Winning with the Successful Value Analysis and Supply Utilization Mindset

By Robert W. Yokl, Sr. VP, Operations — SVAH Solutions

There are hundreds of supply chain articles that are written on various change models, strategies, and techniques to reduce costs while maintaining or improving quality at healthcare organizations. One area that gets little attention, though I think is one of the most important aspects of being a value analysis or supply utilization change agent, is that of mindset (attitude, approach, and outlook). It does not matter how good your contracts, methods, systems, or leverage is when working on a cost reduction or quality initiative; you must have the right mindset to make it work. Otherwise, you will get shut down often by your customers and stakeholders, and that does not do you or your organization’s bottom line any good. This article is a mindset guide for helping you save more in less time and with greater results for you and your internal customers. These are my own proven mindset approaches that I use and teach my team every day which I have honed and continue to perfect over my 28+ years in Value Analysis and Supply Utilization Management.

You Have to Believe That the Savings Are There and Attainable

It does not matter whether you have the best and most accurate proof of why a hospital product category  has increased by 23% from last year to the current year to date, or whether you have a rock solid cohort benchmark within your own system that shows Hospital A is 67% better on their IV set costs as compared to Hospital B (similar operating characteristics). When this information is presented to a value analysis committee and/or the hospital directors who manage the nursing teams who are running over, you will find that they will give you many reasons why they are different and that these savings are not real. The bottom line is, everyone is okay with change until it’s at their own doorstep. You have to hold fast. If they give you a reason for why they are different or why their costs spiked, then you can just go back to their volumes or your cohort benchmarks to prove it one way or another. The moment you stop believing or give up on your savings opportunities, you and your organization lose!

Welcome Pushback and Excuses as the Front Door to Change

Yes, our peers who sit on our own value analysis teams and understand our goals and objectives to save money can quickly start giving a litany of excuses for why savings opportunities identified are not real. Here are just a few example exchanges that occur on just about any product or service:

  • Our costs are up because we had a patient volume blip that month.
  • Our costs are up because we had several people on vacation and the contractors used more product because they did not follow our procedures.
  • We are so different that I question your benchmark and where it came from. Because we are so unique that most benchmarks don’t match up to us.
  • You’re not a nurse, doctor, cath lab manager, facilities manager, etc. How can a non-subject matter expert tell me that there is a 23% savings on this product?

You should expect that your peers will try to use every communication tactic they can to try to shew you away from pursuing this savings opportunity further. It is not that they are not interested in saving money, because they are very interested in saving. They wonder more about if the squeeze is worth the juice. They are not used to supply chain or value analysis teams calling them out on how much of a product they use or costs of utilization in their departments. They just don’t want to upset the balance of their department(s) with any type of change whether it be simple or not. This is natural, especially when an outsider is pushing for changes in the name of saving money.

Don’t Accept the Single Reason Brush Offs

I wish there were only one reason per supply category as to why supply utilization costs increase and/or are out of alignment at hospitals and health systems. But the reality is that it is rarely just one reason why costs are out of line, and not just the initial one reason given by customers and stakeholders. I like to refer to this as the knee jerk reaction to the supply utilization opportunity by the  department heads and managers and sometimes even C-Suite level stakeholders. The only way to find out for sure is to delve into each category by each department, by product, and by each modality of use. If you accept all the single reason brush offs, then your job will become very easy, but your organization’s supply utilization expenses will run rampant and damage your bottom line further.

Sometimes You Just Need to Weather the Storm for the Good

I find that communication roadblocks and questions are just a call for more information for you to allow the department heads to buy into the change that you are prescribing. Sometimes, you just need to enlist them to assist you in helping them correct their own utilization misalignments. When they buy-in, they are going to be big winners and so will the patients. For instance, if your nursing departments are using too many IV sets by as much as 67% over the comparable hospital in your health system, that is probably not a good thing (dollars and patient quality of care wise) and should be investigated. Many times, high supply utilization is indicative of issues with patient care.

Become the Iceman from Top Gun

In the movie Top Gun, the main rival to Maverick was the Iceman. The Iceman’s flying style was described as one who stays on your tail just waiting for you to make a mistake for him to attack. In supply utilization management, you may get talked away from time to time, but you must have the Iceman mindset and just keep coming back to the savings opportunity if it persists. Eventually, they are going to have to give in and allow you to work through this savings opportunity for bottom line results. One Nursing Director said to me half-jokingly at the beginning of a meeting that if I bring up exam gloves or foley catheters again she is going to scream! Their hospital is currently sustaining at the best in national cohort level for both product categories for their size and unique characteristics. Why? Because the supply utilization by volume metrics kept pointing to opportunities that needed to be addressed.

Become a Supply Utilization Expert and Stop Trying to Become a Subject Matter Expert for Every Product Category

Most of the challenges that I see are clinical in nature, and key clinicians and stakeholders are quick to point out that I am not a clinician or a subject matter expert in the product or service categories in these situations. The good news is that you and I don’t have to be a subject matter expert to work on any supply, purchased service, or capital equipment project. The organization you are working for is chock full of highly skilled, highly trained, and highly educated subject matter experts. You need to enlist them to help find out the reasons why utilization is too high and/or what is happening that is affecting costs.

You should become an expert in supply utilization management and value analysis inside and out in concept, methods, and application. Supply utilization management is new to most healthcare organizations and to department heads and managers. You can guide them and utilize their expertise accordingly. They are the true subject matter experts who will need to address supply utilization because they are the ones that consume the products, services, and technologies of a healthcare organization.

Victory Garden Analogy Applies to Supply Utilization Management

Envision healthcare supply chain as a metaphor to the beautiful Victory Garden that we see on television,  except healthcare’s Victory Garden has over 1,500 major and minor categories of purchase and anywhere from 5,000 to 30,000 line items of purchase. Even on TV,  Victory Garden hosts must deal with weeds through proactive (preventive treatments and filters) and reactive methods (pulling weeds). Because of the sheer size and volume related to healthcare’s Victory Garden, there is no doubt that there are going to be weeds (utilization savings opportunities). Some will be simple weeds (minor changes) that we can just pluck out, and some require more effort to find and deal with. Supply utilization management is the system and methodology that gives you the edge with your Victory Garden!