What are some take-it-to-the-bank best-practice tips for supply chain professionals to promote value analysis as a useful – and necessary – strategy to the C-Suite? Ten experts share their suggestions.

• Develop Value Analysis Operating Guidelines that include C-Suite oversight. Operating Guidelines are the blue print for success. Just like other key stakeholders, C-Suite needs to see and understand how important their role is in making the program a success.
• Have a single point of access for all program activity. There is nothing more debilitating to a program than disjointed communications, mismanaged documentation, poor tracking and reporting. Take these basic project management functions seriously. Do not rely on Excel spreadsheets floating around the organization as the communication and tracking tool for the whole program. Your program is more dynamic than a spreadsheet. Establish a team site or tool that can handle the project management basics. If C-Suite is going to support you, then you need to demonstrate that you are well organized and have the capacity to manage a comprehensive program.

– Stephen Kinsella, President, Data Leverage Group LLC, Quincy, MA

This question is better answered from the perspectives of the individual roles in the C-Suite as it impacts them all differently.

CFO: Proven return on investment (ROI) exceeds the annual salary many times over.

CMO: Value analysis provides a mechanism for the clinical concerns to be brought to the forefront within the C-Suite using an evidence-based focus on patient outcome impact.

CNO: Value analysis is ‘one of their own’ who can integrate the concerns of nursing, draw out the expertise and value of your largest labor pool and provide a voice for them while educating them on the importance of the evidence-based decisions regarding product purchases, and the positive impact to nursing of managing their costs effectively.

COO: Value analysis assists with implementation of operational efficiencies

CEO: Product/technology acquisitions that positively impact patient outcomes while keeping the cost at the lowest possible threshold, which facilitates alignment with the new pressures of healthcare reform and value-based purchasing.

– Karla Barber, R.N., Director, Clinical Value Analysis,
Mountain North Denver Operating Group

ROI – invest in the process/people to drive a clinical-based approach. Show the ROI in this investment by documenting success and savings. 

Executive support – if your organization is talking about surviving on Medicare the time is right to get executives on board with an evidence-based value analysis approach.

Data – evidence, price, usage, cost per procedure, etc., [represent] must-haves to form the business case to increase quality while reducing cost. 

– Dee Donatelli, Senior Vice President, Provider Services,
Hayes Inc., Lansdale, PA

Healthcare professionals are very busy whether you are on the ground floor of patient care or in an off-site location in supply chain. Due to schedules, physical locations and the sheer volume of requests this communication is naturally very disjointed. Here are the tips we suggest to promote value analysis to the C-Suite:

• Value analysis helps describe the balance of the clinical efficacy and financial impact of a product to all parties involved.

• Helps drive standardization of products which ultimately drives your costs down dramatically.

• Manages an otherwise disjointed process which allows people to focus on their jobs providing enormous opportunity cost savings.

– Tim Hopkins, President, MedApproved, Hudson, OH

Implement and utilize a strong project management approach to all value analysis projects. A clearly defined project plan from the beginning increases the potential for stakeholder engagement and successful results.

Take a “total approach” to value analysis projects looking at the clinical, quality, financial and reimbursement impacts of the project. With the focus on healthcare reform and improving overall organization financial improvement and clinical outcomes, projects need to go further than looking at individual product costs. Rather, value analysis projects need to focus on clinical utilization and appropriate use of products. The project should address the impact on clinical outcomes and improvement in the delivery of patient care. A review of top DRGs and procedures with high variable costs and longer than expected [lengths of stay] allows for a “deeper dive” into those areas of higher utilization and variation in clinical practice and product use, uncovering large opportunity in cost savings and efficiencies.

Align cost savings opportunities and projects with the organizational strategic plan.

– Nancy Masaschi, Senior Director, Clinical Resource Management, MedAssets, Alpharetta, GA

Demonstrable return on investment. How many departments can point to a reliable and provable savings figure and say, “Here’s what it costs for our department to exist (salaries, benefits, etc.) and here’s tangible cost savings and quality improvements that we’ve made.” Last year, our department’s ROI was 11:1. For every dollar VCUHS spent on Value Analysis, they got back 11. And every penny of it can be verified (no smoke and mirrors).

Secondly, I’d say the liaison factor. It’s not my favorite word, but it is the right one. Clinicians speak their language and business professionals speak theirs, but neither side is much interested in learning the others.’ Try to find a clinician who’s interested about GPO contract compliance and then a purchasing buyer who cares about the thickness of an isolation gown. It’s not that easy. Value Analysis Facilitators (VAFs) can translate so both sides communicate more effectively.

Lastly, but perhaps most importantly, readiness for the future. As my colleague Neil Horton (Perioperative VAF) is fond of saying, ‘whatever the future of healthcare brings, reducing costs and improving outcomes can only help us move in the right direction.’ No matter what new policies are enacted or regulations are passed, the Value Analysis process for examining data, developing strategies to reduce variation, and following up on changes made to promote efficiency and accountability can only help prepare a facility for the changes to come. Value Analysis can provide blueprints to help a facility adapt to new challenges like value-based purchasing, pay for performance, bundled payments and aligning incentives between physicians and healthcare organizations. These blueprints and strategies can help take the emotion out of change and allow an organization to make decisions based on data, information and logic, regardless of how scary change can be. Neil is also fond of saying that ‘healthcare reform is like train that’s leaving the station. You can get on-board and adapt, get left behind doing things the way you always have, or resist change by standing in front of it and get run over. It’s rolling along no matter what you choose.’ 

– James Russell, R.N.-BC, MBA, Value Analysis Facilitator,
VCU Health System, Richmond, VA

The healthcare landscape is changing and as we look to the future, it is imperative that purchasing is driven by both cost and quality. Clinicians, supply chain executives and healthcare administrators must work together to find a balance between individual preference and pure commodity in the healthcare supply chain. Value analysis is the key to finding that middle ground. That said, my three tips to help supply chain professionals become value analysis ambassadors at their organizations would be:

Show the value of value analysis. When pitching a VA program to your hospital leadership, try to compile some articles and case studies showing savings and outcomes. Demonstrating the potential value of a VA program helps to justify the staff time involved.

Prepare a VA program prospectus. Provide your C-Suite with details on clinical service line spend and which stakeholders should be included on the VA team. Although successful VA programs are driven by these stakeholders, supply chain professionals should take the lead when pitching the idea to executive leadership.

Show the data. Data are key to a successful VA program. Prepare sample reports to show your C Suite that your team can access the necessary information to create meaningful product comparisons to facilitate VA discussions.

Hospitals and systems need to change to a culture of cost containment. The value analysis forum is a great way for senior executives to reinforce this message and drive the necessary changes.

Providers of all classes of trade are coming together to gain “system efficiencies.” The value analysis and steering committee structure is a great forum to drive standardization of care and products as well as to manage the necessary utilization changes across the system.

Collaboration with accountability across disciplines is the only way to drive significant savings.

We provide the supply chain leaders within our member hospitals with the data and opportunities to be able to focus their time on clinical preference items and utilization variations. We do not recommend that our members’ value analysis committees focus on commodity items and contracts, but rather on utilization variance where 15-20 percent savings is often achievable.

– Mark Scagliarini, Senior Vice President, Supply Chain Services,
Yankee Alliance, Andover, MA

Healthcare organizations are faced with shrinking reimbursements from a variety of fronts and are seeking strategies that will impact the bottom line. Proven Value Analysis processes produce three key impacts; price control, appropriate product and services utilization, and positive margin impact. The systematic approach that value analysis brings to healthcare fosters a collaborative transparent culture where leaders, physicians, nurses and supply chain make a commitment to quality while promoting cost management at all levels of their organization.

– Barbara Strain, MA, Director, Supply Chain Analytics, University of Virginia Health System, Charlottesville, VA, and Past President, Association of Healthcare Value Analysis Professionals (AHVAP)

If structured and staffed appropriately a Value Analysis Program can:

Support the organization’s cost reduction and revenue enhancement goals/targets and produce a viable ROI for staff time and involvement.

Foster empowerment and ownership by clinicians and operational department leaders for supplies and services decisions/expenses (versus Supply Chain having sole responsibility for results).

Develop a culture change resulting from the shift in empowerment and ownership to users that expands into other aspects of cost reduction, such as utilization management

Offer increased visibility to initiatives in process, decisions being made, and resulting impact on costs and quality

Most importantly, provide an integrated and collaborative approach to addressing cost and quality simultaneous to ensure “value-based” decisions occur.

– S. Scott Watkins, Vice President, Supply Chain Performance, OMSolutions, Owens & Minor Inc., Mechanicsville, VA

The first is to develop a Strategic Value Analysis Plan (revised annually) with the participation of your C-Suite. This way your C-Suite members have an opportunity to provide their ideas to improve your value analysis program while at the same time buy into it and then own it.

Second, publish a monthly value analysis newsletter that informs your C-Suite, department heads and managers of the activities of your value analysis program. The newsletter should include success stories, need to know information about product or services changes and new VA studies that are being planned in the future.

Third, the use of storyboards to tell your VA success stories that could be displayed near your cafeteria, doctor’s lounge and operating room. These three ideas will go a long way toward promoting your value analysis program organization-wide as useful and necessary to the success of your healthcare organization.

– Robert T. Yokl, Chief Value Strategist,
Strategic Value Analysis in Healthcare, Skippack, PA

Healthcare organizations are being challenged to manage in an environment with declining revenues, increasing expenses while improving patient outcomes.  It should be a part of the facility’s strategic supply expense management plan to control and improve expenses and have a better understanding what new products and new technologies that are being brought into the facility. A rigorous value analysis process will provide the facility or IDN level to identify opportunities, establish procedures and measurement criteria to ensure efficiencies maximize financial outcomes and sustainable results.