Healthcare Purchasing News asked a group of key supply chain movers and shakers to define value analysis. Here’s what they said.

Value analysis is a proactive process that a provider uses to engage their clinicians and their administrative leaders into supply chain decisions and activities with the ultimate goal of driving down costs for supply chain expenditures. Value analysis is designed to address practices, vendors and products and identify how they are used in the organization within the context of managing costs, while at the same time improving quality, organizational efficiency and effectiveness.

Value analysis is a consistent process that is used to make decisions around the products and services that an organization uses. This would include both new products and services and existing products/services where savings opportunities might exist. This process should take into account objective criteria for decision making based upon:

• Functional profile of the product/service – what does it do?

• Quality/safety profile of the product/service – how well does it perform, when should it
be used

• Cost profile – what is the cost or reimbursement considerations

 – Peg Tinker, MSA, LAC, LSW, senior director,
VHA Performance Services, VHA Inc., Irving, TX

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Value analysis is a function-oriented, systematic team approach for providing, designing or investigating the right functions (primary, secondary and aesthetic) for the millions of dollars of products, services and technologies that are required to operate a healthcare organization. VA studies do focus on cost and quality improvements which is paramount in the value equation. The value methodology can be applied to any product, process, procedure, system or service in a healthcare organization. Its goal is to ascertain through value studies, those characteristics deemed most important or critical for performance by customers (internal and external) then provide these attributes in their products, services or technologies – no more and no less.

Our surveys show that only 1 in 10 healthcare organizations are really practicing VA as I have just described it, thereby missing the opportunity to slash 7 percent to 15 percent off of their supply chain expenses annually. This is because they think they are performing value analysis studies, but they are really doing something else and calling it value analysis.

Value analysis is the process of comparing the total cost of an effort with its total return. This includes both pro forma projections and subsequent validation of actual results. All costs and returns must be considered and measured, including economic, clinical, social, environmental, etc.

The most basic definition of value analysis is the traditional process hospitals have used to assess new products prior to utilizing them in the treatment of patients. The goal is to analyze and compare products with the goal of providing quality patient care while controlling expenses.

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Executive-level definitions of value analysis

The hits and misses of value analysis