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Additionally, examining the clinical value of products versus their cost cannot be understated. These indicators of price and quality are where a Value Analysis Department makes its impact. The benefit of including clinicians in these supply cost management departments is the focus of this article.

By using a Value Analysis approach to supply chain management, hospitals can facilitate agreement between two equally important branches of personnel that can seem at odds with one another ... Clinical departments, like Medicine and Nursing, and Business departments, such as Materials and Purchasing. Through a detailed example, this article will describe how Virginia Commonwealth University Health System (VCUHS) has adopted this product selection methodology. The results in the cited example were threefold: A better product (improved outcomes, enhanced patient dignity, and superior customer service for VCUHS’ patients and families), better compliance by staff (through education and involvement in the process of product choice), and better pricing for the health system (fiscal responsibility).

At VCUHS, the Value Analysis Facilitators (VAF’s) are Registered Nurses who operate as liaisons between the clinical and business divisions referenced above. Having management experience, advanced education, and a clinical background, these VAF’s speak both languages and "facilitate" projects that ultimately satisfy the priorities of both philosophies: Providing products that contribute to the best possible outcomes for patients (clinical) at the most responsible prices (business).

Clinical Problem Description: Nursing staff experienced problems with the Fecal Management System (FMS) in use at VCUHS. An FMS is "a temporary containment device for patients with acute fecal incontinence, (it) was designed to safely and effectively divert liquid or semi-liquid fecal matter, help protect patients’ wounds from fecal contamination, and reduce the risk of both skin breakdown and spread of infection, such as infection with Clostridium difficile (C. difficile)."¹ Stool, being comprised of 30% bacteria², can be a major causative factor in negative outcomes related to infections. With Hospital Acquired Infections (HAI’s) counted on the Centers for Medicare and Medicaid’s (CMS’s) "never events" list, facilities are no longer reimbursed for the treatment associated with them³. Clearly, prevention of such non-reimbursed negative outcomes is a priority in any healthcare setting.

At VCUHS, the device being used was leaking and often had an unpleasant odor. These problems led to compliance issues with patients and/or their families, contributed to skin breakdown and frequent linen changes. The Value Analysis Department and Facilitators were asked to assist and established:
Project Rationale #1: Clinical quality was substandard.

Pricing Analysis: As with any Value Analysis project undertaken, a cost analysis was created. In the 12-month period preceding the project, VCUHS spent $400,000 on Fecal Management Systems. The pricing and usage data were compared with other like-sized institutions via a comparative index offered by VCUHS’ membership in University HealthSystem Consortium (UHC), an alliance of Academic Medical Centers (AMC’s)⁴. This index provides benchmarking data in relation to pricing and annual usage. For this product area, there were 36 AMC’s purchasing the same product.

In analyzing price, 97% of the 36 facilities were receiving a better price while only 14% purchased a higher volume. Barring any convincing arguments, volume purchased (14th percentile) should have been close to price paid (97th percentile). The conclusion of the Value Analysis Department was that VCUHS’s pricing was not representative of the volume and the VAF’s determined:
Project Rationale #2: Pricing required enhancement.

Project Process (financial): A Request for Proposal (RFP) was sent out to the three market leaders for FMS’s. Each company was asked to provide their most aggressive pricing in anticipation of a commitment to a majority of VCUHS’ marketshare. A multi-year agreement was not out of the question.

Each company returned pricing that demonstrated a positive benefit to VCUHS’ supply cost expense, therefore, all three companies were "allowed to play" in the clinical aspect of product selection. This financial weed out process seeks to eliminate a clinician’s investment in products that have little chance of being purchased (due to exorbitant cost).

An initial average savings opportunity of $60,000 annually was realized, with Company A giving slightly greater savings than Companies B and C. This process was accomplished prior to the clinicians seeing any demonstrations. In this way, whichever clinical option was chosen would offer significant financial savings. By the culmination of the clinical portion of the project, due to continued negotiations by the VAF’s, the savings increased to a mean of $70,000 ($85,000 counting rebates - about 20%). Financial analysis and negotiation provided a resolution to Project Rationale #2 and offered VCUHS competitive pricing.

Project Process (clinical): In order to seek input from clinicians, a Value Analysis Ad Hoc Committee was formed, consisting of clinical experts from various units, who volunteered to participate in the decision-making process. Finding participants for this committee was not difficult. The nurses were quick to point out that HAI’s have always been "never events" for clinicians. Chaired by a VAF, this committee included representatives from the Wound Care Team and several of the Intensive Care Units (ICU’s). Front-line staff involvement is crucial to appropriate decision making and buy-in of product users. As a designated magnet facility (by the American Nurses Credentialing Center - ANCC)5, VCUHS is committed to involving direct caregivers in the decision-making process for all facets of their vocation possible. Product selection is no exception.

The committee sat through demonstrations by three FMS vendors, scoring them on a 1-to-5 scale in areas such as patient safety, improved patient outcomes, technical support, and capacity to supply, among others. Each area was weighted appropriately by the committee (i.e.: patient safety was 25%, while R & D was 5%). The scoring, after demos, culminated in the following:

Using this data-driven decision making process, clinical trials were set up for companies A and B in two intensive care units (Surgical-Trauma and Medical-Respiratory). Company C was excluded. Each company provided clinicians with free product and education prior to use. Many staff nurses were involved in the trials and completed an evaluation tool while using each product. After clinical trials, comparison of the evaluations (another data-driven decision making process) showed a slight clinician preference for Company A. Both products showed improvement in the odor issue and leakage was minimized. The Ad Hoc Committee gathered once more to go over the data and make a decision. The committee was then disbanded. This resolved Project Rationale #1 and provided a product of acceptable clinical quality.

In this example, both the clinical and business perspectives resulted in the same choice, Company A. While optimal, this is certainly not always the case. If the conclusions had been mixed, either product choice would have been acceptable. With the clinical evaluations so close in score, the clinicians would have supported Company B, if Company B had offered far greater savings. Similarly, the financial departments would have supported Company B, if the clinical advantages were superior. By eliminating any financially unacceptable options and allowing the final decisions to be made by the end-users, this encourages the clinician’s commitment to the Value Analysis process and support of future endeavors.

Product Change Roll-out: The decision to change products from the current vendor was promoted at meetings, councils, committees, and other venues. Using an SBAR6 format, memos were sent to impacted departments. Special emphasis was placed on the fact that direct care staff was involved in the decision-making process. Although staff are interested in the monetary savings generated by a product change, they are far more interested in the clinical benefits to their patients.

Project Resolution and Follow Up: The Value Analysis Department follows up on the clinical Project Rationale by monitoring clinician input and reviewing incident reports related to products. The financial Project Rationale is tabulated quarterly. The Value Analysis Department tracks purchasing data to compare the estimated "Return-On-Investment" (ROI) with the actual (annualized) savings.

Project Oversight: Updates on the Project Rationales are presented quarterly to the Value Analysis Oversight Committee, comprised of VCUHS’ upper management. Each project is updated with this group, examining actual versus estimated impact, both clinical and financial.

This oversight committee requires differentiation between actual supply cost savings (paying a lower price than previously) and supply cost avoidance (avoiding price increases). Clinical advances (patient outcome data, i.e.: HAI rates) are continuously measured against the targets predicted. Follow up on the impact of the Value Analysis Department in this manner provides measurable data that validates the department’s role in the institution.

Conclusion: By allocating liaisons to the clinical and business departments (the Value Analysis Facilitators), their respective priorities and principles are considered when making decisions about which products to purchase. Rarely are clinicians (remember, these VAF’s are RN’s) able to quantify their positive impact on a hospital in terms of dollars spent for their positions versus dollars saved (and avoided) and outcomes improved. As the FMS project shows, decisions that include both departments’ priorities can truly result in a "Win-Win." The realization that the clinical and business department’s priorities are not diametrically opposed can result in a positive experience for all concerned.

References:

1. Retrieved from the World Wide Web October 21, 2009. http://cms.sys-con.com/node/1039450#

2. Ganong, William F., Review of Medical Physiology. 22nd Edition. New York, NY: McGraw-Hill Companies; 2005: Page 509. Retrieved from the World Wide Web October 21, 2009. http://www.cms.hhs.gov/apps/media/press/release.asp?Counter=1863

3. Retrieved from the World Wide Web October 24, 2009. https://www.uhc.edu/

4. Retrieved from the World Wide Web October 26, 2009. http://www.nursecredentialing.org/