Why You Should Adopt a Value Analysis Policy and How to Develop One

Why You Should Adopt a Value Analysis Policy and How to Develop One

Value Analysis Policy is Necessary to Clearly Define VA’s Role in Your Healthcare Organization

Too often, value analysis practitioners assume that they have the support and commitment from their healthcare organization’s management team, when in fact their management’s support and commitment is weak or non-existent. Therefore, it is important to have your senior management adopt a Value Analysis Policy (VAP) to ensure that you and your value analysis team(s) have the acceptance needed to have a successful Value Analysis Program.

Goals and Objectives for a Value Analysis Policy

The following VAP goals and objectives are outlined below to assist you in developing your own VAP:

  • To formally create the staff function of value analysis reporting to supply chain management (or other department).
  • To establish an annual value analysis budget and performance goals (e.g., percentage savings achieved, average approval time, percentage approved, etc.).
  • To demonstrate strong organizational leadership and commitment to a Value Analysis Program.
  • To define accountability for new and existing product, service, and technology cost reduction, quality, and safety improvements.

Naturally, additional goals and objectives can be added that make sense for your healthcare organization.

What Else Does a Value Analysis Policy Contain?

In addition to your goals and objectives, you will need to elaborate on specific topics as follows to define the authority and scope of your Value Analysis Program:

  • A statement authorizing a Value Analysis Steering Committee (VASC) to be formed and comprised of your healthcare organization’s COO, CFO, and stakeholders to monitor and guide your Value Analysis Program. The VASC will meet monthly for this purpose.
  • A statement permitting your Value Analysis Team(s) to review and approve ALL new product, service, and technology requests, GPO contracts, and renewals, in addition to ongoing assessment of all existing products, services, and technologies with the goal of reducing their cost or improving their quality and safety.
  • Guidelines for establishing, reinventing, or maintaining a Value Analysis Program such as:
  • VA will perform value analysis studies on products, services, and technologies with an annual expenditure of more than $25,000.
  • All VA studies will be completed within a 90-day period, or they will need to be reassessed by the Value Analysis Steering Committee.
  • Value analysis studies will be performed on products, services, and technologies which represent 80% of the healthcare organization’s supply budget (including purchased services) annually.
  • Additional essential elements of a Value Analysis Program such as:
  • Job descriptions of value analysis staff, VA team leaders, and team members.
  • Selection and appointment process for value analysis team leaders and team members.
  • Training and education requirements for your value analysis staff, VA team leaders, and team members.

Naturally, additional guidelines can be added that make sense for your healthcare organization.

Value Analysis Is a Mission Critical Management Function

Value analysis is a mission critical management function of your healthcare organization, whether you realize it or not. VA is responsible for evaluating and approving millions of dollars of products, services, and technologies annually, as well as performing value analysis studies on existing products, services, and technologies. Therefore, it is critically important that you have your senior management’s support and commitment for your Value Analysis Program. We have found one of the best ways to do so is to have a Value Analysis Policy approved by your healthcare organization’s management team. Don’t start or renew your Value Analysis Program without one!

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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