Value Analysis 2.0: No One Size Fits all Hospitals
By Robert T. Yokl, Chief Value Strategist
I just read an article in HPN magazine recommending one singular approach to what I call Value Analysis 2.0 (beyond price and standardization) that the author suggested would fit all size hospitals. I beg to differ with the author on this point, but let me tell you first what I liked about the article.
I was happy to see the author agrees with me that big price and standardization savings are now dead, and that hospitals now need to focus on savings beyond price (i.e. utilization) to keep their savings machine humming. I also agree that a fresh approach to value analysis in now called for if healthcare organizations want to move to the next level of savings performance. And that any and all supplies and purchase services should be included in the scope of value analysis teams’ charters so that no supply related cost is exempt from value justification.
I couldn’t agree more with the author that without a total and unwavering commitment from the c-suite no real change can or will happen beyond what you are doing now. And that material management should be the data guru’s for your value analysis teams, thus pointing the way to new savings opportunities, so your value teams aren’t burdened with this complex, time consuming and arduous task.
Where I differ with the author are on two points. First, that all hospitals should be establishing product-line value analysis teams and secondly that value team members shouldn’t need to do any of the teamwork because they are too busy.
On the first point, it’s my strong opinion, that small hospitals, which represent 80% of all hospitals in the country, don’t need elaborate product-line value analysis teams because they don’t buy enough products, services and technologies to warrant the time investment to do so. Second, no one should ever be too busy to save money or not ready to roll up their sleeves to find it. Just listening to presentations from material management, then making decisions as a committee isn’t value analysis at all. This is Value Analysis 1.0, which we are trying to move beyond.
In the final analysis, I thought the author did a great job of explaining what she saw as the future of value analysis in healthcare. Nevertheless, I think we all need to remember that “one size” of anything doesn’t fit all situations. We need to customize what we are trying to accomplished based on the size, culture and complexity of our healthcare organization. Then we will get the exact fit for our healthcare organization.
P.S. If you would like more powerful savings ideas like this one I would recommend that you sign-up for our “no cost” weekly Savings Beyond Price™ e-Newsletter at www.Strategicva.com. You will also get a copy of my e-book “Your Target Blueprint for Supply Chain Management Success”, as a bonus.
New Podcast: 80/20 Rule for Healthcare Supply Chain Savings
This podcast is geared towards helping you align your efforts and focus towards the supply chain savings opportunities that will give you the best bang for your buck as far as effort to return on investment. We will highlight the major functions of supply chain savings and detail out all the major supply chain savings areas and why and where you need to focus your efforts for the highest supply chain savings return possible.
Certified Value Analysis Leadership Workshop - Early Bird Special
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- Further Enhanced our Value Analysis Leader Web Software (included in the workshop)
- New Utilization Benchmarking Section
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- More Members Only Webinars
Tip of the Week Article: What Value Analysis Is and What It is Not!
It’s About Commitment, Discipline and Focus!
What’s value analysis all about? It’s about commitment, discipline and focus and finding lower cost alternatives to what you are doing now! If you are missing even one of these success components you can’t and won’t have consistent, sustainable and substantial savings results.
VA is all about having your senior management commit to making savings happen for your supply value analysis program or it will slowly, but surely sputter, fizzle and die.
VA is all about having discipline (practices and methods to enforce acceptable behavior) from the top, right down to your value team level or you will be going every which way — but forward.
Value analysis is NOT about GPOs, capitation, standardization or custom contracts, but is all about utilization management: wasteful and inefficient consumption, misuse, misapplication and mismatches. If you are focusing all or most of your efforts on the price side of the supply equation, you are missing 79% of your hidden savings opportunities.
To bring these points home here’s is an example: we once were retained by a hospital CEO who intuitively understood that saving money was ALL about commitment, discipline and focusing on finding lower cost alternatives to what his hospital was doing. With our help, he organized, and operationalized his hospital’s multi-phased savings initiative. He then became the chief cheer leader for his management team and hospital staff, encouraging his staff at every opportunity to dig deeper and broader then ever before to search out and find those hidden savings. Well, as you could have guessed, within a year his hospital saved over $6.5 million.
There is no magic to this success formula; just the commitment, discipline and focus to make savings happen the old fashion way: Hard Work!
Your Partner In Innovative Savings,
Bob Yokl
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
P.S. If you are looking to establish, enhance, re-energize and dramatically improve your value analysis program (or you have hit the wall on savings) then our Certified Value Analysis Leader Program to be held on June 24-26 is the ticket for you. And, as a bonus, you will receive a one-year subscription to our new Value Analysis Resource Web at “no cost” to you. Note: Only 25 days left to save on our early bird rate of $1,192.00! click here to learn more
P.P.S. Hove you checked-out our new and improved Savings Beyond Price™ blog where I talk this week about the “Supply Chain Hall of Fame Honors Nine Superstars”.? Can you guess who the honorees are? If not, I have listed them for your review. and I hope some comments. Visit the Blog Here
Vendor Credentialing Analysis Article
Just got my latest issue fo Supply Chain Strategies by Patrick Michael Plummer which gives a great analysis of the current state of the vendor credentialing situation. This is really a hot topic and it effects so many people in the healthcare supply chain, including us consultants/trainers as well. You may have to sign up for this newsletter to gain access to this newsletter article but I guarantee you Patrick always has great insights and articles like this vendor credentialing that will make it worth while.
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Supply Chain Hall of Fame Honors Nine Superstars
By Robert T. Yokl
This is a first in healthcare where nine superstars are honored by the Bellwether League www.bellwetherleague.org for their groundbreaking work in professionalizing the healthcare supply chain management discipline: Dean Ammer, Lee Boergadine, Gene Burton, Charles Housley, Thomas Kelly, William McFaul, Tome Pirellie, Donald Siegle and Alex Vallas.
I have had the good fortune to be able to follow the careers of most of these honorees and to apply their enlightened philosophies, teachings and models in my own supply chain work. From my prospective, all of these individuals are or were important trailblazers when our industry desperately needed the leadership over the last 30-years.
One honoree in particular I would like to talk about is Charles Housley, since I do know him personally, once contributed a chapter to one of his books, have had him conduct a seminar for my supply chain staff in the 80s and have talked to him as recently as last year. Chuck has had a profound influence on my thinking about our profession when I was a young material manager. His teachings started me thinking about systematizing what I was doing as opposed to grappling with the same old problems over and over again. Chuck gave me and my colleagues the big picture of what materials management was all about when everyone was trying to understand it. He gave us the “how to’s” on just-in-time inventories, stockless distribution, exchange carts, and product formularies strategies that worked in the real world of materials management. I am happy that I have had the opportunity to thank Chuck personally for his contribution to my own career. I’m elated that Chuck is now being nationally recognized by the Bellwether League for the pioneering influence he has had on the growth of our discipline.
That’s not to say that the other nine honorees don’t warrant this adulation, it’s just that I have had an up close and personal relationship with one of the honorees that gives me an insiders perspective of why I support the Bellwether Leagues efforts to honor these nine unsung hero’s of healthcare.
P.S. If you would like more powerful savings ideas like this one I would recommend that you sign-up for our “no cost” weekly Savings Beyond Price™ e-Newsletter at www.Strategicva.com. You will also get a copy of my e-book “Your Target Blueprint for Supply Chain Management Success”, as a bonus.
How to Plan, Reduce, Improve and Succeed Even With Limited Resources!
by Robert T. Yokl, President
We all know we need to do more with less since our healthcare organizations’ revenues are flat, reimbursement is meager and staffing is at a premium. Rather then wince over these realities let’s talk about how we can plan, reduce, improve and succeed even with limited resources.
It’s been my experience that there is always a better way to do things that can dramatically improve your situation, even with limited resources. I remember when I was hired for my first materials manager’s job at a children’s hospital in Philadelphia, I quickly found that my new employer was so cash-strapped that on some weeks we were told we would not be getting a paycheck. But that didn’t stop me from planning and implementing a new par level system, reducing my utilization cost with my new value analysis team, improving my supply chain operations with a new computerized inventory system and succeeding with very limited resources. I was even promoted after only a year on the job!
Success in anything, when its comes right down to it, is having the right ATTITUDE, not money, time or even resources to get the job done. Since my first job as a materials manager at that children’s hospital I just talked about, I have worked for some of the largest, and most affluent healthcare organizations in the country, but you know what, I really didn’t really get anything more done with more money, more time and more resources than I did when I didn’t have any of these things many years ago.
If you are looking to succeed as a supply chain professional, don’t let any constraints, of any kind, hold you back from your planning, cost reductions, and improvements even if you have limited resources, since they really don’t matter if your have the right ATTITUDE to succeed!
P.S. If you would like more powerful savings ideas like this one I would recommend that you sign-up for our “no cost” weekly Savings Beyond Price™ e-Newsletter at www.Strategicva.com. You will also get a copy of my e-book “Your Target Blueprint for Supply Chain Management Success”, as a bonus.
Is Standardization Working Against You?
I have preached for years that “standardization is a self-defeating paradigm” for healthcare organizations that want to achieve the lowest total cost for the products, services and technologies they are buying. Now, we are documenting even more proof that the overused standardization model is producing even more unintended consequences than I first thought.
The truth is no one size fits all products, services and technology purchases. If you try to standardize on everything you buy you will limit your customers’ choices, and thereby, compel them to use over-specified or under-specified supplies and equipment which don’t meet their exact specifications. Believe it or not some of the blame for this observable fact can be laid at the feet of your GPO because you are rewarded for over-standardization by the terms of their offerings.
As an illustration, we just completed a 360 Degree Supply Savings Analysis for a client where we found that they had standardized on a $7.10 I.V. set for ALL of their patients. This practice was costing this hospital $54,334 annually in unnecessary and unwanted IV set cost since this was the only IV set that was available for their clinicians to use.
A much better way to decide on what I.V. sets this client should have been buying was for them to develop customized specifications for each of their value groups (segmentation of the customers by their critical to quality requirements) that use this product. With the result, that this client would have ended up with five or six IV sets vs. one only and this would have met each of their value groups’ exact CTQ requirements thus saving $54,334 annually on their IV set purchases.
The lesson of this story is that this client did have the best price on the IV set they were buying, however their standardization policy was working against them when it came to having the lowest total cost in this commodity group. Is you standardization policy working against you as well?
er In Savings Beyond Price™
Your Partner In Savings Beyond Price™
Robert T. Yokl
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
P.S. One of the new power tools that are available to you and your c-suite to give them and you a window into your supply chain operations is our Utilizer™ Dashboard. This new tool will show you and your c-suite members all their supply chain costs in one database along with actionable targets for savings. Why not make it easier on yourself by having this tool at your disposable to effortlessly cost justify your initiatives vs. fighting your c-suite for every dollar you request to improve your supply chain operations. Check out our “test drive” to see how we do it!
It’s Only Money Right?
Click to enlarge view of comic
What Were They Thinking?
Studies show that 3 out of every 10 change initiatives fail to sustain their momentum over time. My thinking is that this statistic isn’t shocking to you because you have found this to be an accurate representation of what happens — time after time — in your own healthcare organization.
Here’s what this phenomenon looks like! The change initiative, whether it’s value analysis, Lean Management or Six Sigma, had a full head of steam over its few years of its existence, then fizzles, sputters and quietly dies a slow but unnoticed death. Then everyone forgets, after a few years have gone by, that your organization ever had such a change initiative in place.
What were these organizations thinking when they spend weeks or even months to conceive, champion and launch these change initiatives in the first place? My guess is that these hospitals, systems and IDNs were thinking that somehow or someway these change initiatives had a life of their own and didn’t need to be nurtured, re-tooled, re-invented and re-energized from time to time to sustain their momentum.
Nothing lasts forever if it isn’t given a new coat of paint, thorough clean-up and reinforced when it is weakened by the ravages of time. We see this observable fact with our Lean Value Analysis Programs. If our clients don’t provide the on-going leadership, discipline, maintenance, coaching and training to sustain their value teams’ efforts, then this mission critical change initiative will inevitably die on the vine.
From our experience, a well-planned change initiative has, at its core, transformation elements like balanced scorecards, annual training, planned team member turn-over and twelve-month retreats to keep the cobwebs from forming.
Otherwise, it is nearly impossible to keep the thrust, energy and impetus of your change initiative at a high level of performance without investing the requisite time and life force to fine-tune the human side of your change management equation. Partner In Savings Beyond Price™
Your Partner In Savings Beyond Price™
Robert T. Yokl
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
P.S. One of the new power tools that are available to you and your c-suite to give them and you a window into your supply chain operations is our Utilizer™ Dashboard. This new tool will show you and your c-suite members all their supply chain costs in one database along with actionable targets for savings. Why not make it easier on yourself by having this tool at your disposable to effortlessly cost justify your initiatives vs. fighting your c-suite for every dollar you request to improve your supply chain operations. Check out our “test drive” to see how we do it!
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You’ve Heard it All and Seen It All Before…Except for This!
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Major Breakthrough for the Healthcare Supply Chain! 