Robert T. Yokl, President/CEO, SVAH Solutions
It is my estimate that sixty-four percent of all hospital, system, and IDN’s value analysis practitioners (VAP) are still using paper and Excel spreadsheet systems to manage their value analysis tasks, projects, savings reporting, etc. Eighty percent of VAPs aren’t tracking any metrics, KPIs, or employing analytics to improve their value analysis performance.
This practice of using spreadsheets to manage your value analysis tasks, activities, and projects is wasteful, inefficient, and counterproductive. A report released last November by Navigant Consulting found that tightening control over the supply chain and identifying waste (through value analysis studies) could help reduce expenses by an average of 17.4% or $12.1 million annually per hospital. The analysis also found that a decrease in supply spending doesn’t translate to lower quality care. This is why it is mission critical to up your value analysis performance.
Benefits of Employing Technology as a Value Analysis Best Practice
It is estimated that value analysis is a best practice at 84% of hospitals, systems, and IDNs in the United States. Yet, technology is only being employed in about one-third of healthcare organizations to improve their value analysis performance. Here are three ways your healthcare organization can utilize technology as a tool to up your value analysis game to save more in less time:
1. Use Advanced Data Analytics to Identify New Savings: If you are looking to save money beyond your price and standardization initiatives, you need to use analytics (or the extensive use of data, statistical and quantitative analysis, explanatory and predictive models, and fact-based management to drive decisions and actions1) to obtain a broader view of your VA savings opportunities. Just the other day, a client of ours using our value analysis analytics tool determined they weren’t saving the $42,345.00 they projected would be saved on their bed bath system. How would they know this fact without employing advanced data analytics?
2. Focus Your VA Efforts on Utilization Misalignments: Most value analysis teams focus their efforts on vetting new products, services, or technologies and implementing new or renewal group purchasing contracts. Unfortunately, this isn’t where your double-digit supply chain savings reside any longer. Your big robust supply chain savings are now to be found in your hospital, system, or IDN’s utilization misalignments (i.e. wasteful and inefficient consumption, misuse, misapplication, and value mismatches in the products, services, or technologies you are buying). Your value analysis teams should focus at least one-third of their time investigating these new and better savings opportunities assisted by technology.
3. Select a Technology Platform to Manage All VA Activities: We have seen VA practitioners try to manage their value analysis tasks, projects, and savings reporting on spreadsheets as big as a house. Not only are spreadsheets time consuming to maintain, but data is usually lost because of the complexity, size, and unwieldiness of the hundreds of columns, rows, and cells that need to be aligned. A much better way is to have a technology platform to manage your new product, service, and technology requests, team minutes, agendas, projects, savings reports, balanced scorecard, surveys, etc. Having one technology platform to bring together all things value analysis can booster you and your VA team’s performance by a factor of two or three.
As a discipline, value analysis has come a long way in the last two decades. It has demonstrated its value to every healthcare organization that has embraced it. Yet, if VA is to move to the next level of performance, value analysis practitioners need to leave their spreadsheets behind and embrace the latest technologies to improve the value analysis program’s performance today, tomorrow, and in the future.
1 Thomas H. Davenport, Competing on Analytics