Healthcare Value Analysis & Utilization Management Magazine - Volume 7 Issue 3

Volume 7/Issue 3

Healthcare

Leading Cost and Quality Strategies for the Healthcare Supply Chain

Magazine

Featured Article:

Nursing and Supply Chain Partnership to Reduce Variation in Urology Catheter Management at Sanford Health: Part II, Sustainability

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Contents

Healthcare Value Analysis & Utilization Management Magazine

4 FROM THE MANAGING EDITOR’S

DESK

By Robert W. Yokl

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

Thank You! 7 FROM THE PUBLISHER’S DESK

By Robert T. Yokl

P.O. Box 939, Skippack, Pa 19474

Get Better and More Sustainable Results

Phone: 800-220-4274 FAX: 610-489-1073

9 FEATURED ARTICLE

bobpres@ValueAnalysisMagazine.com

By Erica DeBoer, Kimberly Alsbrooks, and Halit O. Yapici

www.ValueAnalysisMagazine.com

Nursing and Supply Chain Partnership to Reduce Variation in Urology Catheter Management at Sanford Health: Part II, Sustainability

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Editorial Staff Publisher

20 VALUE ANALYSIS 101

Robert T. Yokl

By Robert T. Yokl

Value Analysis Workshops Could Be the Ticket for You

bobpres@ValueAnalysisMagazine.com

————————————

Managing Editor

24 UTILIZATION MANAGEMENT

Robert W. Yokl

By Robert W. Yokl

11 Ways to Fast Track Non-Salary Savings After Covid-19

ryokl@ValueAnalysisMagazine.com

————————————

28 PHARMACY VALUE ANALYSIS

Senior Editor

By Chase Johanson

The HC Supply Chain’s Untouchable: The Pharmaceutical Supply Chain

Patricia A. Yokl ————————————

Editor and Graphic Design

32 VALUE ANALYSIS ADVISOR

Danielle K. Miller

By Robert T. Yokl

Sell Concepts, Ideas, and Results—Not Services or Things

37 VA PERSPECTIVE

By Robert T. Yokl

Are Spreadsheets Holding Back Your Value Analysis Performance?

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

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From the Managing Editor’s Desk Thank You! Thank You! Thank You!

By Robert W. Yokl, Sr. VP, Supply Chain & Value Analysis— SVAH Solutions

I want to thank all our hard working and dedicated physicians, clinicians, support services, supply chain and value analysis professionals in this once in a century virus situation we are now in. I am a believer in the strength of our healthcare systems, their leaders, people and supply chains throughout the country. Most importantly, I am a believer in supply chain’s ability to rally to take on this new challenge that has caused a major bend, but not a break, in their armor. The healthcare supply chain is strong.

Value Analysis Can Help Value analysis was created at the end of World War II when there were dramatic shortages of raw materials and limited manufacturing of needed commercial, business, and consumer supplies and equipment. They were forced to look for functional alternatives for materials, products, and equipment to meet their needs. Value analysis was created on the premise of defining the problem in terms of functionality required and the search for alternatives to help solve the challenge.

Communicate the Function You or Your Clinicians Require Fast forward to today. There are so many great stories in the news, and we are seeing value analysis Volume 7/Issue 2

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Featured Article happen before our eyes. Nurses have discovered that rain ponchos’ impervious functionality will meet the same requirements as an impervious gown. This conserves surgical and isolation gowns for other important uses and meets the nurse’s functionality requirement of protecting them and their clothing from infectious droplets. In hearing about this, the Disney Company just donated their rain ponchos to be distributed to healthcare professionals.

We are seeing many industries chip in, such as major designers making masks for healthcare workers, NASCAR racing teams making splash guards, Automotive and other manufacturers making ventilators. I especially liked seeing innovations in taking N95 masks, normally made to be worn and disposed of, now being able to be sterilized using various methods and worn again.

Keep up the great work and keep explaining your functional requirements to see who steps up to answer the challenge!

Finger Pointing Does Nothing for Anyone Right Now I know there are many inside and outside our healthcare industry who can easily offer 20/20 hindsight commentary about the state of the personal protective equipment shortages and other supply chain challenges going on right now. I think there will be a time and place for that debrief after we have reached our goals and objectives to get through this virus and sustain a level of normalcy.

Supply Chain Always Answers the Challenge You can rest assured that the healthcare supply/value chain will overcome this challenge and get right back on track with cost, quality, and outcome goals. They will learn from this challenge and adapt new plans, policies, and procedures that will better prepare their hospitals and health systems for the next challenge down the road. Keep up the great work healthcare and supply chain professionals, we are with you!

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

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From the Publisher's Desk Get Better and More Sustainable Results Robert T. Yokl

It is rare that a value analysis or utilization management savings or quality and safety improvements are sustainable in and of themselves. For them to stick, you need to install policies, procedures, and systems to sustain your gains, or these hard-earned enhancements to your healthcare organization’s operations will vanish before your eyes. For example, we have documented that 26% to 46% of all new contract and value analysis savings start to disappear in a few weeks or months after being reported. This slippage happens because supply chain professionals don’t regularly validate that their savings are being achieved as projected. This is a classic case of, “you need to inspect what you expect” to ensure compliance.

The principles of supply chain sustainability consist of three pillars: People, policies, and persistence. These principles require that people understand that a “one and done” philosophy that is too often exhibited in supply chain circles isn’t a policy, but an attitude that will ensure that you will quickly deplete your resources instead of sustaining them for as long as possible. Persistence is the attribute that supply chain professionals must adopt to doggedly enforce their system, policies, and procedures that promote sustainability in all things that we do in supply chain management.

Another good example of supply chain sustainability would be the recycling of reusable medical devices. Based on our research, hospitals, systems, and IDNs can do much better in this area of their supply chain operations. It is our estimate that 28% more medical devices can be recycled (at an average 50% savings) by hospitals, systems, and IDNs, but aren’t because their recycling vendor’s measurement tools are deficient for the purpose for which they were designed. Only by having an internal tool to measure your true recycling intensity can your healthcare organization rein in these costs.

My point here is that to get better and sustainable results you must be willing to do things differently. All it takes is a new attitude that considers that every product, service, and technology you are buying or evaluating has a lifecycle. It’s our job as value analysis practitioners to ensure that we get the most mileage possible out of them. In some situations, it could mean to go back to buying reusables, because we have become a “throw-away” society at a cost that is now becoming prohibitive.

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It’s a Fact….

The More Organized You Are with Your Value Analysis Program…

...the More You Save!

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Featured Article Nursing and Supply Chain Partnership to Reduce Variation in Urology Catheter Management at Sanford Health: Part II, Sustainability Erica DeBoer, MA, RN, CCRN-K, Sanford Health Kimberly Alsbrooks, BSN, RN, RT (R), VA-BC, BD

Importance of Urinary Catheter Management and Supply Chain Process According to the Centers for Disease Control and Prevention (CDC), 12% to 16% of adult hospital inpatients receive indwelling urinary catheters, which makes it one of the most commonly used medical devices in the hospital setting.1,2 Each additional day with an indwelling urinary catheter may increase the chance of catheter-associated urinary tract infections (CAUTI) by 3% to 7%,2 which is likely associated with over $1,000 in costs per event (up to $10,197 for Intensive Care Unit [ICU] patients) adding to a total US burden of $1.7 billion.3 Moreover, indwelling catheters may lead to several issues including catheter encrustation, leakage, and discomfort.1 An evidence-based approach to catheter insertion and management can reduce the rate of negative outcomes and related costs.1 The hospital supply chain is particularly complex since medical supplies often go through several steps (i.e., processing by central stores prior to delivery to end-user) before being available at multiple clinical departments for patient-care.4 Furthermore, clinical staff contributes to supply chain/ logistics activities which means almost everyone is involved in the supply chain.4 In fact, over 10% of

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Featured Article the clinical staff time and 40% of hospital expenses are spent on supply chain activities. 4 Therefore, effective supply chain management initiatives not only reduce costs but also lead to improved quality of care and job satisfaction among clinical staff.4 A lack of communication between manufacturers and materials managers, fragmented supplier base (i.e., a large number of vendors), and nonstandard purchasing processes are key issues in hospital supply chain management.5 Participation from a wide range of internal and external stakeholders, and collaborative planning is necessary to address key issues outlined above.5,6 An interdisciplinary improvement team representing medicine, nursing and administration should be involved since “the people who do the work need to be the ones to change the work”.7 Engagement of clinicians is especially crucial because they can provide knowledge and perspectives which can significantly contribute to success.7

About Sanford Health Sanford Health is one of the largest health systems in the United States. After its merger with the Evangelical Lutheran Good Samaritan Society in 2018, Sanford delivers integrated healthcare, genomic medicine, senior care and services with 44 hospitals and 482 clinics spanning 26 states and 9 countries. Sanford’s organizational structure consists of four major regions, including its headquarters in Sioux Falls, SD, as well as three regional offices in Fargo, ND, Bismarck, ND, and Bemidji, MN.8

The Impetus for Change In 2016, Sanford recognized the need for a consistent urology catheter management policy across its network. The goal was to reduce variation in patient care and increase supply chain efficiency by standardizing policies and products across the organization. Sanford’s leadership understood the value of collaborative planning for the long-term success and sustainability of the initiative and partnered with BD. A wide range of expert clinicians from Sanford were also involved in the planning and implementation of the initiative specializing in infection control, education, quality, and supply chain teams as well as physician leadership. Additionally, project champions from Sanford Health were selected in each nursing unit from the frontline clinical staff to support the implementation.

Before 2016, urology catheters at Sanford Health were stocked based on local value analysis and products differed within and across care settings. Hundreds of different products were carried

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Featured Article by medical centers causing inefficiencies in ordering, stocking, troubleshooting backorders, and dealing with product expiration. Furthermore, nurses often had to “mix and match� these products to prepare them for clinical use, taking time away from patient-care activities. 9 Significant resources were being spent on training the clinical staff in using a variety of products appropriately. Previous attempts to standardize the catheter management process and reduce associated supply chain waste were limited to local initiatives focusing on managing stock-keeping units (SKUs) and revising urology catheter policies.

The 2016 Initiative at a Glance Sanford adopted a data-driven, evidence-based, and clinically-led strategy to identify and address the gaps in the catheter management process. First, each product went through a comprehensive evaluation based on specific criteria, including its impact on patient care and ease of use. Only the items that provide the highest overall benefit to patients were maintained in the system, while others were eliminated from the ordering list. As a result, Sanford decreased the number of line items in purchase orders by 74% and decreased the number of vendors to one. 9 The economic benefits of reducing the number of suppliers, establishing standard order management processes, and minimizing SKUs are well-documented in the literature.5

The catheter management initiative at Sanford was not limited to efficiency improvements in the supply chain. To ensure excellence in patient-care, Foley kits and post-insertion wipes were made available in every single unit. These easy-to-use kits include everything that a nurse may need to complete a sterile catheter insertion, including step-by-step directions. Specific patient needs were also prioritized as coudĂŠ tip catheters became a standard for the adult male patients and modified Foley kits for patient subpopulations (i.e., patients with allergy to latex products) were made available in every unit.

Planning for the Hurdles

The implementation was not without challenges. The full implementation of the initial changes took around a year including the planning phase. Evaluating hundreds of products in terms of benefits to patient care was especially time-intensive. An evidence-based approach and clear criteria allowed Sanford to complete this process without delays. Moreover, Sanford often used the ICU as a pilot before expanding the processes to the enterprise since ICU had the highest catheter utilization.

Lessons learned from the smaller scale ICU implementation allowed Sanford to achieve a smooth transition across the enterprise.

An extensive communication and education strategy complemented the implementation process to prevent any challenges regarding stakeholder buy-in. Effective and open communication was achieved through close coordination at the enterprise and regional levels. Hands-on product training Volume 7/Issue 2

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Featured Article and education, classroom sessions, and training materials were provided to ensure the appropriate use of the available urology catheter products. In-person and teleconference meetings and email communications were used to disseminate the benefits and rationale behind the new catheter management processes and to receive feedback. The project team addressed questions and concerns from the stakeholders by providing examples from the literature and data from the early improvements at Sanford which made these communications especially effective in convincing various stakeholders.

Continuous Improvement Aiming for absolute excellence in patient care, Sanford Health continued to improve catheter insertion and management processes. Since the implementation of initial changes in 2016, Sanford health has adopted two-person urology catheter insertion and made external catheters available for both male and female patients.

Two-person insertion of urinary catheters allows one nurse to fully focus on ensuring the correct steps are followed while her/his colleague is cleaning the periurethral area of the patient and inserting the catheter. In this method, the second nurse reads step-by-step directions, observes the patient (i.e., look at the skin condition to decide the best catheter to use) and ensures sterile insertion. If the sterile technique is broken for any reason, the second nurse can stop the procedure. When necessary, the second nurse also supports her/his colleague in cleaning and positioning the patient, especially for patients with unilateral weakness, mental status changes, or post-operative pain. A significant reduction in CAUTIs following two-person catheter insertion is documented in the literature.10-12 Sanford Health also introduced external catheters to improve patient care and staff satisfaction.

Using external catheters when feasible may be an effective strategy to minimize the utilization of indwelling catheters.13 Sanford Health used a trial method to decide the most appropriate external catheter to carry in its inventory. In the trial period, clinical units received several products as well as a scorecard to rate the products on a variety of criteria including easiness of use and patient satisfaction. Based on the results of the overall scores, Sanford decided on a male and a female external catheter. Nurses from varying regions and departments all expressed positive experiences and very high satisfaction with using external catheters; they wanted to see an increased use of these catheters in the future.9

Sustained Success Following a successful implementation, sustainability is the main challenge. According to a

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Featured Article systematic literature review, the median follow-up time after quality improvement interventions is less than 1-year.14 Reverting to prior practice leads to resource waste and may increase the resistance to future initiatives to improve patient-care15 since achieving stakeholder buy-in is likely to be more difficult after unsuccessful attempts to change behavior. Sanford employed several methods to avoid reversion to prior practice:

1.Education Continuous product training and education have been a key component of sustainability from the beginning. The goals of the continuous product training and education programs included refreshing skills of experienced Sanford employees as well as training new hires in delivering efficient and high-quality patient care.

Sanford holds annual skills fairs where nurse educators go over the urology catheter insertion, maintenance, and removal processes in detail. These trainings created by Sanford are also incorporated in the new hire orientation, where the nurses complete computer-based and hands-on trainings and are expected to demonstrate competence in their preceptors’ presence. Additional unit-centered product training and education programs are also provided on an as needed basis where nurse educators visit a unit and observe the status quo, identify gaps, and address these gaps with further trainings.

2. Monitoring Sanford has been using multiple reporting systems to make sure the new catheter management process is functioning as intended. Trends in direct and indirect indicators such as indwelling catheter days, catheter utilization, and the number of CAUTIs are closely watched by weekly and monthly reports. Furthermore, infection prevention and compliance departments conduct occasional audits.

BD also provided product training and education, including assessing whether Sanford clinicians used BD products consistent with their instructions for use.

Monitoring the improvements is not limited to reporting. Catheter management at Sanford is everimproving, which is in line with the organization’s aim to provide the absolute best patient care. Every

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Featured Article single issue identified by the reports or audits automatically triggers a detailed root cause analysis led by the hospital’s leadership. After the investigation, appropriate changes are made in the process to prevent issues from recurring.

3. Daily Rounds Nurse leaders also play a critical role in improving catheter management and sustaining the benefits. Nurse leaders in each unit conduct daily patient rounds with the department nurses and discuss the prognosis of patients with urology catheters. For each patient, the nursing team considers whether the catheter can be removed to help decrease the CAUTI risk factors. When the urology catheter is a necessity due to the patient’s condition, the team also reviews less invasive options such as external catheters. These rounds have been an excellent opportunity to raise awareness among nursing staff regarding best practices in urology catheter management, as well as product options that are available at Sanford Health such as external catheters.

4. Adherence Policy Sanford also adopted administrative policies to ensure adherence to the best practices and to provide the highest quality patient care. The organization’s adherence policy dictates consequences for clinical staff who deviate from the best practices ranging from re-education and oral/written warning to prevention from providing urology catheter-related care in the future (i.e., insertion, management, and removal). One of the supply chain management nurses added, “We are not doing this to be punitive. Our goal is to do what is best for the patient.”

The Long-Term Benefits “More confidence and less confusion” is how a nurse leader describes the current situation at Sanford Health.9 Nurses from a variety of departments and regions expressed very high satisfaction with the improvements at the organization. An infection prevention nurse added, “Standardizing the product and policy is making us a highly reliable organization.”9 Day-to-day work is also easier for Sanford Health nurses as they can simply “grab the kit and insert the catheter.”9 The improvement in nurse Volume 7/Issue 2

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Featured Article satisfaction is likely to improve quality of care since association between nurse satisfaction and patient satisfaction is well-documented in the literature.16-18 Sanford Health has sustained and improved the benefits of the catheter management initiative. Six months after the implementation, the formulary compliance among clinical staff increased from 35% to 95%.9 Nurses reported a decrease in indwelling catheter days and catheter utilization. 9 Furthermore, they reported significant improvements in supply chain processes, including ease of monitoring and managing inventory. A summary of perceived supply chain-related improvements among nursing staff can be found in Figure 1.

Figure 1. Average Perceived Improvement (n=11)

The Right Partnership BD’s partnership has been instrumental in the implementation and sustainability of the new catheter management at Sanford Health, and employees are highly satisfied with the partnership. 9 BD prioritized Sanford’s goal in providing the highest quality patient care. According to the nurse leaders and other nursing staff at Sanford, BD’s attention to detail and responsiveness set it apart from the rest of the companies in the industry.

BD’s support consisted of: • • •

Conducting annual product trainings and education to show progress as well as areas for improvement Providing references through literature reviews to support Sanford’s evidence-based approach Supplying easy-to-use urology products (i.e., SureStepTM Foley Tray System)

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Featured Article Sanford employees indicated that other health systems could also benefit from a similar catheter management initiative, especially the health systems that have a high variation across their care settings (i.e., health systems that recently went through a merger). However, several of the nurses underlined that a determined leadership and the right partnership would be necessary to replicate the success at Sanford Health.9 The likeliness of Sanford employees in recommending the initiative is illustrated in Figure 2.

Figure 2. The likeliness to recommend the initiative to other health systems (n=11)

This study demonstrates the value of standardization and quality improvement initiatives in the urology catheter management. With a strong leadership, internal/external stakeholder involvement, and an evidence-based approach, Sanford has successfully improved its catheter management process and realized significant clinical and economic benefits.

Sanford Leaders Vital to Initiative’s Success Alex Sproul, MSN, RN, CEN

Julie Jacobson, RN, BSN, CIC

Brenda Wolles, MS, RN, OCN, CNL

Mary Beth Kuehn, RN, CIC

Darcy Weber, RN

Megan Hills, MSN, RN

Diana Berkland, PhD, RN, FAAN

Sue Hohenthaner, RN, BSN, CIC

Halie Deters, RN

Tiffany Schouten, RN

Jacqueline Gibbons, RN, BSN Volume 7/Issue 2

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Featured Article Correspondence: Halit Onur Yapici, Senior Consultant Boston Strategic Partners, Inc. 4 Wellington Street Suite 3 Boston, MA 02118 halit.yapici@bostonsp.com Disclosure: This hospital experience report was sponsored by BD. Ms. Deboer is an employee of Sanford Health. Ms. Alsbrooks is an employee of BD. Dr. Yapici is an employee of Boston Strategic

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Smith JM. Indwelling catheter management: from habit-based to evidence-based practice. Ostomy/wound management.

2003;49(12):34-45.

Centers for Disease Control Prevention. National Healthcare Safety Network (NHSN) Patient Safety Component Manual.

In:2019.

Hollenbeak CS, Schilling AL. The attributable cost of catheter-associated urinary tract infections in the United States: A systematic review. American Journal of Infection Control. 2018;46(7):751-757.

Landry S, Beaulieu M. The Challenges of Hospital Supply Chain Management, from Central Stores to Nursing Units. In: Denton BT, ed. Handbook of Healthcare Operations Management: Methods and Applications. New York, NY: Springer New York; 2013:465-482.

Chandra C, Kachhal SK. Managing health care supply chain: trends, issues, and solutions from a logistics perspective. Paper presented at: Proceedings of the sixteenth annual society of health systems management engineering forum, February2004.

Aston G. Supply chain. Teaming with physicians can drive down costs. Hospitals & health networks. 2010;84(1):13.

Silver SA, Harel Z, McQuillan R, et al. How to begin a quality improvement project. Clinical Journal of the American Society of Nephrology. 2016;11(5):893-900.

Sanford Health. Dedicated to the Work of Health and Healing. https://www.sanfordhealth.org/about.

Published 2018. Accessed January 10, 2020.

11 Clinical Staff from Infection Prevention SCM, Quality, Education and Nursing, . In: Yapici HO, ed2019.

Barry J, Allen C, Chlebeck M, Siebenaler R, Wick K, Gunderson W. Implementing a Two Person Insertion Technique and Indwelling Urinary Catheter Insertion Competency Assessment to Reduce Catheter Associated Urinary Tract Infections. American Journal of Infection Control. 2017;45(6):S60.

Belizario SM. Preventing urinary tract infections with a two-person catheter insertion procedure. Nursing2019. 2015;45 (3):67-69.

Rhone C, Breiter Y, Benson L, Petri H, Thompson P, Murphy C. The impact of two-person indwelling urinary catheter insertion in the emergency department using technical and socioadaptive interventions. J Clin Outcomes Manag. 2017;24(10).

Rebmann T, Greene LR. Preventing catheter-associated urinary tract infections: An executive summary of the Association for Professionals in Infection Control and Epidemiology, Inc, Elimination Guide. American Journal of Infection Control. 2010;38 (8):644-646.

Alexander JA, Hearld LR. Review: What Can We Learn From Quality Improvement Research?: A Critical Review of Research Methods. Medical Care Research and Review. 2009;66(3):235-271.

Hovlid E, Bukve O, Haug K, Aslaksen AB, von Plessen C. Sustainability of healthcare improvement: what can we learn from learning theory? BMC Health Services Research. 2012;12(1):235.

Kutney-Lee A, McHugh MD, Sloane DM, et al. Nursing: A Key To Patient Satisfaction. Health Affairs. 2009;28(4):w669-w677.

Molyneux J. Nurses' Job Satisfaction Linked to Patient Satisfaction. AJN The American Journal of Nursing. 2011;111(5):16.

Perry SJ, Richter JP, Beauvais B. The Effects of Nursing Satisfaction and Turnover Cognitions on Patient Attitudes and Outcomes: A Three-Level Multisource Study. Health services research. 2018;53(6):4943-4969.

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Value Analysis 101 Value Analysis Workshops Could Be the Ticket for You Robert T. Yokl, President/CEO, SVAH Solutions

There is a Time and a Place for VA Workshops vs. VA Teams Value analysis practitioners are used to facilitating value analysis teams or committees to vet their supply requirements, but have you ever thought of conducting a value analysis workshop for outliers?

A value analysis workshop is different than a VA team or committee in the length of its sessions, specialization of participants, and immediate outcomes. For example, if you want to standardize your cardiac rhythm devices, it would be much more effective and efficient to conduct a value analysis workshop with the stakeholders, customers, and experts of these categories of purchase than spending months trying to accommodate all of these users’ requirements one at a time.

Characteristics of a Value Analysis Workshop The following characteristics set a value analysis workshop apart from a VA team or committee:

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Value Analysis 101 •

• •

Robert T. Yokl

Workshops are held near the category of purchase location (e.g. operating room, cardiac cath lab, radiology, etc.). This enables the workshop participants to see firsthand how the product, service, or technology under review is employed by their healthcare organization’s staff.

The length of the workshop could be one, two, or three days, depending on the complexity of the product, service, or technology being studied.

An outcome is expected after the workshop that satisfies the functional requirements of all of the participants.

If these characteristics are adopted, participants will achieve the cost, quality, and safety goals of the workshop without pushing or pulling the stakeholders, customers, and experts to change their behaviors. It will just happen organically.

Required Workshop Materials and Logistics In order to properly facilitate your value analysis workshop, your facilitator will need: •

Computer, projector plus a screen, flip chart, stand, pads, markers, tape, sticky notes

If these materials and logistics aren’t already available, your value analysis facilitator is responsible to make sure they are there at the time of your workshop.

Rules For The Value Analysis Preworkshop During a preworkshop coordination meeting with your stakeholders, customers, and experts, your workshop leader will establish the workshop guidelines, which may include: •

• • • •

Requiring attendance at agreed-upon times (some participants may not need to attend every session).

Requesting that non-workshop related e-mails, texts, internet, and phone usage occur during breaks and lunch.

Eliciting participation and consensus from all workshop participants.

Maintaining the agenda and being punctual about starting times.

Encouraging the workshop participants to contribute to the preparation and presentations of data, facts, and statistics on the category of purchase being studied.

This is an important meeting to set the ground rules for conducting your value analysis workshop. If this preworkshop meeting is skipped, I can assure you that it will cause you disruptions during the sessions down the road that will need to be addressed.

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Value Analysis 101

Robert T. Yokl

Conducting Your Value Analysis Workshop Your workshop leader (usually an individual that has no stake in the outcome) should facilitate the value analysis workshop to include: •

Establishing specific goals and objectives for the workshop’s outcome.

•

Review of category of purchase to be studied ( i.e. history, vendors, statistics, utilization, benchmarking of peers, life cycle cost, etc.).

•

Performing a functional analysis/functional matrix on the category of purchase.

•

Using brainstorming or other creative techniques to identify lower cost alternatives to what you are buying now.

•

Conduct a financial analysis of the lower cost alternatives being recommended.

•

Select the one lower cost option that meets your stakeholders’, experts’, and customers’ functional requirements at the lowest cost consistent with quality outcome.

•

Design an implementation plan for the lowest cost alternative your participants have selected as the optimum best value purchase.

The above steps in your value analysis workshop are meant to open up the dialogue between your stakeholders, customers, and experts so they can own their decision and support it.

When to Employ a Value Analysis Workshop A value analysis workshop isn’t to be employed for routine purchases; that’s what value analysis teams are designed to address. Instead, value analysis workshops are specifically designed for high volume, high ticket physician preference purchases, such as, cardiac rhythm devices, stents, orthopedic implants, etc. The goal is to set aside multiple days, if necessary, to focus solely on a commodity group that is costing your healthcare organization millions of dollars annually. It is a highly effective, efficient, and controlled way to fast track your buying decisions on these highly sensitive physician preference purchases. Try it, I think you will like it!

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FAST-TARGET SAVINGS ASSESSMENT Value Analysis 101

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Utilization Management 11 Ways to Fast Track Non-Salary Savings After Covid-19

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

Since hospitals have been asked to temporarily shut down primary revenue sources of their operations, such as major elective surgeries, they will need to reduce costs to the lowest possible levels while regaining their bottom lines. Here are just a few ways that I would recommend this be accomplished: 1. Set Up a Fast Track Value Analysis Savings Team(s): Most healthcare organizations’ value analysis programs run on a committee model, whereby most of the work is done by value analysis managers and supporting supply chain staff. We suggest that this cost reduction initiative switch to the team model where every team member is assigned a project and the VA manager and supply chain team will support them through their projects. This will greatly expand the number of projects for each team. You could have 12-15 members on a team, and if you have multiple teams (i.e., General Medical VA, Surgery VA, Support Services VA, etc.), you could have 30-50 projects going at once! The more projects you have going, the more you will save.

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2. Stop All New Product Requests During Your Savings Initiative: Our studies have found that new product requests can add as much as 1% to 3% to your annual supply budget. If you put new product requests on hold (until your bottom line is in order), you can restart them later when the timing is right. You can then move the resources and staff that normally work on these new product requests to your cost management value analysis teams.

3. Spin Up Everything: If you are going to engage in an organization-wide savings program, you don’t want to leave any sacred cow untouched. You should have initiatives to go after everything from capital to supplies to purchased services. Capital may be the biggest sacred cow, as you already have a process in place and committees that vet these requests every year. However, that does not mean that they should not be vetted again for cost avoidance purposes by your value analysis team. This can be done quickly and efficiently by having team members look to see if there are any lower cost alternatives or have a bid sent out. Sixty to eighty percent of the time you won’t find anything, but given the large dollar value of capital spends, it’s worth finding savings in the other 20% to 40%.

4. Fuel Up the Savings Pipeline to Over 120% of Your Savings Goal: Any cost savings initiative is only as good as what you are investigating and put on the agenda of your value analysis/ cost savings team to work on. Go in knowing that the 80/20 rule applies. When looking at 100% of the projected savings, know that 20% of those savings may not stick for various reasons. The key to these major initiatives is to have over 120% of your savings dollars identified up front so that you can first feel confident that you will meet your goal. Second, you will offset the dry holes that you may come across due to customer, contractual, or operational issues.

5. Benchmark the Utilization of Your Supplies and Purchased Services to Best Practice Low Levels: The best way to avoid dry holes is to cue up savings opportunities that you know will show the most realistic savings possible for your teams to work on. The best tool I have utilized over my 27+ years in the healthcare supply chain is to benchmark all of your supply and purchased service categories to see where you stand. You can do this by comparing historically or you can benchmark with low, mid, or high ranges of a cohort if you have access to cohort utilization benchmark data. By benchmarking, you will be able to establish savings ranges for each of these categories. By knowing the savings range, you will be able to manage these projects much better because you will know whether the VA team or project manager has done their job of wringing the towel dry on savings for that category.

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Utilization Management

Robert W. Yokl

6. Get Your Spend/Utilization Data in Order Now: There will be an initial challenge that we will face with utilizing data from March 2020 to the end of the pandemic. This is because it is not realistic to utilize that spend data. This data is highly distorted due to a higher focus on PPE and little or no focus on surgical or procedural products that are normally used. I would recommend that you use data prior to March 2020 as your baseline end and trend back to March 2019 to use as a base period for your annual comparisons. You can then go back and look at your data during that period or look back to the prior year’s data if you are looking for annual, quarterly, or monthly trend data to use. There is still good data to use to reduce costs, but you must have it all in order and ready to use.

7. Look Inside Your Existing Contracts: You might look at a major category of high dollar purchases and find that your contract does not expire for another two or three years. If you are only looking to reduce costs on price, then of course you would need to move on. However, you can look inside those contracts for lower cost alternatives at any given time that can reduce your costs dramatically. Ninety-nine percent of my recommendations to clients are contract-friendly recommendations because as an outsider, I cannot possibly recommend a client change contracts or anything to that effect. Although, I do recommend adjustments to areas of waste that need fixing and value mismatches that occur in just about every major and minor contract category.

8. Don’t Underestimate the Power of Setting Savings Goals for All to Know: I worked with an organization that wanted to reduce their non-salary operating costs to keep their bottom line healthy while in a major building program. Their supply chain leader put in place a savings goal of 40 million dollars over a one-year period for this initiative. If this leader had just formed their VA teams and told everyone to go save as much money as they could, do you think they would have met that goal when prior to this there was no goal in place? The answer is no. Supply chain leaders need to set goals for their teams that are realistic, achievable, and most importantly, trackable through your savings initiative.

9. Savings are Savings Whether Short or Long-Term Savings: VA/Supply chain teams will inevitably find both short and long-term savings. We typically want more short-term savings that can hit your bottom line immediately. I would like to defer to one of my boss’s (Robert T. Yokl, CEO, SVAH Solutions) mantras when we find long-term savings for our clients while we are predominantly trying to save in the short term: “Hey that hospital needs savings next year, too!” This should be your view as well.

10. Don’t Depend on Price - Look at Total Cost: For the most part, hospitals and health systems had been ratcheting down their costs and engaging in price savings initiatives with their group purchasing organizations on an ongoing basis. This is not to say not to continue with this engagement, but the fact is that many organizations were on the downward savings trend on these types of initiatives. They were already achieving the lion’s share of savings before the virus hit. Now, Volume 7/Issue 2

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most manufacturers of products (except for standard PPE and other hospital staples such as IV sets and solutions) have had their sales/revenues dramatically reduced with the surgical/procedural curtailment as well. I predict they will be sheepish with their offerings of new price savings further than they have already given to date for at least the next year. Look to savings beyond price which can save you as much as 7% to 15% more than you are saving now.

11. Give Supply/VA Teams the Tools to Save: You had some sort of savings program on an ongoing basis prior to the coronavirus pandemic. Take stock of what you have inhouse as far as tools to streamline and speed up savings opportunities for your organization.

Remember, if you want your team to save on utilization beyond price opportunities, you need to give them tools to help them find, track, and save as fast as possible. If they must start from scratch, that will cost you valuable dollars, and most importantly, time that you don’t have. Buy, borrow, or create systems/tools and implement them as fast as you can for your supply/value chain teams.

7% to 15% of Utilization Savings from Supply Budget Prior to Covid-19 is Still On the Table It goes without mention that hospitals will undeniably need to have their full revenue sources back online and operating at 100% which will certainly aid in their cashflow. Unfortunately, that will not be enough because they have lost so much from March to the end of this pandemic. Interestingly, before the Covid-19 pandemic hit, we estimated that the majority of hospitals and health systems had a savings opportunity of 7% to 15% of total budget in additional savings from supply and purchased service utilization (savings beyond price). Most organizations did not have formal utilization management and reduction programs in place which leaves a big opportunity to use utilization overruns, waste, inefficient use and value mismatches as a means to a healthier bottom line.

The best part about being in the supply/value chain world is that every dollar we save goes right to the bottom line as opposed to new revenues which have to trickle through the operations of the organization. We have a huge opportunity to wring the towel dry in the non-salary areas of our operations in order to make our hospitals’ bottom lines healthy. We can help protect employees’ jobs, bonuses, and even future raises. Clinicians have borne the brunt of the Covid-19 challenge to date, but it will be supply/value chain who will return your bottom lines to where they once were, or even better!

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Pharmacy Value Analysis The HC Supply Chain’s Untouchable: The Pharmaceutical Supply Chain

By Chase Johanson, Executive Search Consultant, Gibson Consultants

Pharmaceutical Costs Continue To Climb One of the most difficult challenges that hospitals and health systems all across the world face is managing their pharmaceutical spending. “Rising pharmaceutical costs present one of the most urgent and unsustainable. We continue to see aggressive and unwarranted price increases for drugs that are critical in the care of patients and where substitutes are not available. For hospital supply chain leaders, this paradigm is not only pressing, it is unsustainable,” according to Scott Caldwell, President and CEO of The Resource Group.1 In speaking with hundreds of doctors, nurses, and supply chain professionals, one thing appears evident at every organization, even those that have carefully integrated pharmacy procurement into their supply chain. Pharmacy supply chain is its own specialty that deserves extra attention from health systems and should not be treated the same as traditional clinical and non-clinical supply chain.

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Pharmacy Value Analysis

Chase Johanson

Usually delegated to a team dedicated to pharmacy and pharmaceutical procurement, this supply chain vertical is under the spotlight more than ever during this COVID-19 pandemic. According to Modern Healthcare, “While many health systems have yet to experience any related drug shortages and many generic drug suppliers have 3 to 12 months of active pharmaceutical ingredients stocked, executives are increasingly concerned by the opaque system that is dependent on foreign countries.” 2 There are a few domestic generic pharmaceutical endeavors working to alleviate growing concerns, but one of the largest interests regarding the U.S. supply chain, aside from its growing costs, is the source of pharmaceuticals.

“We have become too dependent on China for essential medications. We need to rebuild U.S. infrastructure for essential generic pharmaceuticals,” said Civica Rx CEO, Martin Van Trieste.3 It is important that the healthcare industry in America continues to innovate to strengthen the pharmacy supply chain and strive to deliver higher quality care and improve costs for our growing population.

Organizations On the Forefront A few endeavors making their way into the headlines recently include government action like 403(b), and companies like Amazon, Pillpack, and Civica Rx entering the generic drug industry. Organizations like Civica Rx are hoping to provide generic pharmaceuticals at lower prices and help smaller hospitals and health systems that lack purchasing power. The race to deliver quality, generic pharmaceuticals to drive down cost and improve quality patient care is on.

Supply chain in healthcare is always best addressed case by case and every organization is different.

There are many factors that go into making a decision when sourcing pharmaceuticals: The size of an organization, the GPOs they partner with, the emphasis the organization puts on supply chain, the number of agreements already in place, the area and demographic of its patients, etc. It is extremely Volume 7/Issue 2

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Pharmacy Value Analysis

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difficult for any individual provider to understand the big picture without having the data and information to drive good business decisions. These innovative industry actions and organizations that focus in generic pharmaceuticals will work to help providers better strategically source pharmaceuticals and ensure a strong supply chain during times of crisis, like COVID-19.

Hospitals and Health Systems Currently, there are directors of pharmacy in supply chain at most established IDNs (Integrated Delivery Networks). There is always conversation between the clinical and business side of healthcare in the form of value analysis committees or single value analysis professionals with an understanding of the clinical world acting as a soundboard for making educated decisions. The best practice in the industry is typically a mix between pharmacy professionals and value analysis professionals together tackling the pharmacy supply chain. There is a level of trust that pharmacists and clinicians must have for the supply chain process and personnel. Due to the complexity of the trade, most traditional supply chain directors in healthcare do not have experience in pharmacy supply chain and rely heavily on those that have a better understanding of the specialty. This is the reason that the pharmacy supply chain is kept under its own umbrella at hospitals and health systems.

Larger organizations have a clear advantage due to economies of scale and can negotiate better prices by using a spoke-and-hub approach to their many hospitals around the country. Smaller organizations are at a clear disadvantage because they do not have the leverage that major IDNs have. With rising costs, pharmaceutical spend is unsustainable for smaller hospitals and health systems.

A Pennsylvania health system, involved with Civica Rx, has a VP of Pharmacy and a VP of Supply Chain that report to the COO. They believe that the inventory needs of the general supply chain are different from the needs in pharmacy. Putting emphasis on pharmaceuticals and working with an organization dedicated to combatting rising costs is one way hospitals in America are successfully bringing their patients better quality care.

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Pharmacy Value Analysis

Chase Johanson

COVID-19 Pandemics can set healthcare organizations back many years financially. COVID-19 is a real-world example of how disease has affected, at the very least, the way we think about and approach the pharmacy and non-pharmacy supply chain. “The Indian government may hold 26 pharmaceutical ingredients and drugs made from them amid supply concerns stemming from the coronavirus, stretching an already fragile pharmaceutical supply chain,” says Modern Healthcare. 2 “Much of the world's supply of generic drugs comes from India, which relies heavily on China for their active pharmaceutical ingredients.”2 Many leaders in the industry believe that, moving forward, America should put more emphasis on sourcing domestically rather than depending on imports from China and India. America already faces drug shortages every year without import constraints. Although shortages can be quality issues from the manufacturer or from manufacturers that choose to make more profitable drugs, each year there are over 100 reported drug shortages, according to the American Society of Health System Pharmacists' list, which jeopardize patient care and inflate healthcare costs.4,5 This does not take into consideration treatments for COVID-19.

The entire healthcare industry and especially providers must work to solve the problem of drug shortages, rising costs, and the lack of domestic production of pharmaceuticals. Although pharmacy is given extra attention at most organizations, there is a lot of work to be done to close the gap that is growing with the aging U.S. population. Supply chain professionals must work to leverage value analysis and pharmacy professionals to stay on top of trends and prepare for the worst. Hospitals and health systems will need support from group purchasing and consulting organizations aimed at diverting pharmaceutical sourcing away from other countries. Healthcare IDNs will have to come together to innovate and put more focus on generic pharmaceutical organizations if they want to overcome the issues facing America and deliver higher quality care at lower costs for patients.

References 1.

2.

3.

4.

5.

Scott Caldwell Addresses Top Supply Chain Issues. Feb. 2020. https://theresourcegroup.com/News/2020-Scott-CaldwellAddresses-Top-Supply-Chain-Issues Coronavirus Strains Fragile Pharmaceutical Supply Chain. March 2020. https://www.modernhealthcare.com/supply-chain/ coronavirus-strains-fragile-pharmaceutical-supply-chain Trieste, Martin Van. March 2020. https://www.linkedin.com/posts/mvantrieste_we-have-become-too-dependent-on-china-for -activity-6650104072969998336-DYRQ The Drug Shortage Crisis in the United States: Causes, Impact, and Management Strategies. C. Lee Ventola. PT. 2011 Nov; 36 (11): 740-742, 749-757. PMCID: PMC3278171. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3278171/ Drug Shortages Statistics. 2020. https://www.ashp.org/Drug-Shortages/Shortage-Resources/Drug-Shortages-Statistics

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Value Analysis Advisor Sell Concepts, Ideas, and Results Not Services or Things This is One of the Keys to the Value Analysis Selling™ Technique Robert T. Yokl, President/CEO, SVAH Solutions

All companies tend to train their sales reps to sell services or things, when they should be training them to sell concepts, ideas, or results. The reason why this tenet is important is that if you are selling services or things, your customer can compare your prices to your competitor’s, then select the lowest price offering. Whereas, if you are selling concepts, ideas, or results, you can differentiate yourself from your competition and then you can charge even more than your competitor.

Selling a Concept, Idea, or Result When you sell a concept, idea, and/or result, you are entering into a new world of selling that isn’t based on price, but on creating a vision for your customer of how their situation will improve with your product, service, or technology. For instance, if you apply the Value Analysis Selling™ technique of functional analysis in your sales process you will be emphasizing what your product, service, or technology does (i.e. promotes safety, increases output, reduces waste, etc.) vs. just talking about a

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lower price. However, you must document these attributes in your value analysis studies, or your customers won’t believe your claims!

Most Products, Services, and Technologies are Spinoffs If you would be honest with yourself, most products, services, and technologies in the healthcare market today are spinoffs (even high-tech devices like pacemakers) of other products, services, and technologies. They aren’t new, but are just some variation of what’s on the market already. That’s why it is critical that you sell a concept, idea, and/or result to avoid constant price wars with your competitors.

P.S. Finally, a Certified Value Analysis Advisor™ program exclusively for sales and distributor professionals to add more value to your own sales process so you can gain more of your customers’ loyalty, cooperation, and an even bigger market share.

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VA Perspective

Are Spreadsheets Holding Back Your Value Analysis Performance?

It’s Time to Up Your Value Analysis Game to Save More in Less Time

It is my estimate that sixty-four percent of all hospital, system, and IDN’s value analysis practitioners (VAP) are still using paper and Excel spreadsheet systems to manage their value analysis tasks, projects, savings reporting, etc. Eighty percent of VAPs aren’t tracking any metrics, KPIs, or employing analytics to improve their value analysis performance.

This practice of using spreadsheets to manage your value analysis tasks, activities, and projects is wasteful, inefficient, and counterproductive. A report released last November by Navigant Consulting found that tightening control over the supply chain and identifying waste (through value analysis studies) could help reduce expenses by an average of 17.4% or $12.1 million annually per hospital. The analysis also found that a decrease in supply spending doesn’t translate to lower quality care. This is why it is mission critical to up your value analysis performance.

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VA Perspective

Robert T. Yokl

Benefits of Employing Technology as a Value Analysis Best Practice It is estimated that value analysis is a best practice at 84% of hospitals, systems, and IDNs in the United States. Yet, technology is only being employed in about one-third of healthcare organizations to improve their value analysis performance. Here are three ways your healthcare organization can utilize technology as a tool to up your value analysis game to save more in less time: 1. Use Advanced Data Analytics to Identify New Savings: If you are looking to save money beyond your price and standardization initiatives, you need to use analytics (or the extensive use of data, statistical and quantitative analysis, explanatory and predictive models, and fact-based management to drive decisions and actions1) to obtain a broader view of your VA savings opportunities.

Just the other day, a client of ours using our value analysis analytics tool determined they weren’t saving the $42,345.00 they had projected would be saved on their bed bath system. How would they know this fact without employing advanced data analytics?

2. Focus Your VA Efforts on Utilization Misalignments: Most value analysis teams focus their efforts on vetting new products, services, or technologies and implementing new or renewal group purchasing contracts. Unfortunately, this isn’t where your double-digit supply chain savings reside any longer. Your big robust supply chain savings are now to be found in your hospital, system, or IDN’s utilization misalignments (i.e. wasteful and inefficient consumption, misuse, misapplication, and value mismatches in the products, services, or technologies you are buying). Your value analysis teams should focus at least one-third of their time investigating these new and better savings opportunities assisted by technology.

3. Select a Technology Platform to Manage All VA Activities: We have seen VA practitioners try to manage their value analysis tasks, projects, and savings reporting on spreadsheets as big as a house. Not only are spreadsheets time consuming to maintain, but data is usually lost because of the complexity, size, and unwieldiness of the hundreds of columns, rows, and cells that need to be aligned. A much better way is to have a technology platform to manage your new product, service, and technology requests, team minutes, agendas, projects, savings reports, balanced scorecard, surveys, etc. Having one technology platform to bring together all things value analysis can boost you and your VA team’s performance by a factor of two or three.

As a discipline, value analysis has come a long way in the last two decades. It has demonstrated its value to every healthcare organization that has embraced it. Yet, if VA is to move to the next level of performance, value analysis practitioners need to leave their spreadsheets behind and embrace the latest technologies to improve the value analysis program’s performance today, tomorrow, and in the future.

1 Thomas

H. Davenport, Competing on Analytics

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

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It’s Not Too Late...

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