Healthcare Value Analysis: Are You Attacking Your Value Mismatches to Achieve Even Greater Savings?

Healthcare Value Analysis: Are You Attacking Your Value Mismatches to Achieve Even Greater Savings?
Robert T. Yokl, President/CEO, SVAH Solutions

One little-known secret in healthcare value analysis is that there are more savings to be achieved by identifying your value mismatches (i.e., lower cost alternatives available, but not employed) than in lowering your purchase cost. This is because a value mismatch is equivalent to throwing away money that isn’t needed to perform a desired function. A product, service, or technology’s functions (primary, secondary, and aesthetic) can be defined with an adjective, verb, and/or noun. For instance, the primary function of a vacuum cleaner is to DEEP CLEAN, otherwise it would be useless.

A quick Google search shows that a vacuum cleaner’s price range is $125.00 for a light weight Oreck to $1,225 for a heavy-duty Kirby. Which one do you select as the best value? Well, it comes down to which one meets your customers’ functional requirements reliably. My mother-in-law decided on an Oreck as the best value since her required secondary function was that her vacuum be light weight. Best value is always in the eye of the beholder or customer, not what you think is best for them. However, it’s your job to help them select the best value products, services, and technologies by performing a functional analysis with them.

Healthcare Value Analysis: Performing a Functional Analysis

This naturally leads us to the question of, how do you perform a functional analysis? This is accomplished with a series of questions that your customer can answer about the product, service, or technology they desire:

  • What is the primary function (or reason for being) that you desire the new product, service, or technology to do?
  • What are the secondary functions (in addition to the primary function, what else do you need) your new product, service, or technology is expected to do?
  • What are the aesthetic functions (nice, but not functionally required like color, shape, texture, etc.)?

These questions should be the starting point for every request for a new product, service, or technology vs. accepting a brand, catalog number, and description of the commodity that your customer desires. By answering these questions, you can avoid hundreds of costly value mismatches like those that are now in your supply streams.

About Robert T. Yokl, Founder & Chief Value Strategist for SVAH Solutions
Robert T. Yokl is President and Chief Value Strategist at SVAH Solutions. He has four decades of experience as a healthcare supply chain manager and consultant, and also is the co-creator of the Clinitrack Value Analysis Software and Utilizer Clinical Utilization Management Dashboard that moves beyond price for even deeper and broader clinical supply utilization savings. Yokl is a member of Bellwether League’s Bellwether Class of 2018.

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