How to Select a Candidate for a Value Analysis Study

Robert T. Yokl, President/CEO, SVAH Solutions

First, I would like to explain the difference between a study and a project. A value analysis study is a detailed investigation and analysis of the functions of a product, service, or technology, and the search for lower cost alternatives. Whereas a project is a carefully planned endeavor to achieve a particular aim. Hopefully you can see the difference, because to wring the towel on your savings, you need defined value analysis studies to do so.

What Are the Best Candidates for a Value Analysis Study?

If you don’t have analytical tools to help you identify the best value analysis study candidates by return-on-investment, here is a list of ideas of how to methodically determine the best savings opportunities:

Pareto’s Law of Distribution or 80%/20% Rule: Run a report on your materials management information system on commodities purchased, from the highest to the lowest, by annual dollar spend. Then, create a list of these same commodities that represent the top 20% in dollar spend of items on your master list. This list should approximate about 80% of your annual purchases. This is where you want to focus your value analysis studies, starting with the commodities at the top of your list. From our experience, you should save about 26% overall once you perform value analysis studies on this list of purchases.

Categories of Purchase That Are Over Budget: All you need to do is obtain a copy of your healthcare organization’s non-salary expense budget overruns from your CFO to target your best VA savings opportunities.

New Technology Purchases: We have routinely found that new technologies that require supplies (e.g., point-of-service test, laboratory equipment, radiology equipment, etc.) are frequently defective, thereby, utilizing more supplies than needed. New technology is always a good candidate for a VA study after 90 days of being in use.

Old Technology: On the other end of the spectrum, we have discovered that old technology (e.g., I.V. pumps, laboratory equipment, radiology equipment) that has reached the end of its useful life can cost thousands per year in unnecessary supply costs. With the help of your finance department, you can identify these aging technologies so you can conduct a VA study on them.

Although we prefer that you utilize analytical tools to identify your best value analysis study candidates to save time and resources, we can assure you that the recommended sources above will yield substantial savings for your healthcare organization.

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.