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Description: Value Analysis Training Issue - Value Analysis Training is the Magic Bullet that Focuses the Light on Big Savings!

Healthcare Insights Best Practices and Advanced Strategies You Can Use To Up Your Value Analysis Game Spring 2013 ISSUE Magazine Featured In This Issue Reduce Control and Eliminate Unnecessary Utilization Practices Page 8--Strategic Value Analysis Planning sue Also In This Is- Page 15--Value Analysis Team Leadership Page 18-- Breakthrough Savings on Demand Value Analysis Training is the Magic Bullet that focuses the light on Big Savings Featured In This Issue Page 9--Value Analysis Begins & Ends with Training Page 20--How to Avoid Group Think Page 34-- The Missing Link in Supply Expense Management Spring 2013 Published by Strategic Value Healthcare Value Analysis Magazine Analysis in 1 Capture More Than Price Savings Alone Fiscal 2013 is the year to bank on a solution that can propel more of your supply chain savings under management control and put the strategy back into your strategic supply chain efforts. Utilizer Dashboard is selected by more chief financial officers and supply chain leaders to Augment existing supply analytical suites investments to fill the big gaps. Speed productivity and innovation for spend of any size category or complexity. Tackle complex spend areas (i.e. utilization and demand management) with advanced value analysis analytics capabilities. Customers using Utilizer Dashboard are reporting their utilization savings are now ranging from 7% to 15% in most categories and are reporting a 28 1 return on investment in less than three months after conducting their first value analysis studies. Click Here to Sign Up for a Free Utilizer Test Drive Spring 2013 Healthcare Value Analysis Magazine 2 contents Healthcare Value Analysis Magazine Healthcare Value Analysis Magazine is published quarterly by Strategic Value Analysis in Healthcare P.O. Box 939 Skippack Pa 19474 Phone 800-220-4274 VA Begins With Training FAX 610-489-1073 bobpres ------------------------ Editorial Staff Publisher Robert T. Yokl bobpres 9 Value Analysis Begins & Ends With ------------------------ Diversity is Key Training How to build a foundation for reaching even higher levels of savings. Managing Editor Robert W. Yokl ryokl 20 How to Avoid Group Think Why you need to diversify your VA team s membership to energize your team s performance. ------------------------ Senior Editor Patricia A. Yokl ------------------------ 34 The Missing Link in Supply Expense Management Techniques to ensure you have all of your supply expense management bases covered. Editor Danielle DeShong Copyright 2013 Strategic Value Analysis in Healthcare. All rights reserved. Reproduction translation or usage of any part of this work beyond that permitted by Section 107 or 108 of the 1976 United States Copyright Act without permission of the copyright owner is unlawful. For permission call fax or email Robert W. Yokl Managing Editor Phone 800-220-4271 FAX 610-489-1073 E-Mail ryokl for approval to reprint excerpt or translate articles. 37 What You Can t See Could Hurt The Missing Link You Covering all of your supply expense bases in real time. 40 Good Evidence --The Missing Link How do you determine good clinical evidence vs. bad evidence Healthcare Value Analysis Magazine Spring 2013 3 From the Publisher s Desk If You Think Training is Costly Just Think of the Cost of Not Training Your VA Teams Robert T. Yokl I can t count the times I have seen value analysis teams waste time money and resources because they haven t received advanced training in value analysis strategies tactics and techniques. Instead of taking less than 90 days to complete their value analysis projects they sometimes take years if they ever get their projects finished. They ignore savings opportunities because they believe they are too hard to investigate or implement or they are uncomfortable challenging their clinicians bad behavior habits and practices thereby costing their healthcare organizations millions of dollars annually in lost ignored or discarded opportunities. It doesn t need to be this way Fully developed trained and motivated value analysis teams are like savings machines you couldn t stop their savings from flowing even if you tried This is because they have acquired the appropriate skill sets through training to make their VA job easy productive and profitable. We train our clients value analysis teams to use our 6-Step Value Analysis Funneling process that ensures that their value analysis team members approach each and every value analysis study the same way. That s why they complete 91% of their VA projects on time within the budget and within 90 days When you consider that a one hour meeting of your value analysis team costs your hospital about 500 you want them to be as productive and profitable as possible. This cost doesn t even consider the time (3 7 or even 11 hours) it takes for your team members to investigate new products or revisit existing products that have utilization misalignments failures or anomalies in your spend. If you think training is costly just think of the cost of not training your value analysis teams A cost in time a cost in inefficiency a cost in productivity a cost in lost opportunities. Can you really ignore that training is the answer to most or all of your value analysis challenges I know from personal experience that training is the magic bullet for your value analysis success. Robert T. Yokl can be reached by phone (800-220-4274) or by e-mail at bopres with your questions comments counter-points to his editorials or anything else that peaks your interest in this issue. Spring 2013 Healthcare Value Analysis Magazine 4 You could be leaving up to 11% to 18% in new supply savings on the table untouched BenchPlusManager Does your team have the visibility and control over your purchase services Three easy steps to quickly ring the towel dry on these multi-million dollar expenditures... 1. Build a case for change Show your C-suite how much they are spending and what the potential savings (11% to 18%) would be if you were to aggressively attack the multimillion dollar expenditures that are ready to be harvested. Or let BenchPlus do it for you 2. Centralize all purchase service contracts We recommend that all of your purchase service contract documents be archived and administered by your materials management supply chain department. If the workload justifies it you will need to hire a contract administrator to manage control analyze bid or negotiate these contracts. However this very small investment if required will yield a high ROI in a very short time. Or archive w BenchPlus 3. Benchmark all purchase service contracts This will ensure that your purchase service contract s total lifecycle costs .com are within acceptable limits. How could you know if there are savings opportunities if you don t quantify them and have a roadmap to start saving This shouldn t be a one time event but instead a continuous process. Or BenchPlus can do this for you too Spring 2013 Healthcare Value Analysis Magazine 5 From the Managing Editor s Desk We are All Teachers and Trainers in Value Analysis Robert W. Yokl This issue of Healthcare Value Analysis Magazine is focused on value analysis training and teaming so I thought I would bring up an important point that I have learned over my 21 years in the business. All of us involved in value analysis are teachers educators and trainers. Believe me we are because we are always educating teaching and correcting our teams committees managers and staff in the proper use of our value analysis methods and practices. We are leading the value analysis and utilization revolution by educating our VA teams committees senior management and clinicians on how to reduce costs while maintaining or improving quality. Of course this is easier said than done Now I know there are value analysis practitioners out there that may not look at themselves as a trainer or educator but trust me you are always educating your staff and yourself toward improving the value of value analysis at your healthcare organization. Think about it when you are putting on your value analysis analyst hat and breaking down a commodity group for your value analysis team to investigate you are educating your value analysis team members managers and staff of the affected departments on the proper methodology to employ to yield the most savings. Nine times out of ten you are already offering up a corrective action plan which of course entails educating and training staff on new methods and practices to fix the root cause of your overspends. Let s face it - we still very much live in the Price World when it comes to making savings happen. In order to help our staff management and senior leadership recognize that there is more to the savings equation that value analysis and supply chain professionals work on such as over-utilization product mismatches product failures contract integration quality outcomes etc. we must continue to educate ourselves in the latest methods and practices of value analysis. I know you are busy and you may or may not view yourself as a trainer or educator but it comes with the territory of being a value analysis professional. Embrace it and your organization s value analysis program will flourish as you gain more knowledge of the latest strategies tools and tactics in value analysis and supply utilization management. Robert W. Yokl can be reached by phone (800-220-4271) or by e-mail at ryokl with your questions comments counter-points to his editorials or anything else that peaks your interest in this issue. Spring 2013 Healthcare Value Analysis Magazine 6 Value Analysis News New Book Gives You Insight Into Your Purchase Service Spend Did you know that at most hospitals systems and IDN s purchase service spend is equal to or greater than their supply spend Well that s just one insight into your purchase service spend that Robert T. Yokl s new book How to Rein in Your Multimillion Dollar Purchase Service Spend Before It Damages Your Bottom Line can give you. After decades of researching measuring and consulting on this topic Yokl takes you behind the curtain to reveal his little-known secrets to reining in these elusive undermanaged and prohibitive costs drivers. Yokl projects that healthcare organizations could be leaving up to 11% to 18% in new savings on the table -- untouched. That figure represents about 28 090 per occupied bed in new savings in less than 12 months. He says It s a virtual gold mine just waiting to be excavated by value analysis professionals. The good news Yokl writes is that this category of purchase is the easiest to rein in if you have the strategies tactics and tools to do so which you will find in my new book. If you would like a complimentary electronic copy of Yokl s new book you can request it by emailing Yokl at bobpres Also Yokl has a second new book 10 Best Strategies to Save More in Less Time that can be purchased at for 9.95 in both a Kindle or hardcover editions. AHVAP Announces 10th Annual Conference - October 23-25 The Association of Healthcare Value Analysis Professionals has announced their 10th annual conference will be held on October 23-25 at the Chaparral Suites Scottsdale Arizona. For more information contact Laurie Krueger Managing Director at lauriek Bed Alarms Fail To Reduce Patient Falls Study Reports A new study by the Annals of Internal Medicine reports that bed alarms made of weight sensors embedded into a flexible pad which is placed on a bed chair or toilet do not reduce patient falls. After studying 28 000 patients at the Methodist University Hospital Memphis the study concluded that the alarms didn t decrease patient falls or fall-related injuries. The reason for this was that nurses ignore alarms because of too many false alarms and or patients have already fallen when the alarm was triggered. The report further states that alarms can be helpful in the context of a well developed fall prevention program. Spring 2013 Healthcare Value Analysis Magazine 7 4 Key Points Supply Chain Managers Should Know About Utilization Management It s the future of supply chain expense management. Price and standardization have been the primary supply chain cost containment strategies for decades. Now that these sources are waning there is nowhere else to go for savings other than utilization management. 2 1 It s a problem that s bigger than you might think. We estimate that one in four products services and technologies you are buying right now has a utilization misalignment. By this we mean it is costing you on average 26% more to employ these commodities than it is costing your peers. Left untouched they will cause real damage to your hospital s bottom line. 3 It s eating away at your organization s bottom line. For every dollar you save in price you could be losing 2 3 or even 4 dollars in utilization misalignments. For example you might get a great price on I.V. catheters but if your clinicians are using more than 2.3 per patient to get the job done it s costing you more than it should be on just this one product. 4 It s easier to save when you know where to look. Utilization savings are different than price savings because you can t see them with the naked eye That s why you need an advanced power tool to uncover these hidden savings. Then it is very easy to eliminate them Make your utilization management job a whole lot easier Spring 2013 Healthcare Value Analysis Magazine 8 Feature Article Value Analysis Begins & Ends with Training VA training is the foundation for reaching even higher levels of savings There seems to be an aversion held by value analysis practitioners to value analysis training in our industry. This is because there is a universal belief in value analysis circles that value analysis can be self taught and learned by doing. Nothing can be further from the truth This misconception has come about because value analysis practitioners have equated value analysis with the product evaluation and selection of their new products services and technologies process. This is not value analysis Product evaluation and selection is the examination appraisal and testing that leads to an informed judgment of the appropriateness of a product service or technology. Value analysis however is the study of function and the search for lower cost alternatives that provide equivalent performance for the product service or technology under investigation. Here s how these two concepts differ in practice If a requisitioner or GPO contract offering for new surgical gloves is sent to a value analysis team for evaluation and approval the gloves price will be the number one determining factor after a clinical trial has proven that the new surgical gloves are suitable (e.g. size strength tactile Spring 2013 Healthcare Value Analysis Magazine 9 Feature Article sensitivity etc.) for surgeons use. If the same surgical gloves were investigated by employing the classic 6-step value analysis methodology the functions (primary secondary and aesthetic) of the gloves would be identified and measured against predetermined standards to determine the lowest cost alternative that meets the required functions to protect surgeons and patients. Different Methodologies Through interviews and observations with customers stakeholders and experts we would clearly understand what functions weren t being met and then provide those functions at the optimum cost (not price) to meet our customers exact requirements. I can guarantee that the outcomes of these two different and distinct methodologies would be quite different -- in dollars satisfaction and overall acceptability. That s why we consider product evaluations to be an inexact science (i.e. trial and error) whereas value I can guarantee that the outcomes of these two different and analysis is an art and science that has a distinct methodologies would be proven repeatable and reliable process quite different -- in dollars satisfaction and overall acceptability that provides our customers with their required functions (not more or less) at the lowest cost. Another big difference is that the value analysis methodology starts with a blank piece of paper First we obtain the functional specifications of the product service or technology under investigation and ignore any customer requisition or GPO offering until we have fully comprehended the underlying reason or purpose for this commodity. We then search for lower cost alternatives to meet the identified functions exactly. For example if we received a requisition from the operating room for a new one-time use endomechanical trocar we would identify it s primary function (punch holes) secondary functions (maintain sterility) and aesthetic functions (bladeless). Spring 2013 Healthcare Value Analysis Magazine 10 Feature Article We would then rate (on a scale of 1-10) each function cost for desirability reliability and efficacy. Once we clearly understand what the customer absolutely requires (in most cases eliminating some unnecessary or costly functions along the way) we look for alternatives to meet those functions at a lower cost. As you can see it s a whole different mindset vs. the product evaluation and selection process most hospitals are employing today to reduce supply chain spend. Increase Savings with Training The value analysis process I have outlined requires extensive training to perfect these higher level skills. It s not a self-taught or learned-on-the-job proposition Advanced training in the value methodology will enable you and your value analysis team to save even more dollars (26% on average) than you are saving now. In figure 1 I have outlined what a typical advanced value analysis training program curriculum would look like which would be given over a one two The value analysis process I have outlined requires extensive trainor three day session for your value ing to perfect these higher level analysis administrative champions skills. It s not a self-taught or learned-on-the-job proposition team leaders and team members. We recommend that your value analysis steering committee members also attend this training so they too can understand the value methodology what their role is in your value analysis process and start to bond with your team leaders and team members in order to form mutual respectful professional and rewarding relationships. Vital Savings Engine Value analysis if practiced correctly consistently and scientifically as I have outlined in this article is the vital savings engine that all healthcare organizations need to make saving beyond price quickly happen. However training and executive Spring 2013 Healthcare Value Analysis Magazine 11 Feature Article management support are required to create manage and maintain high performance value analysis. If your hospital system or IDN is serious about value analysis remember that value analysis isn t about establishing a value analysis team(s) and then telling the team members to GO SAVE MONEY It s about having highly trained motivated and incentivized value analysis team leaders and members that understand internalize and vigorously apply the six-step value analysis methodology that is taught by experienced professionals who have worked in your shoes. Then and only then can you up your value analysis game Figure 1 Advanced Value Analysis Training Curriculum Philosophy Principles and Practices Must go to the next generation of supply chain savings Value Analysis is all around you How are you evaluating selecting your products and services The philosophy of value analysis Purchase costs are only the tip of the iceberg It s all about function 4 reasons for waste and inefficiencies Standardization vs. Customization Opportunity Pyramid 9 reasons for non-conformity Value Analysis as a quality tool Understanding the customer 6-Step VA VE customer mapping process 80 20 rule Classifying customers by order of importance How to translate their functions into our language Why dollarize your functions How to build functional statements Developing win-win alternatives Proving that your ideas work in the real world How and when to look for opportunities for improvement Value Analysis The Concept What is value The concept of value How to apply this concept Why value analysis must be a system What is function Types of functions Life cycle cost analysis The search for alternatives Why value analysis is a creative tool How to improve your savings performance Functional tests you need to know Value Analysis The Process Goals and objectives for every VA program 15 triggers for selecting your value analysis projects Why you need to target your family of products services and technologies 6-step value analysis funneling process Benchmarking for success How to utilize a functional matrix to make your job easier How to blast create and refine your VA project into savings Why you can t stop at the first best idea What s holding back creative thinking Why pilot studies are always required How to design evaluation instruments 11 key requirements for any VA program Creating Managing and Maintaining High Performance VA teams What makes teamwork work The characteristics of successful VA teams What goes wrong with teamwork How to avoid negative VA team dynamics How to develop a mission statement Characteristics of an ideal mission statement Why VA teams break down in their teamwork How to obtain optimal VA team performance Team-Based project management model The role of team leaders Techniques and strategies for facilitation Why listening is the 1 Skill What s your conflict style 4-Step change management model Team members roles The 4 stages of VA team development Why you need a social contract 11 tips for developing high-performance VA teams How to structure your VA team meetings for success Value Analysis Project Management What is VA project management How to select your first cycle of value analysis projects How to conceive define plan and implement your VA projects Goals and objectives for a VA study How to collect data and data mine How to benchmark to identify VA candidates How to select build and manage your project work groups How to plan and implement your VA projects How to keep your VA project on schedule How to use your power influence and leadership skills to succeed How to manage change effectively with your peers Spring 2013 Healthcare Value Analysis Magazine 12 Fill in the blanks about your Price Savings ( ( ( ( ( ( ) Are your group purchasing savings becoming smaller and smaller ) Is your product standardization substantially completed ) Have you had increases in your group purchasing contracts last year ) Are you scraping the barrel for price savings for 2013 and beyond ) Is inflation eating into the savings you have achieved in prior years ) Are your value analysis teams running out of meaty projects If one or more of these Price-itus symptoms (or the lack of new price or standardization savings opportunities) are causing you to lose sleep at night then maybe it s time to invest 38 minutes to learn more about the future of supply chain expense management Utilization Management Avoid these symptoms by signing up for a FREE demo at Spring 2013 Healthcare Value Analysis Magazine 13 Clinical Value Analysis Value Analysis It s All About Data James Russell RN-BC MBA Value Analysis Facilitator VCU Health System Richmond VA After price is whittled down as low as it can go utilization can offer an avenue for cost savings. However without good data before and after a project all you have is an opinion. Often in the value analysis role we get zeroed in on the price of a widget and for good reason. Most value analysis programs are evaluated in terms of dollars saved and this is a fine metric for determining a department s return on investment (ROI). However once the proverbial low hanging fruit has been picked one can only squeeze the nickel so far. Luckily cost savings (or avoidance) can occur from other strategies. PIV Case Study As an example consider a project involving peripheral intravenous catheters (PIV s). Clinicians at the Virginia Commonwealth University Health System (VCUHS) wanted to bring in a PIV securement device. They went through the clinical evaluation process and successfully trialed several products. They chose a vendor and made the case for adoption of the device. Part of the Value Analysis process involving new products at VCUHS is to develop a hypothesis related to the proposed product s impact. In this case the clinicians claimed that using the securement device would prevent PIV s from being inadvertently discontinued (pulled out) by Spring 2013 Healthcare Value Analysis Magazine 14 Clinical Value Analysis patients moving around (transferring from bed to stretcher or wheelchair bedside commode turning over in bed etc.). By preventing this negative outcome the device would 1. Decrease the frequency of PIV restarts experienced by patients thereby decreasing their pain and the nurses instances of exposure to a contaminated needle. 2. Decrease the quantity of supplies used in performing PIV restarts thereby decreasing the total cost of those supplies. A key to the required hypothesis is deciding on the measurable data by which the project s success (or lack thereof) will be measured in this case normalizing the data to account for census swings was important. The hypothesis was as follows After integration of the PIV securement device the number of PIV supplies utilized per patient day will decrease by 25%. This will decrease patient discomfort PIV supply costs the amount of time clinicians must devote to unanticipated PIV restarts and the clinicians exposure to contaminated needles. Outcome When evaluating the results of a project the data tells the story. After the PIV project s completion a careful examination of the metrics ensued. The inclusion of the securement device occurred in July 2011. As seen in Figure 1 the number of PIV catheters per patient day remained virtually unchanged from 2010 to 2011. The securement device wasn t fully embraced (included in PIV start kits on all supply shelves etc.) until later in the year. Once fully implemented for the entire 12-month period (2012) the decrease in PIV catheters was quite dramatic 0.69 to 0.36 IVC s PPD (48%). The above results are powerful and clinically compelling in terms of decreasing patient discomfort decreasing nursing time spent on PIV restarts and Spring 2013 Healthcare Value Analysis Magazine 15 Clinical Value Analysis decreasing the potential for needle sticks. What about the costs The cost per patient day for PIV supplies increased the first year. What happened We had to pay for the PIV securement device. This actually increased our cost per patient day for the PIV procedure. However once the utilization of the supplies decreased dramatically (2012) the costs decreased as well inclusive of the new securement device. The decrease is recorded at 21%. This is the Figure 1 IV Catheters Used per Patient Day by Calendar Year 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 IVC s PD 2010 0.70 2011 0.69 2012 0.36 delta between the cost per patient day before the project ( 2.34) and after ( 1.84) as shown in figure 2. For VCUHS that s nearly 6 figures in annual net spend. All elements of the hypothesis have been proven. Clinical quality (patient discomfort) has improved staff safety concerns (needle stick exposures) have decreased nursing time devoted to PIV restarts has decreased (fewer IVC s used per patient day) and supply cost per patient day have decreased even including the new securement device. This results in a truly positive outcome and successful project. However it is the data that shows the impact and makes the case for the continued purchase of the PIV securement de2010 2.34 2011 2.85 2012 1.84 Figure 2 PIV Costs per Patient Day by Calendar Year 3.00 2.50 2.00 1.50 1.00 0.50 PD vice. Spring 2013 Healthcare Value Analysis Magazine 16 Clinical Value Analysis Data veterans may be asking if the facility measured any reduction in staff needle sticks. In this project it was decided to consider that a soft but important cost. It wasn t quantified because the facility was doing a great many things to decrease staff needle sticks many of them had begun during the timeframe above. To attribute the needle stick reduction to the introduction of the PIV securement device would be suspect. Instead the team included reducing the exposure to needle sticks based upon the number of PIV s occurring per patient day in the hypothesis. Summary The project described above had a positive outcome in both value analysis areas Cost and Quality. A good value analysis department concerns itself with both and speaks the language of clinicians (quality safety) and operations (cost). When providing feedback to either group data makes the case. It provides a transparent and logical picture of the return on investment for the project. Clinicians pride themselves on making decisions using evidence-based practice. The data above is exactly that. Operational departments use metrics to evaluate performance this is evidenced-based practice as well. It s all about the data. 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 Spring 2013 Healthcare Value Analysis Magazine 17 Expectations Are Higher for Value Analysis Than Ever Before Bigger Savings Goals More Accountability Better Attention to Evidence Quality Improvements Reducing Infection Rates Collaboration with Clinicians How do you take your Value Analysis Program to the whole new level that your senior leadership now expects Dear Supply Value Analysis Practitioners As one of the leading value analysis firms in the healthcare industry since 1987 Strategic Value Analysis has seen the maturity of hospital-based value analysis programs bring about incredible results in cost and quality improvements for hospitals and healthcare systems throughout the country. Incredibly the majority of value analysis programs at hospitals and health systems in the industry today were formed and run with little or no training in the classic tenants of value analysis and value engineering. Yes healthcare organizations have been able to knock down supply chain expenses with their home grown programs with a good rate of success but there is still more money on the table to be captured and knocked down. This next generation of savings will require a new level of sophistication from your value analysis teams. This will require your teams to stop operating on the best price first mentality and start to focus on functional requirement and utilization management. This new and better approach will require a new level of advanced VA tools benchmarks training and more than the old form a team and go save money strategy that we have seen up to this point in the majority of healthcare organizations. Like Lean or Six Sigma value analysis is a true management improvement process with over 67 years of development and enhancements that healthcare organizations are not taking full advantage of because they have never been trained in the classic tenants of value analysis. Value analysis is more than two words it is a comprehensive process that Strategic Value Analysis in Healthcare has embraced since establishing our firm in 1987. Since that time we have trained hundreds of our clients VA teams in our advanced strategies and tactics with the highest level of success. All SVAH Client Teams receive advanced tools guidebooks benchmarks forms checklists support and much more Now SVAH has made our toolbox available to you so you can move to the next level of performance Spring 2013 Healthcare Value Analysis Magazine 18 Available Now...Your Next Generation of Supply Value Analysis Savings and Quality Tools Best Practices Benchmarks and More Discover the Hundreds of Leading Edge Strategies Tools and Resources That Are Successfully Employed at SVAH Client Hospitals Throughout the Country Why a Savings Toolbox Now Realizing that the Supply Chain World and more specifically the Val ue Anal ysis World is forever changing we wanted to make sure our clients receive the most up to date information tools and resources that are essential over the long term for their value analysis and supply chain success. Now you too can benefit from this technology. Million Dollar Savings Ideas Tools and Resources You Need To Have at Your Fingertips Quick Savings Tips Benchmarks VA Study Checklists eBook Knowledge Library Forms Reports & Guides SMART Success Blueprints Value Analysis Utilization Studies Videos & Tutorials Audio & Webinar Replays Value Analysis Leader Certification Learn More About This Exciting Low Cost Toolbox WWW.SUPPLYSAVINGSTOOLBOX.COM Spring 2013 Healthcare Value Analysis Magazine 19 Value Analysis Teams How To Avoid Group Think You need to diversify your VA team s membership to energize your team When selecting or replacing your value analysis team membership you need to consider the diversity of your team s members. Do they look alike dress alike and think alike (i.e. homogeneous) or are they edgy rebels and free thinkers (i.e. heterogeneous) The reason I ask this question is because there have been numerous studies conducted which show that if you have a homogenous group you are in danger of group think or the practice of thinking or making decisions as a group in a way that discourages creativity individual responsibility and promotes mediocrity. I know you have seen this group think behavior with your own value analysis teams over and over again. Team members don t want to hurt someone s feelings step on their toes or seem to be unreasonable so you go along to get along . Not a good business practice if you want to make the best decisions possible at your value analysis team meetings. Another big turnoff is a team member who is obviously protecting their turf when a decision is put on the floor for discussion. They will find every reason possible (logical or illogical) to keep their products or services from being changed. Yet no team member will challenge their positions opinions or intransigence. Spring 2013 Healthcare Value Analysis Magazine 20 Value Analysis Teams This is the danger of group think - when the desire for harmony and conformity trumps good management practices. To avoid this counterproductive dysfunctional and limiting group dynamic we recommend the following four new rules 1. To ensure the unbiased nature of your value analysis team s composition up to 50% of your membership should be nonclinical. For instance if you have ten members on your value analysis team five would be clinical and five would be nonclinical. The nonclinical members could be recruited from finance maintenance food service public relations telecommunications etc. 2. All value analysis members should be selected for their core competencies instead of by their title. We call this recruiting the usual suspects (OR and ER director infection control manager clinic manager etc.) to be members of your value analysis team instead of selecting them for their unique attitudes talents and traits that complement your value analysis process. 3. This is the danger of group think - when the desire for harmony and conformity trumps good management practices To avoid group think territorial constraints and to lower resistance to change value analysis project managers should have no ownership over the products services or technologies they are investigating. Meaning if they specify use or have budget control over any commodity group they would be disqualified as a project manager on a project in their spear of influence. 4. Rule 3 goes for team leaders too they shouldn t be permitted to lead a value analysis team that is organized by product line if they have ownership over the product line they are evaluating or investigating. For example a director of nursing shouldn t be a team leader for a clinical VA team. Spring 2013 Healthcare Value Analysis Magazine 21 Value Analysis Teams The purpose for these new rules is to structure and encourage your value analysis team members to be cooperative have an open mind and to look at the big picture rather than just their department division or subsidiary s particular self-interest. This goal can only be achieved if there is diversity in your value analysis team membership which will lead to creativity individual responsibility and respect. Guide to Selecting Team Leaders and Team Members Based on Their Core Competencies All winning teams are a combination of attitudes talents and traits matched with tight leadership to give them the needed vision goals objectives and can-do attitude. We need team members and leaders who will take reTeam Leaders sponsibility for their acCompetencies tions and pride in their Motivator accomplishments. Over the last two decades Organized SVAH has documented and observed ideal team Team Builder core competencies or what outstanding value analysis team leaders and team members do more often in more situations with better results than the average performers in highly successful value analysis teams. To identify the individuals in your healthcare organization who also exhibit these same core competencies we would suggest that you employ a 360-degree Spring 2013 feedback mechanism in assessing your team leader and team member candidates qualifications prior to membership on your value analysis teams. This means that you have the candidates their direct report Team Members customers and colCompetencies leagues rate their Analytical Thinker competencies on a scale of 1-10 prior to Organized final selection as a value analysis leader or Reliable and Dependable team member. The reason for doing so is that you only see one Enthusiastic Enthusiastic face of this individual but by having them Result Oriented Takes Initiative assessed by numerous individuals with whom Communicator Computer Literate they interact in many Welcomes Challenges Welcomes Challenges different venues you can truly identify who is the right candidate Anticipates problems and Looks for Growth to be involved in your resolves them and Recognition value analysis proActs as Role Model Acts as Role Model gram vs. being selected by their title. Healthcare Value Analysis Magazine 22 Requisition Manager All of your new purchase requests will be completed online numbered and then automatically triaged to the appropriate responsible party for action. This eliminates the hassle of dealing with the hundreds of unwieldy and non-uniform (e-mail fax and phone) new purchase requests that flow through your office annually. We have listed (see side bar) the primary and secondary features and benefits of our CliniTrackTM Value Analysis Team Management System to give you an idea of how it can help you to quickly organize document and then capture and control all of the pertinent details of your value analysis process for new and better results. If you are looking for an intuitive uncomplicated yet complete system to manage and control your value analysis teams this just might be the solution for you. It will also ensure that you have complete documentation (from requisition to approval) to value justify all of your new purchases No more lost documents no more unanswered questions no more hassles or loose ends with your product service & technology evaluations. or mis- Document Manager To ensure that your important documents are never lost placed in your requisition to approval process all relevant data will be automatically archived in the CliniTracKTM file repository until deemed appropriate to be removed. This will give you peace of mind to know that all of the critical data you require to manage your value analysis studies will be at your fingertips when you need it. FREE 30-Day Trial Click Here to Sign up If you are one of the hundreds of supply chain managers who are dissatisfied with the time lost opportunities and complexity of your current value analysis process then you owe it to yourself to opt in to our FREE test drive of our CliniTracKTM Value Analysis Team Management System to see for yourself if it is the right solution for you. All you need to do is go to our website at to sign up for your FREE test drive. It s just that simple Best of all it only Value Analysis Manager All relevant value analysis team documents will be housed in this module. It will also contain our proven six -step Value Analysis Funneling process to assist your VA team in the evaluation selection of any and all products services or technologies and clinical supply trials. All and all with this module you will never lose a document or miss a vital step in your value analysis process. Clinical Trial Manager This module will provide your clinical supply trial team with a step-by-step process to follow to manage and control all aspects (project manager trial location length training cost benefit analysis survey forms etc.) for your clinical supply trials. By using this embedded process we can almost guarantee you that your clinical supply trials will be more consistent credible and exacting. Spring 2013 takes 38-minutes Healthcare Value Analysis Magazine 23 Value Analysis 101 Value Analysis Steering Committee A Value Analysis Prerequisite In each issue of HVAM we will provide our readers with the one basic proven and time tested tenet of value analysis to help you to refine enhance and advance your value analysis processes. If you have any questions on this lesson please contact us at bobpres or call 800-220-4274 for more information. We have worked with hundreds of value analysis teams over the last two decades and have discovered that the most successful high-performance value analysis teams have had their CEO establish a value analysis steering committee to monitor guide and arbitrate disputes related to their healthcare organization-wide value analysis program. We see it as a value analysis prerequisite Some healthcare organizations have so-called value analysis steering committees but they really function as the actual value analysis committee team. That s not what we are talking about here We are referring to a committee that consists of representatives from your senior management whose role is not to review and evaluate your product service and technology requests or GPO offerings but to provide your value analysis team(s) with overall direction and guidance. A typical monthly meeting agenda of a value analysis steering committee would consist of (i) review of monthly savings reports (new savings this month savings fiscal year to date cost avoidance and rejected savings initiatives) Spring 2013 Healthcare Value Analysis Magazine 24 Value Analysis 101 (ii) report from team leaders on progress from last month and the challenges and opportunities they have identified and (iii) issues that are impeding their progress. We see the most important responsibility of this committee is to arbitrate disputes between department heads and managers and the value analysis team leadership since this is what holds back most value analysis teams from being successful. For example we helped a client to identify 725 989 in telecommunications savings but the telecommunications director at this hospital wouldn t seriously discuss this project with the value analysis team s project manager assigned to this study. When this topic was brought up by the chairperson of the steering committee after being informed of this issue she confronted the telecommunications director s vice president at the committee meeting who didn t have an excuse for his director s in- We see the most important responsibility of this committee is transiences. Fast forward one month and to arbitrate disputes between this savings was implemented and booked department heads and managers and the team leadership by the team. This is the power of the value analysis steering committee it can make decisions quickly that can move your value analysis projects forward or at least put issues to bed if the committee agrees with the department head or manager s position on an issue. Either way this committee can keep the ball moving forward for you as opposed to having roadblocks that are never removed from your value analysis team s way. The value analysis steering committee should be chaired by your president executive vice president vice president of finance or senior vice president. The reason you want the highest level of management to chair your committee is that it gives it status decision making power and clout. The membership of your committee should include but not be limited to the following members supply chain manager value analysis coordinator value analysis team leaders director of quality Spring 2013 Healthcare Value Analysis Magazine 25 Value Analysis 101 improvement vice president of finance (if not selected as chairperson) vice president of nursing vice president of support services vice president of medical affairs and a recorder. The goal here is to have the right stakeholders on your committee who can make decisions for their divisions which can differ from facility to facility. I can speak from experience that not having a value analysis steering committee in place to monitor guide and arbitrate disputes can often cover up serious deficiencies in your healthcare organization s value analysis program. I ve seen team leaders avoid their responsibilities ignore chronic problems and miss most of their team meetings. Then senior management after many months wonders why their value analysis team isn t saving money. It s all about accountability In the final analysis that s what your value analysis steering committee can do for you hold all team leaders and team members accountable for your value analysis program s success. Don t miss this critical structure in your value analysis program On-Site Fully Customized 1 2 or 3 Day Advanced Value Analysis Training Program Can Help Your VA Team(s) Increase Savings by 300% or More This (training) program offers a different perspective on value analysis than the GPO based programs. It can offer a recipe complete with tools for the development or revitalization of a (VA) program. Betsy Miller Value Analysis Manager Shands Healthcare TrainingOnSite.htm or E-mail bobpres for On-Site fees Spring 2013 Healthcare Value Analysis Magazine 26 Leadership Interview Value Analysis Leadership Interview Alan Weintraub Chief Procurement Officer Director of Support Services Enloe Medical Center Chico CA The following interview was conducted by Robert W. Yokl Managing Editor Healthcare Value Analysis Magazine Allan Weintraub is a 30-year supply chain veteran who is Chief Procurement officer and Director of Support Services for a multi-facility system serving a six-county region in Northern California. Allan is past president and board member of the California Association of Healthcare Purchasing and Materials Management. (HVAM) How did you get into value analysis (AW) I think it was an evolution born out of my passion for decision-making models but certainly influenced by the works of Miles Deming and Yokl. I was interested in better ways to make capital and consumable technology decisions than old product standardization committees could offer. I saw technology purchases merely as an input that needed to be evaluated by its effect on quality and outcomes. I felt value analysis offered a more suitable method to consider technology purchase decisions. From there it became about crafting a model for a program that fit within the organization s culture. (HVAM) When you first started planning your value analysis program what was your vision of how value analysis should operate at Enloe Medical Center Was it a steep learning curve for you and your organization (AW) Those who were around at that time will likely tell you that I was passionately committed to certain characteristics that I felt the program must possess to be effective evidence-based with collaborative decision-making an emphasis on determining what technology is functionally necessary to achieve a desired quality outcome a focus on cost of care and the inclusion of both new technology requests and a retrospective review of existing technologies. However I wanted the program to have a certain degree of flexibility that is to withstand being moved to different settings (both physical and electronic). I didn t want our program restricted to only these individual decision-makers and only in this specific meeting. Spring 2013 Healthcare Value Analysis Magazine 27 Leadership Interview In addition I wouldn t say the learning curve was steep but the adoption curve sure was. Our program caused us to change the way we make decisions and that didn t happen overnight nor did it happen without some resistance. (HVAM) A number of years ago you hired a value analysis coordinator to manage your value analysis program. Back then it might have been a bit forward thinking but today hiring a value analysis coordinator is a best practice for hospitals and systems. Why do you think this is such an important position for your hospital and why should other hospitals consider this position mission critical for their organization (AW) First off let me just describe the position at our hospital. An outstanding value analysis coordinator is a supremely talented individual that is able to speak multiple languages possess x-ray vision along with a microscopic attention to detail able to build bridges while standing on them and display the skills of a UN ambassador while being outspoken. What I mean is that we are dealing with the second largest area of expense in a hospital. Numerous stakeholder groups have input in how the money is spent. Those stakeholders don t all speak the same language so I wanted someone with a clinical background who understood supply chain to translate between clinicians and non-clinicians a clinical financial liaison if you will and focus on it every day to ensure that we maintain traction for our program. Someone who also gets up out of their seat and observes practice to understand what our clinicians are trying to accomplish...someone who sees the disconnects and wants to make a difference like I do. How Do You Approach Gaining Your Senior Management and Department Head s Buy-In to Value Analysis I was passionate about the characteristics of the program but open to what the organization s culture would support. So the short answer is that I sat down and talked to people - our senior leadership team medical staff key department leaders and shared what I saw as the impetus for change. We talked about the inconsistent use of items excessive variation the lack of consensus and clinician input into decisionmaking fragmented process unfavorable financial impacts of existing technologies and the disconnect to quality. Once there was common ground on those items I shared the characteristics I desired for the program and asked a lot of questions to determine what each leader would support in terms of commitment structure process turnaround time etc. Asking these questions allowed me to implement a program that fit within Enloe s culture. From there we kept at it until it was grafted into the fabric of how we do business. Spring 2013 Healthcare Value Analysis Magazine 28 Leadership Interview (HVAM) Could you give me an example of one or two of your most recent successes (AW) Our IV securement device initiative stands out due to the collaboration between our anesthesiologists nursing staff OR staff radiology and our value analysis program. It is a great example of how focusing on functional need first helped to facilitate solutions. Our stakeholders in this initiative were focused on meeting the patient care need (functionally) rather than being married to any particular manufacturer. Our annual savings will exceed 43 000. Another recent initiative focusing on reducing variation in both price and practice in orthopedics is expected to save our organization in excess of 500 000 over the next year. (HVAM) Can you share with me some key leadership attributes that make your value analysis program successful (AW) Several things stand out. First we hold quarterly meetings with our senior leadership team to discuss our value analysis program activities and initiatives and any concerns we have relative to our initiatives. I will tell you that the opportunity to collectively discuss these issues with our CEO CFO and VP s and make decisions together is amazing and key to our success. Second we have great working relationships with quality management and Infection Control which I believe is essential. Third we use a standardized scoring system to objectively rate each request. Fourth each of the early decisions that I made a flexible movable model inclusion of new and existing technology review and inclusion of Pharmacy--have all contributed to our success. Last but certainly not least we have an outstanding program coordinator who is everything I described earlier and more. (HVAM) How is your value analysis program incorporating new disciplines within value analysis such as utilization management and evidenced-based evaluation into your program (AW) Maybe here too we were a bit ahead of the curve in that we ve used a utilization benchmarking tool for several years now. Prior to using it I felt we had a blind spot that its use helps resolve. We also consider studies and market data when available and reliable to drive evidence-based decisionmaking (often shying away from early adoption of new consumable and capital technologies). (HVAM) What advice would you give a fellow supply chain leader if they were looking to take the plunge into a comprehensive value analysis program (AW) Ensure senior leadership support hire the right coordinator be careful to exercise relational (rather than positional) power understand your culture and don t worry about whether your structure matches what you may see in a magazine article. Value analysis is a methodology how you apply it depends on you and your organization. (HVAM) How do you envision the impact of value analysis moving forward in the age of the Affordable Care Act dramatically effecting hospitals bottom lines (AW) The ACA is a very complex issue which many are struggling to understand. Since I don t possess the crystal ball that gives me the answers my approach is simple. I believe that our ability to control expenses and reduce cost of care may be the difference between those that make it and those that don t. Unless or until I find a methodology more effective than value analysis I m sticking with value analysis. 29 Spring 2013 Healthcare Value Analysis Magazine Value Analysis Techniques Did You Know That Standardization Can Cost You Money Not all standardization is good for your healthcare organization s bottom line For over 40 years the healthcare supply chain industry has espoused standardization as a technique of choice for reducing and controlling their costs. I cannot argue that if implemented strategically this will definitely reduce your supply costs. Unfortunately we have seen hundreds of supply chain organizations over-standardizing because of the scope of their standardization practices. Consequently this practice ends up costing you more than you are saving and you may not even realize this is occurring. Best Practice To give you more insight into this thinking let s define the true benefit of standardization as a best practice Standardization is the consolidation of vendors and or manufacturers of defined product service categories with the goal of gaining the most economy of scale to render a better negotiable price and or contract terms. A simple example of this practice would be consolidating your Peripherally Inserted Central Catheters (PICC Lines) to one manufacturer which will give you the highest group purchasing contract tier to achieve Best Price in this category of purchase. On the surface this looks like a great price strategy but here s Spring 2013 Healthcare Value Analysis Magazine 30 Value Analysis Techniques most hospitals systems and IDN s decide to go one step further and standardize on the PICC lines that the customers will use house-wide to one primary triple port PICC line on the manufacturer s contract offering. Their thinking is that this one PICC line would cover all of their customers needs throughout their healthcare organization. This is what we call over-standardization. Does this thinking really benefit your bottom line New Tactic First off there is no additional economy of scale that you will receive by consolidating inside a manufacturer s contract by doing this since you have already consolidated your volume to the one manufacturer and gained your best price. You may think that you are keeping inventory lines to a minimum but does that really equate to a measurable advantage Even worse with this PICC lines standardization example you now have standardized to a triple port PICC line when the majority of the time your patients only require a single or dual port but the only option your PICC nurses have is an expensive triple port line. This equates to 13% to 32% of unused PICC line features being wasted 53% to 71% of the time. The question you must ask yourself is why knowingly throw away 13% to 32% of your PICC lines cost value representing tens of thousands of dollars annually especially when it is not clinically required The lesson to be learned here is that your triple port PICC line will cover all of your clinical bases but you are wasting the value of this particular product. Keep in mind that the goal of value analysis is to find these gaps and close them to make sure that you are only using the exact product with the right configuration at the right time. Customization vs. Standardization The solution to this over-standardization problem is to look at customizing your PICC lines (and other commodities) within the manufacturer s product mix instead of standardizing on one PICC line. Spring 2013 Healthcare Value Analysis Magazine 31 Value Analysis Techniques To this end find out through observations and interviews what your nursing floors departments unique PICC line requirements are and then just buy what they absolutely need no more or less. Then establish standards for each nursing floor department. (e.g. ICU dual and triple PICC lines ED single and dual 4 Tower North single line etc.) to build your purchasing specifications. Next follow up with training programs in the proper use of each of these PICC catheters. The goal in doing these three steps is to eliminate the wasted and costly feature gaps to ensure that you are only using what you absolutely need not only in PICC lines but all products and services organization-wide. Further make sure you are utilizing every penny dollar you pay for each and every product service you buy since waste and inefficiency is no longer an option Ignoring A Customer In Your Value Analysis Process Can And Will Destroy Your Credibility When we teach our clients value analysis team members in our Lean Value Analysis Program about the Hierarchy of Customers (internal and external) we start out by focusing on the obvious customer who is anyone who touches the product service or technology through its life cycle. their key customers and stakeholders in new product evaluations that their value analysis team has approved for purchase. Then through happenstance they find out that these customers and stakeholders were using the product improperly and wastefully not to mention upset that they were not involved in the value analysis process of their product. These misunderstandings are quite an embarrassment for value analysis teams when the key customers and stakeholders find out (and they will find out) that they were omitted from their product s value analysis process. at the start of their project value analysis project managers don t map out (on paper) who their customers stakeholders and experts are in their value analysis study. Don t make this same mistake All it takes to avoid this fatal error is to ask these three questions Who touches the product service or technology through its life cycle who can block or influence this initiative and who knows more about the product service or technology than any other person By conducting this short exercise you can be assured that you won t miss a customer stakeholder or expert in your value analysis process ever again. 32 However we also talk about the importance of identifying stakeholders (anyone who can block or influence your initiative) and experts (know more than any other person about the product service or technology) because if you ignore any one of these customer classifications in your value analysis process you can and will de- I can t think of any one thing that stroy your credibility. can terminate a value analysis study more rapidly than missing or I cannot tell you how many times ignoring a key customer in your we see value analysis project man- value analysis process. This misagers forget to communicate with take happens most often because Spring 2013 Healthcare Value Analysis Magazine Who s In Charge of Your Purchase Services If you are honest the answer is nobody Breakthrough book will change the way you manage your purchase service contracts If not now when Dear Colleague Over the last 25 years I have researched tested and applied the lessons I will share with you in my new book that has saved my clients on average 26% (or 28 090 per occupied bed) on their purchase service spend. What I have discovered from this experience is that purchase service management is the rich gold mine that most healthcare organizations have overlooked ignored or neglected. Why wait any longer to rein in these multimillion dollar expenses This is the dirty little secret that I will explain in depth in my new book. Please send for (see coupon below) a complementary copy to learn my insider secrets to this discipline. Warmest Regards Bob Yokl Robert T. Yokl Purchase service management is the rich gold mine that most healthcare organizations have overlooked ignored or neglected. Why wait any longer to rein in these multimillion dollar expenses Fax Coupon to 610-489-2505 to Receive Your Complementary Book Yes please send me How to Rein in Your Multimillion Dollar Purchase Services... FREE of charge to Name ________________________________________________ Title ____________________________________ Organization ____________________________________________________________________________________ Address ______________________________________________City __________________________Zip ________ Phone _________________________________________________E-mail __________________________________ To order your FREE copy of How to Rein In Your Multi-Million Dollar Purchase Services Expense return enclosed order form. Spring 2013 Healthcare Value Analysis Magazine 33 Utilization Management The Missing Link in Supply Expense Management Do you have all of your supply expense management bases covered It wasn t so long ago that price and standardization was king in supply chain management circles. All you needed to do was join one or two GPO s and then maximize your compliance and you where home free. Then products services and technologies became so complex that value analysis became in vogue to decide what was the most appropriate product service or technology to purchase. Now more and more supply chain professionals are acknowledging that there is a missing link in their supply expense management strategies and tactics attacking their utilization misalignments. At a recent AHRMM s Executive Thought Leaders Forum participants emphatically stated Even with the lowest possible price if utilization is inappropriate the cost will remain too high. Supply chain leaders also noted that with commodities there is a point at which the price is as low as it can possibly be and they must look at reducing utilization to capitalize on further savings. Well it looks like the jury has given its verdict utilization management is Spring 2013 Healthcare Value Analysis Magazine 34 Utilization Management the future of supply expense management. However to make this great leap forward from price and standardization alone you will need your value analysis team(s) to also focus their cost reduction efforts on utilization management this way you will be covering all of your supply expense management bases. More importantly this transition from price and standardization to also include utilization could up your savings yield by as much as 7% to 15% on your total supply spend. Wouldn t you agree that it is worth the effort One word of caution the transition to utilization can t be achieved with your current spend manager s tools since they are focused on price not utilization. You will need to develop or purchase new value analysis analytical tools that are However to make this great built specifically to attack your utiliza- leap forward from price and standardization alone you will tion misalignments. need your value analysis As we like to say you need to have team(s) to focus their efforts on more than one tool in your supply chain utilization expense toolbox to enable you to have the right tool for the right task at the right time to make your cost management job easier and more efficient It s just like a carpenter the more exacting the tool he has that is designed for a specific purpose the faster easier and more professional the job gets done. As I said the verdict is in utilization management is the future of supply expense management. Your bosses your peers and your professional associations are jumping on this bandwagon. Isn t it time you make the same leap forward with your own value analysis program to align with your healthcare organization s transition from volume-based to value-based purchasing It can make all the difference in your hospital system or IDN s bottom line now and in the future. Spring 2013 Healthcare Value Analysis Magazine 35 BREAKTHROUGH GAME CHANGING BOOK IS YOURS FOR FREE THE FUTURE OF SUPPLY CHAIN MANAGEMENT IS ALL ABOUT UTILIZATION BECOME A SAVINGS MAGNET Read this book and in a few weeks save more money than you have in years Sound unbelievable Robert T. Yokl and Robert W. Yokl healthcare s leading authorities in Supply Utilization Management have helped hundreds of hospitals healthcare systems and integrated delivery networks to save close to a half billion dollars by employing the same utilization management strategies tactics and techniques that they will teach you in this book. Understand why you are slowly but surely running out of price savings Learn why utilization management is more important than ever before Hear why a new discipline of utilization management is on the horizon Review 8 categories of utilization misalignments that cost you money Know why value analysis analytics is the new science of savings Grasp the worth of the value analysis utilization management connection The Book is FREE ( 12.95 Value) but the Information is PRICELESS Click Here To Get Your FREE Copy Today Spring 2013 Healthcare Value Analysis Magazine 36 Value Analysis Analytics What You Can t See Will Hurt You Most of your new saving opportunities are below the water line We like to equate supply chain expense savings to an iceberg Above the waterline are your price and standardization savings which are easily identified. However your robust savings opportunities (67% to 79%) are below the water line where they are hidden from your view. More importantly these hidden utilization savings can and will hurt your healthcare organization s bottom line if not eliminated rectified and controlled. Scientific Approach That s why a more scientific approach is called for to root out your utilization misalignments before they damage your healthcare organization s bottom line. This approach is called value analysis analytics or the new science of savings. With this said I m sure you realize that your hospital system or IDN s senior management is looking to its supply chain professionals for even more savings to help them meet this unprecedented and unanticipated challenge in the healthcare marketplace. These challenges include lower revenues demand of higher quality and more patients. Unfortunately these new supply chain savings won t be achieved with price and standardization alone. New sources of savings must be discovered to bridge the savings gap that you will experience with the erosion of your price and Spring 2013 Healthcare Value Analysis Magazine 37 Value Analysis Analytics standardization savings in the very near future -- if you haven t already. This is because most healthcare organizations aren t employing a scientific approach to identifying the best value analysis target beyond price. Value Analysis Analytics That s where value analysis analytics comes into play. It s the art and science of measuring trends patterns anomalies and variations in your supply chain spend to quickly uncover savings opportunities. For example we identified with our Utilizer Dashboard (which does all the value analysis analytics work for our clients) that one of our clients transcription service utilization cost was 1.64 per CMI adjusted patient day higher than their peers or 211 888 based on annualized savings. It s been our observation that anomaly in their supply spend they not most healthcare organizations are only discovered that they were spend- throwing darts at an elusive and moving target to find their value ing too much on their fragmented and analysis candidates and with decentralized outsourced transcription meager results services but also decided after a thorough analysis to outsource all of their transcription functions for an additional savings of 66 999 annually (or 278 887 in total). It s not an accident that we uncovered this big transcription savings and 76 other utilization misalignments for this client. It s because we employed value analysis analytics to do the difficult work for us which never would have been uncovered by the naked eye. Measuring Over Time Because some of our clients have employed value analysis analytics for several years we are able to trend their purchases over a two or three-year period to quickly Spring 2013 Healthcare Value Analysis Magazine 38 When our client investigated this Value Analysis Analytics identify additional saving opportunities that they weren t aware of until the value analysis analytics led the way to these savings. Since things change and people change this always brings about new savings opportunities when you look at your data retrospectively. This was the case with a 98 bed hospital we worked with which reduced its contrast media cost by 43 632 the first year after it identified this utilization misalignment. Then the hospital had to revisit this same commodity two consecutive years thereafter when its contrast media utilization cost spiked repeatedly. The reason for these lapses in protocol was that the radiology staff members kept falling back to their old habits and had to be re-educated about the best practices that were keeping costs in line in the first place. It is a worthwhile effort for you to refresh analyze and benchmark all of your purchasing data on a quarterly basis to ensure that your utilization trends patterns and variations are within acceptable limits and have not spun out of control. A reversal in your supply chain expense performance metrics can easily happen especially when your hospital s census has a large variance. Up Your Value Analysis Game It should be understood that since your value analysis team members have limited time for value analysis studies their energies can t be needlessly wasted on dry holes. Your value analysis candidates must be real quantifiable and irrefutable before you even consider them as targeted savings opportunities. This precision in identifying your value analysis candidates can only happen if you are assisted in this effort by the new discipline of value analysis analytics. It will give you the process metrics and competitive intelligence you need to uncover the high-value savings targets that have eluded you for years. If you are looking to up your value analysis game value analysis analytics is the correct path to follow for repeatable savings. Spring 2013 Healthcare Value Analysis Magazine 39 Evidenced-Based Value Analysis Good Evidence The Missing Link Dee Donatelli RN BSN MBA Sr. Vice President Provider Services Hayes Inc. There s no question that great advances in medicine have been made over the last century. Still not every medical technology service and intervention that we have at our fingertips is safe or works as well as or better than existing options. That s what clinical trials are for to figure out how well a product or medical technology works and compares with other approaches to identify when and for whom it should be used and ultimately to determine its clinical value. If the clinical trial evidence shows a clear benefit then we need to make sure we re using the medical technology in the way in which it was intended--for the appropriate disease and patient population. This is what we call evidence-based medicine a common buzz word these days that everyone seems to be talking about. But as we know talk doesn t necessarily align with behavior does it Recognizing the need to incorporate evidence into our purchasing and utilization decisions is one thing. Being able to evaluate the quality of the evidence and understand how the data should impact our healthcare decision making is another. Once we commit to using clinically based criteria to make decisions about the items we use in the course of delivering medical services to our patients the next step is to understand the evidence and to differentiate between good and not-so-good evidence. So what is evidence Let s define it simply as the outcome data derived from formal scientific research. That s it. Ideally we want the evidence we use to be of the highest quality and to be unbiased that is we want the researchers to report the Spring 2013 Healthcare Value Analysis Magazine 40 Evidence-Based Value Analysis results clearly and accurately without any influence or bias from the clinical trial sponsor or any of the stakeholders involved in the research. Don t consider the slick marketing brochures that sales representatives hand you or the testimonials that appear on manufacturers websites to be unbiased forms of evidence. Unfortunately not all evidence from scientific research is created equal. Assessing the quality and strength of the evidence isn t easy. It s not enough to simply review the abstracts of a few studies that the librarian at your institution pulled when you requested a search. A host of factors (study design sample size patient population study execution data reporting etc.) impact the quality of evidence and these factors often aren t apparent in the abstract alone. High-quality evidence begins with a suitable research design. The figure shows the basic hierarchy of clinical study designs. The weakest form of evidence comes from single case reports. These are the anecdotal reports of the outcomes seen in 1 or 2 patients. The strongest type of evidence comes from meta-analyses and randomized controlled trials (RCT) that enrolled enough subjects so that the results have meaning. Keep in mind that we don t always need an RCT to determine with reasonable confidence whether a health technology works and is safe. Sometimes other types of studies provide high-quality evidence as long as they are well designed well executed and applicable to the patient population in which we re interested. Moreover even Spring 2013 Healthcare Value Analysis Magazine 41 Evidence-Based Value Analysis the best study can be fatally flawed if it s poorly executed. That s why it s important to review the entire body of evidence rather than just a few studies. We need to look at all of the clinical evidence to establish an accurate perspective of a technology s efficacy and safety. Cherry picking only those studies that support one position or opinion is a poor way to assess and compare the clinical value and operational and financial impact of new and existing health technologies. And since new studies are added to the body of evidence over time any review of the evidence must be ongoing rather than a one-time process. Good evidence has all too often been the missing link in our health technology acquisition and utilization decisions. It s time for a new approach. Let s remove marketing considerations vendor-clinician relationships physician preference hope versus proof and revenue potential from the process. Let s focus instead on evidence that documents improvements in patient outcomes or operational efficiencies. By integrating high-quality evidence into our decisions we have the potential to improve clinical outcomes reduce waste and unnecessary costs and make more cost-effective Ms. Donatelli has more than 30 years of experience in the healthcare industry with expertise in the areas of supply chain cost reduction and value analysis. Before joining Hayes Ms. Donatelli was Vice President of Performance Services at VHA Inc. where she provided executive leadership and direction for VHA s consulting services including Clinical Quality Value Analysis. She is a Certified Material Resource Professional (CMRP) and a Fellow of the Association for Healthcare Resource and Materials Management (AHRMM). She was recently elected president-elect of AHVAP the Association of Healthcare Value Analysis Professionals. Dee can be reached at ddonatelli for questions or comments. Hayes Inc. (http an internationally recognized leader in health technology research and consulting is dedicated to promoting better health outcomes through the use of evidence. The unbiased information and comparative-effectiveness analyses it provides enable evidence-based decisions about acquiring managing and paying for health technologies. Good evidence has all too often been the missing link in our health technology acquisition and utilization decisions Spring 2013 Healthcare Value Analysis Magazine 42 Benchmarking The Search For Best Practices It s not the metrics that count but how they lead you to superior performance There is one overlooked fact about benchmarking that it is the search for best practices that leads to superior performance. This is accomplished by utilizing metrics to determine performance gaps in your practices and then to understand why you are different from your benchmark partners. Or where you are now vs. where you should be to meet or exceed your peers practices This fact was brought home clearly to us a few years ago when we were benchmarking a client s forms cost. Our client s cost per adjusted patient day was 1.26 but the best-in-class benchmark in this category of purchase was .59 cents. Or a gap of 0.67. We couldn t believe this was possible until we contacted the best-in-class hospital to understand what they were doing differently. This mystery was quickly solved when we uncovered by way of a discussion with their peer hospital that they had gone 98% paperless. This then become our best-in-class best practice for forms that we recommend to our clients. Therefore it s not the metrics that count in benchmarking but how they can lead you to superior performance at your own healthcare organization. That s why blinded benchmarking studies never work only customized studies can give you the right answers. Spring 2013 Healthcare Value Analysis Magazine 43 Healthcare Supply Chain Best Practices Podcast Now Over 150 000 Listens SVAH Podcas ts THESE SPECIAL AUDIO PODCASTS HELP Y O U S AV E D O L L A R S A N D M A K E S E N S E Generate Actionable Bottom Line Savings Open Up a Whole New World of Savings Beyond Price Lead your Organization to the Next Level of Supply Chain Performance Purchase Cost Is Just the Tip of the Iceberg Reining in Your Multimillion Dollar Purchase Services Comparative Value Analysis Analytics Will Maximize Your Performance 5 Biggest Myths About Healthcare Supply Utilization Management 4 Things to Make Your Cost Management Job Easier Listen online at podcast.htm Or Find Us On ITunes Here Spring 2013 Healthcare Value Analysis Magazine 44 The Last Word The Evolution of Value Analysis Michael Bohon Founding Principle Healthcare Solutions Bureau Twenty-seven years ago I unexpectedly found myself working in the supply chain sector of the healthcare industry in Arizona. For nineteen years prior to that I was also employed in the supply chain but in the steel and electronic businesses back east. In some ways the transition from electronics to healthcare was smooth. In others it was a challenge. I immediately took pleasure in the fact that everything my team and I did during our daily work had a positive effect directly or indirectly on another human being. I could not say that about my previous jobs. What really was a surprise to me was the technological change that occurred rapidly and continuously with multiple new product lines and product changes being introduced weekly. That s when I was introduced to a Product Evaluation system. In fact the hospital where I was employed in 1986 was one of the first to have an RN on the materials staff and she was the key to much of the success we experienced. It was a good process which provided some order in difficult situations. At least it offered a channel to have new products reviewed in a less subjective manner. Good decisions were made and dollars were saved. But was it the real answer to all the issues that the supply chain faced Did it maximize all opportunities and make all the right decisions Probably not Now in the 21st century we use a process called Value Analysis . Where did this concept come from When I conduct seminars for the Institute for Supply Spring 2013 Healthcare Value Analysis Magazine 45 The Last Word Management I ask people from industries other than healthcare if they use a value analysis process in their procurement. The most common response is the question What is value analysis This is surprising because the concept is said to have originated as value engineering during World War II by General Electric which is defined by SAVE International as Value engineering is a systematic method to improve the value of goods or products and services by using an examination of function. Value as defined is the ratio of function to cost. Value can therefore be increased by either improving the function or reducing the cost. It is a primary tenet of value engineering that basic functions be preserved and not be reduced as a consequence of pursuing value improvement. The transition from Product Evaluation to Value Analysis has been a good one that enabled hospitals to increase the breadth and depth of their programs. They have expanded their scope and included broader and more consistent participation by key players. They are using new tools including software to document their processes track their savings and verify the correctness of their decisions. Hearing this we can assume that we have finally reached nirvana. Hold on Not so fast As quickly as we progress the world around us continues to change even more rapidly. So what s new There is this new concept called Value-Based Purchasing. (There s that value word again.) It states that not only cost and quality are important but that now we must address outcomes. This changes our whole approach Spring 2013 Healthcare Value Analysis Magazine 46 The Last Word once again because prior to this it was advisable to have physician participation in our meetings. Now it is virtually required. How else are we going to address the outcomes piece of the formula That will make for a different and certainly more effective means of addressing product and service selection. AHRMM recently announced a new movement they are championing in the supply chain CQO. Its symbol (below) shows the area of intersection of the three circles of focus. The point in which they all overlap could be redefined and referred to by the term we have heard before VALUE. After I attended a supply cently during which a how many used a valfacility. He also asked regular meetings little is accomplished. responded that they or weren t happy with the results. This being said value analysis is a complex and arduous method but when done correctly can provide immeasurable advantages to its users. Healthcare needs these aids to improve its value platform. The wisdom that can be gleaned from publications like this is invaluable. Take advantage of it Michael Bohon CPSM CMRP is the Founding Principal of HealthCare Solutions Bureau (HCSB) a healthcare supply chain consulting firm and speakers bureau. His extensive business background spans 19 years of work in materials operations sales and administration in three industries (steel electronics and specialty manufacturing) plus the last 24 years in healthcare supply chain management. Prior to founding HCSB Bohon held positions as Director Supply Chain Management at TMC HealthCare and Director of Purchasing and Contracts at Health Partners of Arizona. He also worked as a consultant independently and for Perigon LLC and OMSolutions. Among his accomplishments in consulting are the supply cost reduction of 4M at two major systems in the Northeast and leading successful facilities planning and design projects at expanding hospitals. Michael can be reached at bohon with your questions or comments. all that is our goal. chain regional meeting respeaker asked the audience ue analysis process at their how many just attended called Value Analysis where About half of the audience haven t attended a meeting Spring 2013 Healthcare Value Analysis Magazine 47 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. Prove Positive A typical hospital normally saves 1% 2% or 3% on their total spend with price or standardization 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. Our Clients Were Skeptics 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 Spring 2013 Utilizer.htm Healthcare Value Analysis Magazine 48