Where’s the value in value analysis committees?
by Robert T. Yokl

Most healthcare organizations are employing value analysis committees to reduce their product, service and technology costs and to maintain their quality, but are these committees truly adding "value" to value analysis (VA)?  Are they even practicing value analysis?

Numerous VA committees that we have observed over the years have as many as 35 department heads and managers meeting monthly to review and approve new product, service and technology offerings. Occasionally, these committees will investigate product, service or technology failures that have been reported to them in some formal or informal fashion. Mostly, these committee members listen to the committee chairperson, who is usually the hospital’s materials manager, report for an hour or more on new or renewal contracts from their group purchasing organization.

The hospital materials manager usually handles the cost analysis (applying classic accounting principles), and then the members are asked to vote (yea or nay) on these new or renewal contracts or to send the product up to a department for a trial to see if they like it. Committee members will then move on to their next meeting or appointment feeling good about their value analysis skills and how they added value to the VA process. Nothing could be further from reality!

Value analysis in the classic sense isn’t suitable, possible or profitable as a committee function, since VA requires in-depth studies of the products, services or technologies under investigation in collaboration with customers, stakeholders and experts. This dynamic doesn’t happen in a committee structure, which I characterize as passive, valueless, risk averse and a time waster.

Value teams vs. value analysis committees
A much better way is to empower and train value teams of employees to make these savings and quality gains happen. Why? Because no committee member or members collectively ever see the negative or positive affects of how a product, service or technology is impacting its internal and external customer’s value chain. Yet, VA committees nationwide approve billions of dollars of purchases annually, many times with a narrow vision. A better money-saving system to manage and control your purchases – from acquisition to disposition – is to employ value teams for this purpose. In doing so, these value teams involve all internal and external customers in the buying decision and subject all purchase to rigorous value tests in order to determine the most appropriate products, services and technologies based on their functional requirements in order to meet customers wants and desires at the lowest possible cost.

Value teams have unique characteristics, roles and structure that enable them to be effective in their sphere of influence. They must be in alignment with your healthcare organization’s culture and compensation policies and they need to develop creative strategies and tactics to align themselves with your organization’s short and long term goals and objectives.