Producing a Major Impact on Savings Beyond Price Optimization
There are many different views about how Value Analysis is making a difference in our healthcare world, but I believe the biggest difference that Value Analysis can make today is with savings beyond price strategies and methods. Value Analysis, in many ways, is at a crossroads regarding what to do next after taking on new product requests, recalls, resilience issues, and other problematic areas of the clinical supply chain realm. From a measurable results standpoint, healthcare organizations really need VA to further the cost optimization process while maintaining quality outcomes for patients. It sounds so simple but there is much more to this.
VA is the Perfect Process to Get to the Bottom of Any and All Cost Optimizations
Value Analysis is the perfect process to break down and investigate a supply category at all levels – whether it be physician preference items in the OR, supplies on nursing floors, or even a housekeeping product – it can cover all bases. It just makes sense that once you identify an area for savings opportunities and engage in your VA Process (we use a 6-step process) it flows down the natural steps to engagement and finds lower cost alternatives to meet our customers, stakeholders, and experts’ requirements. It must not only meet requirements but maintain and/or improve quality during the cost optimization process. This is the perfect scenario, except for one important point that fails VA Teams throughout healthcare.
You Can’t Save Money on VA Projects if You Don’t Know Where the Savings Reside
There is a fundamental problem with Value Analysis in healthcare which is the ability to find new savings opportunities in a systematic enterprise-wide way. Yes, VA bumps into savings from time to time but finding savings when you are implementing a new contract or there is a change in product does not make it systematic. VA needs to know where they stand on all of the major and minor product/service categories in order to strategically plan for next-level Value Analysis cost and quality optimization projects or savings beyond price.
How Does VA Find and Stratify Savings Beyond Price to Work On?
There are tools for VA that encompass new product request workflow, and some spending reporting is available, but that is about it. New product request software is not going to help with savings beyond price nor is spend management to an enterprise-wide degree because it does not take into consideration patient volume measures. The best way to find out where all your savings beyond price are residing today, tomorrow, and in the future is clinical supply utilization reporting and benchmarking that marry category spend with patient volume centric measures.
Savings Beyond Price Need to be Bulletproof
The most important reason why clinical supply utilization management (CSUM) and/or benchmarking should be your go-to strategies for savings beyond price is quite simple. Your customers, stakeholders, and experts are going to try to pick apart every savings opportunity you bring before them before you even engage with them to try to optimize the cost and quality. Why? Because they, as department heads and managers, are all for savings opportunities until they hit their department’s doors to which they don’t want to look bad or don’t want them to affect their department’s operations. This is just human nature, but you must be prepared for this. Clinical supply utilization paired with benchmarking at multiple levels will prove with certainty that you should be engaging in a VA Optimization Project. CSUM and benchmarking allow VA Leaders to take the next step with savings opportunities and not give in to the initial lip service that costs organizations money every day.
VA Processes and Teams Will Drive Out the Savings and Much More!
Value Analysis processes are highly effective when targeted at areas with clearly identifiable savings opportunities. When VA Teams or professionals are given a defined savings range, they can leverage a variety of strategies to achieve those goals. Additionally, with CSUM in place, organizations can validate both short- and long-term savings outcomes — providing the level of accountability that the C-suite, and especially the CFO, expects.
The Bottom Line on Savings Beyond Price
You’ll notice I didn’t mention securing a better price or achieving a higher tier of standardization — common goals in healthcare supply chain discussions. Instead, the focus here is on savings beyond price. This means looking deeper into your existing supply chain contracts to further optimize them — not just for cost, but also for quality. The objective is to maximize life cycle value for every dollar spent — eliminating waste, reducing inefficiencies, and avoiding the use of unnecessary feature-rich products. It may sound straightforward — and in many ways, it is — which is exactly why now is the time to get started!
| About Robert W. Yokl, President of SVAH Solutions |
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| Robert is the President of SVAH Solutions which provides value analysis, clinical supply utilization, and savings validation tools to help healthcare organizations gain the next level of savings beyond price and standardization. https://www.SVAH-Solutions.com https://www.SavingsValidation.com |
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