University Community Health System has aggressively been undergoing a supply chain redesign process. Working with VHA Consulting, clinical and administrative leadership within the organization, a review of the product evaluation process was deemed necessary. University Community Health’s product review process consisted of three product evaluation committees for the four-hospital system. While representatives from different areas of the hospital attended the meetings, each individual hospital worked in a silo. Within the silos, all requests were channeled through one committee, the meetings would continue for 2 – 3 hours thus preventing some key participants from attending. Not surprisingly quality product review and planning did not always take place, creating challenges for the clinical staff and Materials Management. A quality review process began for the intended purpose of redefining the product evaluation selection process and to identify potential savings opportunities. The end result of this process review was the establishment of a Value Analysis process. It was necessary to develop new policies and procedures and effect a cultural change to facilitate the appropriate acquisition of supplies, materials and services using the most cost effective and value oriented methodology.

The new Value Analysis approach was implemented and customized for the needs of the organization. A permanent Value Analysis Coordinator position was established, this was necessary to insure continuity to the process. Nine committees were established consisting of: Med/Surg, Surgery, Radiology, Cardiology, Laboratory, Pharmacy, Respiratory, Support Services and Documents. Appointments to the committees are accomplished through the office of the system President and CEO. This has assured top down administrative support. The membership is multi-disciplinary in nature and includes representatives qualified by training/expertise in developing, implementing and maintaining the system wide organization team.

The key objectives of Value Analysis included:

• Provide a single point of entry for consideration of all new expenditures to be incurred by the organization

• Evaluate changes in products and procedures resulting in supply expense increase or decrease

• Analyze, evaluate and monitor all trials and evaluations resulting in the selection of the most clinically acceptable and cost-effective product

• Standardize across the four-hospital system

• GPO contract maximization

• Product utilization

• Review use of current products for cost effectiveness

For Value Analysis to be fully effective, control of the entire process from acquisition to disposition needed to be accomplished and promoted. Many of us in Materials Management face the same challenge of managing sales representatives’ activities. For us, sales representatives had been allowed access to departments throughout the four hospitals. In many cases, vendors often dictated service levels and product selection. A new process has been developed and implemented fully educating the sales representative community on the process of introducing new products into our system. A cultural change within Materials Management occurred redefining sales representatives as true business partners. The education includes an overview of the complete acquisition process from proposals to evaluations to procurement. The process outlines all phases from inventory control to standardization, legal and budgetary review. Hospital staff now determines products, their need and use and sales representatives can be held accountable for their roles as suppliers.

In summary, a change in philosophy and culture has truly begun. Documented savings through Value Analysis in its first year (2004) represented $4,500,000. It is important to note that this savings does not take into account increased expenses due to case mix changes, new procedures and volume increases. HPN