

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Utilization Management

Robert W. Yokl

The New End Game!

Life cycle cost is the forgotten goal of all our cost and quality challenges

Every day we hear about all the latest and greatest new strategies, software, tools, and contracting methods that overwhelm us in our supply chain jobs. Granted, we still have to maintain our operational effectiveness while pursuing these new and maybe risky methods in order to move our supply chain organizations forward. So what are we really striving for?

Where is

this game going?

The End Game The end game is really to bring the highest level of quality and optimum life cycle cost to our healthcare organization with the products and services we are purchasing. Did you say, “life cycle cost”? Yes, life cycle cost is one of the most ignored cost management strategies in healthcare today. Its definition is to obtain the most value (i.e., quality, service, and total cost) from a product or service’s useful life.

Simply stated, we must maximize every dollar spent on each and every product or service we are consuming. If, for instance, an IV set tubing can last 72 to 96 hours by its own manufacturer’s specifications, why are we changing the tubing every 48 hours? If one patient bathing system pack is made to bathe one patient, why are our nurses bringing two or three packs into a room? If we purchase examination gloves to meet clinician specifications, why are we giving clinical grade examination gloves to our housekeepers, dietary staff, and other support service staff at a 23% premium?

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Utilization Management

Robert W. Yokl

Price at the Pump Everyone is spending so much time on price at the pump strategies that we fail to recognize that we are spending little or no time looking at the life cycle cost of the products and services we purchase on a daily basis. A simple example of this trend is a client of ours who signed a new pulse oximetry contract with the lowest level of neonatal pulse oximeter vs. the mid to high range pulse oximeter that costs 35% to 45% more.

On the surface, it would appear that the hospital’s contract administrator achieved a sound contract for this commodity with the best price, standardization, and 100% contract compliance along with the value analysis committee’s approval. Win-win for all, right? However, after

“Everyone is spending too much time on price at the pump strategies.“

the price at the pump was achieved and the new contract was implemented, the job of the contract administrator was done, so they then moved on to the next contract to be renewed. But what happened with this product’s life cycle management?

Unintended Consequences What ended up happening was a failure of the selected oximeter in the new contract that caused an estimated one pulse oximeter per neonatal patient per patient day to jump to 6-8 pulse oximeters per neonatal patient day. Yes, that is a 700% overspend! Luckily, this hospital was tracking their utilization costs with a dashboard on all their major commodities and found that they were over their set benchmark on their neonatal pulse oximeters and they needed to look into the issue.

After a thorough investigation, this hospital found that the low cost oximeters they had specified in their contract were not sticking to their neonatal patients, thus

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Utilization Management

Robert W. Yokl

not getting the proper readings on their patients so the nurses would end up replacing the pulse oximeter on the patients - every day.

Here was the simple solution to this costly problem; the hospital replaced their low cost oximeters with higher cost pulse oximeters (that cost 35% more at the pump) which had better adhesion. They also opted in to an oximeter reprocessing program which saved them even more money.

The end game for this hospital was that they reduced their pulse oximeter total costs by over 60% with a higher quality oximeter because they were focused on the oximeter’s life cycle cost vs. just price at the pump. They also expected another 8% to 19% savings on their reprocessing program once it was implemented, for a combined total life cycle savings of 68% to 79% overall, which had nothing to do with price!

Bottom line The bottom line: We need to realize that our job does not stop at the price at the pump. We now need to also manage the entire life cycle cost of the products, services, and equipment that we purchase. Further, we must employ systems to help us track not only the price and the spend of a commodity, but also their actual utilization as it correlates to patient centric volume indicators tied to metrics. Then, and only then, will we be able to put our finger on every cost overrun, mismatch, or life cycle imbalance in our customers’ utilization.

Isn’t it time we start to pay close attention to our product and service life cycle costs, instead of just focusing exclusively on the price at the pump?

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BREAKTHROUGH GAME CHANGING BOOK IS YOURS FOR FREE! THE FUTURE OF SUPPLY CHAIN MANAGEMENT IS ALL ABOUT UTILIZATION!

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Volume 2/issue 1

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Value Analysis Magazine

44

Benchmarking

Robert T. Yokl

How to Become Best-of-the-Best in Everything You Do Understanding your healthcare organization and that of your competitors

How do you know if your people, products, and processes are world class or just so-so? How do you know if there is more savings available in your supply chain expenses? How do you know when you have squeezed the last dollar out of a specific supply chain expense category? This is the essence and foundation of benchmarking: Understanding your healthcare organization and that of your competitors.

Awareness All improvements, of any kind, come about through the awareness that there is a better way to do things. This mindfulness can be manifested through observation, prior experience, or benchmarking. However, since our observations and experience is always limited to where we have worked before this leaves a lot of gaps in our knowledge about what has proven to work best in any situation.

This is where benchmarking (i.e., the search for best practices) comes into play.

It fills our knowledge gaps by measuring how our competitors are managing their people, products, and processes much better than we are doing. For instance, we are observing that hospitals with the lowest per patient day for examination gloves have returned to vinyl gloves as their best practice. Do you know this is an emerging best practice?

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Benchmarking

Robert T. Yokl

I can assure you that if you aren’t benchmarking your examination glove usage per patient day (and all other commodities that you purchase) against your competitors’ cost per patient day, you wouldn’t be aware of this fact. By the way, benchmarking isn’t just comparing metrics with your competitors, it is thoroughly understanding the current practice that your benchmark partner is employing to manage their cost.

Be Proactive Being the best-of-the-best in all phases of your supply chain operations requires you to proactively benchmark almost everything you do. By this I mean that all of your cost drivers (people, products, and processes) need to be monitored and controlled continuously. This might seem like an impossible challenge, but now can be easily accomplished with the power of technology.

For instance, using our technology, we benchmark 294 categories of purchases for our clients on a quarterly basis, along with their pricing and inventory turns. We then create a dashboard where our client can monitor and then control

“Benchmarking isn’t just comparing metrics with

their supply chain expenses.

your competitors.”

We also trend and track all purchases, quarter over quarter, year over year, to identify unfavorable utilization patterns that should be investigated. Just recently, we discovered that one of our client’s patient bathing system’s usage per patient day (CMI adjusted) had jumped 39.7% over a two year period, representing a negative change of 126k in increased cost on just this one commodity. Just think of how many commodities you purchase in which the usage has escalated over time, without you knowing it! This is a best practice you too should think about, if you want to be best-in -class in your supply chain operations and your value analysis studies.

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Benchmarking

Robert T. Yokl

Know Your Operations To effectively benchmark, you need to know your supply chain operations and then assign a metric or measurement to your current process or product to enable you to compare it to a competitor’s metric.

A good example of this concept is the office supplies you are buying. It’s been our experience that most hospitals don’t store office supplies in their storeroom. Instead, they have their department heads requisition directly from their office supply vendor (usually electronically) on an as needed basis. If this is your situation too, then we now understand how you buy your office supplies at your hospital which is the first step in developing a benchmark.

Next, you need to develop a metric to measure the cost implications of your current office supply process if that is your benchmarking goal. We have used the metric FTE/Annual supply expenses for this purpose for the last 17 years with great suc-

“To effectively benchmark, you need to know your supply chain

cess. Let’s hypothetically say that your FTE/Annual supply expense is $135 per FTE. Now, you have a metric to measure against your competitors’ cost.

Know Your Competitors Now that you understand how your hospital buys office supplies and have developed a metric to measure your performance, you need to search out benchmarking partners (at least three at a minimum) to help you search for best-in-class office supply buying practices.

One of the secrets of this process is to search out organizations you believe from your research are on top of their game. Your office supply vendor should be able to introduce you to some of their customers who fit this definition. They might Volume 2/issue 1

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Benchmarking

Robert T. Yokl

Once you have selected and have an agreement with your benchmark partners, which should include sharing the findings of your benchmarking study, you now need to develop a questionnaire. The questionnaire would confirm the method employed by your benchmark partners to buy office supplies, their FTE count, and annual office supply expenses. You also need to ask your partners what they include in their office supply expenses (e.g., furniture, toner, paper, etc.) so you can compare apples to apples.

The examples given herein were for clarification purposes only, since benchmarking is an art, not a science. You need to practice it over and over again to really get good at it. It’s like learning any new skill - the more you practice, the better you

“The whole purpose of benchmarking is to reach superior performance.”

get.

Superior Performance The whole purpose of benchmarking is to reach superior performance or a point in time where you feel you are the best-in-class in some operational area.

Then move on to new areas of benchmarking, especially if an area has been problematic, costly, or challenging for you or your hospital.

Looking to Advertise in Healthcare Value Analysis Magazine?

Contact us for more information and rates 1-800-220-4274 or Email—bobpres@valueanalysismagazine.com Volume 2/issue 1

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

Clinical Departments are Not Cost Management Adverse Clinical departments are not cost management adverse.

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

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

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



No More Guessing Where Utilization Savings Are Hiding in Your Clinical Departments

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Goes Beyond Supply Budgets to the Actual Utilization for Each Department by Major Supply Category

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Drill Down to the Exact Product that is Causing Your Utilization Cost Overrun

Sign Up for A FREE Test Drive Today of the Clinical Department Utilization System

www.ClinicalSupplyUtilization.com A Software-As-A-Service brought to you by Strategic Value Analysis in Healthcare, Skippack, Pennsylvania Volume 2/issue 1

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27-Years as a Trusted Leader in Supply Value Analysis and Utilization Savings Strategies—Making Savings Easy for You!

The Last Word

Meeting the Challenges of Reform Through a Stronger Value Analysis-Supply Chain Partnership

By Michael B. Neely, Senior Vice President, OptimĂŠ Supply Chain

Healthcare reform has placed providers of care under intense pressure to reduce costs and improve operations. Value Analysis teams and Supply Chain are among the most important players when it comes to improving the efficiency of care. So why are there so many examples of not being in sync?

Too Busy?

Is it because Supply Chain leaders perceive themselves as too busy to attend Value Analysis meetings after the low-hanging fruit and/or bigger savings opportunities have been addressed? Do they see their role as complete and pass on to the lower-level individuals within their department the Value Analysis support role? If that is the case, and I hope it is not, these leaders are missing significant opportunities to build the reputation and promote the importance of the supply chain within their facilities.

Do Value Analysis leaders see their role as primarily clinical in nature and thus don’t believe supply chain can or will be instrumental in the achievement of recognizable savings? Do they not recognize the complexities of the flow of materials through their facilities? Or, do they believe that once a decision is made to switch a product or implement a new process, Supply Chain is not essential to carrying out the change?

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The Last Word

Michael B. Neely

I think we can all agree that in any organization where the Value Analysis process is well established under appropriate guidance and internal support, savings have become more difficult to identify and implement. This is a natural progression, but it can cause the VA team and its Supply Chain supporters to lose focus and become less effective, especially when the demands and the routine of team members’ “day jobs” are constant and time consuming. It is why the team must be consistently motivated and rewarded.

Motivation Part of that motivation should include regular reminders of what made Value Analysis so necessary and effective in the beginning, and why it remains such a core function of organizational success. Recharging the Value Analysis process is a two-step solution. You need to take advantage of and implement process control and time-saving technology. Then you should focus on non-traditional spend areas, such as purchased services, where hard-to-achieve but significant savings are possible.

Each of these steps is elucidated below, but both require Supply Chain and Value Analysis leaders to become re-engaged and energized in a joint effort to improve the performance and results of the Value Analysis program. One means for doing so may be to take advantage of the motivational thinking behind the Association for Healthcare Resource & Materials Management’s Cost, Quality and Outcomes (CQO) Movement, which provides a

“Recharging the Value Analysis process is a twostep solution.”

holistic view of the correlation between cost (of services, products, supplies, etc.), quality (of patient care, services provided) and outcomes (patient safety, well-being, experience, and satisfaction) as opposed to viewing each independently. There are many resources within the CQO movement that will help drive home the notion of the importance of Value Analysis in the future success of the organization’s ability to deliver high-quality care in the most cost-effective manner possible.

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The Last Word

Michael B Neely

Time-saving Technology The projects and the teams managed by the Value Analysis leader are often complex and multi-faceted, going in multiple directions over long timeframes and involving a lot of information. Tracking the status of the various projects and their outcomes is essential in order to prove the

“All too often, teams struggle and savings are missed or not reported in a timely manner.�

value of the initiatives being pursued. That’s the responsibility of the Value Analysis leader, but the Supply Chain leader also plays a significant role as owner of much of the information that needs to be tracked.

All too often, teams struggle and savings are missed or are not reported in a timely manner because the tools being used to manage projects are inadequate. To attempt to manage these efforts utilizing paper

forms

and

Excel

spreadsheets is very timeconsuming and open to mistakes.

Fortunately there is technology available to assist in this effort, technology that will bring rigor and consistency to the value analysis management process. It provides a single site repository for all information related to the tracking of multiple projects to include: Real time updates to meeting minutes and project status updates, evaluation and trial process documentation, product information, and links to company and industry information are all available to multiple users. A sample view (figure 1) of tracking software is included on the next page.

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The Last Word

Michael B. Neely

Figure 1: Sample view of VA tracking software

Non-traditional Savings Projects Once the traditional product pricing and utilization opportunities start to diminish and reporting of savings starts to slow, Supply Chain and Value Analysis leaders need to look harder and deeper into the workings of their facilities to find other opportunities.

This can be done in a number of ways, but the easiest is to follow the money trail by requesting Finance to produce an accounts payable report by cost center and vendor, starting with the highest spend areas, to find the biggest potential savings.

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The Last Word

Michael B. Neely

You will typically find significant dollars of spend that are often overlooked because they are not traditionally product driven and not under the purview of Supply Chain or Value Analysis. You will also find that much of this spend is contractual or service oriented in nature and is being controlled by individual department heads.

Some of the challenges include:

 Department heads feeling threatened by oversight.  Contracts often contain multiple issues; evergreen renewal clauses, vague or non-effective terms and conditions, no performance measures.

 Lack of documentation of competitive bidding or price protection.

 Multiple contracts for similar or duplicate services.

Purchase Services Target Areas:

 Medical Transcription  Parking Services  Pagers and Cell Phones  Copier Services and Printer Usage  Record Storage  Waste Management and Recycling It may not be easy to overcome these challenges, but though the spend may be nontraditional, the resistance is often of the same nature as previous challenges faced by Value Analysis. Thus, the change management skills that Supply Chain and Value Analysis have used to address traditional savings opportunities, such as physician preference items, can be used again to achieve success in non-traditional areas.

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The Last Word

Michael B. Neely

Opportunity As reform of the care delivery system unfolds, with more and more regulations and programs making excessive health spending untenable, hospitals and health networks are scrambling for efficiencies across the enterprise. With the support of technology, Supply Chain and Value Analysis leaders have a huge opportunity to explore the synergies in their respective skill sets to fully optimize Value Analysis, producing the kind of efficiencies that truly will reposition the organization to succeed in this new world.Θ

Michael B. Neely is Senior Vice President of Optimé Supply Chain, Skokie, III., and a provider of Software as a Service solution that helps healthcare organizations reduce waste and variation in procurement, utilization, and inventory management. He has extensive leadership experience in supply chain consulting and health care materials management, with a comprehensive background in supply chain management, purchasing, distribution, value analysis, and implementation of best practices. He is recognized as an expert in many facets of supply chain and materials management and is a frequent speaker for multiple national and regional meetings. In addition to his consulting and leadership responsibilities, Mike has 25+ years in direct hospital materials management encompassing a variety of positions and facilities. You can contact Mike with your questions and comments at mbneely@optimesupplychain.com

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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!

Proof 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 Volume 2/issue 1

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