What Does Value Analysis Mean to You?

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When you think of the term “value analysis” (VA) as it relates to the healthcare supply chain, what does this mean to you? I have heard hundreds of different definitions of value analysis in articles, presentations, white papers, and conversations with supply chain and value analysis professionals that make me ponder. Can a term mean so many different things to different people and organizations throughout our industry? Is “value analysis” a true process or is it a term we use when we refer to anything related to cost management  in the healthcare supply chain?

One of the first questions that I ask prospective customers is about their value analysis process. Inevitably, I get answers to this question along the lines of, “Yes, we have a well-defined value analysis process” or, “We have value analysis committees in many different aspects of our business such as general med/surg, cardiology, etc.” I am always encouraged by the fact that they do acknowledge value analysis as a strategy but my mind always turns to the question, are they really practicing value analysis as the founders and developers of value analysis envisioned?  

I have been steeped in value analysis over the last 23 years through my father and CEO, Robert T. Yokl, who for the past 40+ years has followed the classic tenets of value analysis learned from the  father of value analysis, Larry Miles, If you are not familiar with Lawrence “Larry” Miles, he was a Value Engineer who worked for General Electric right after World War II, when General Electric was booming with production and innovation. With this boom in business, GE was challenged with high costs and availability of raw materials and parts to make the products that their customers ordered. Larry created value analysis/engineering to focus on the function of products, not their price, overall cost, brand or features. This enabled him to clearly define specifications for the engineered products and to meet the engineered specifications with the right product.

If I had to hypothesize about why we have so many definitions of VA, I would bet it relates to the word “value” since it is the focal point to what causes us to stray from the true meaning of value analysis. For example, one of the most ubiquitous definitions I see for defining value is Cost/Quality = “Value”. But how do you define quality? Quality, like the term value, is subjective to the standpoint of the evaluator’s judgment. Let’s change our value calculation; take away quality and replace it with Exact Functional Requirements (Cost/Exact Functional Requirements=VALUE). Now you can clearly define what value is. 

By changing our calculation to meet exact specifications instead of a benign call for “quality” we can then ensure that our quality and patient needs are met by meeting exact functional specifications that can be evaluated, added or taken off products. With this new definition in hand you can start to educate your VA teams, senior management and line staff to the true meaning of “value analysis” which aligns perfectly with the classic tenets of value analysis and will get you bigger, better, and faster results.

 

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