PRODUCTS & SERVICES Figure 1 – The Value Proposition
Ron Denton & Associates delineates between a product evaluation committee and a true Value Analysis structure in four key areas: Scope, people, process and progress. Area Scope
Product Evaluation Supplies
People Process
Includes supply chain and physicians (Physicians are not effectively engaged) Executives are not engaged
Price-focused Never say “no” Supply chain dictates priorities Unclear process
Progress No savings goal Complete 1-25 initiatives per year
Source: Ron Denton & Associates, December 2020
process to make decisions for products, services, capital and pharma that are used across multiple departments,” she said. “More importantly, it is a decision structure and process that incorporates CQO [Cost, Quality and Outcomes] – not just price. Value Analysis can be used for product evaluation but Value Analysis is much more. Value Analysis evaluates process, services, equipment and their impact on clinical outcomes. It is a structure that is driven by clinicians, facilitated by Supply Chain and led by a CXO.”
Value Analysis represents a transforming methodology to help providers select prod- ucts and services on the value they bring to the organization and its patients – and not on price, according to Jenny Sydnor, RN, Director, Healthcare Consulting, Advisory Services, Premier Inc. “Looking beyond prod- uct evaluation and selec- tion, today’s value analysis enables enterprise-wide decision making on high- quality supplies, services and euipment by first con-
Jenny Sydnor
sidering care delivery, safety and outcomes as well as total cost,” she noted. “It strives to balance issues related to quality, patient and staff safety, revenue enhancement and reimbursement optimization across the continuum of care.” Fusing the two makes sense from an operational evolutionary perspective, muses Keith Lohkamp, Senior Director, Industry Strategy, Workday. “The confusion or equat-
ing of the two terms is Keith Lohkamp
certainly understandable, particularly as organizations continue to mature their value analysis processes,” Lohkamp said. “For many organizations, the initial driver for setting up value analysis is to expand on the
product evaluation process by coordinating more inputs from more teams and includ- ing evaluation of the impacts on how care is delivered. We’re starting to see organizations look to tools like Workday Strategic Sourcing to formalize intake processes to prioritize value analysis projects and keep stakehold- ers involved. This allows a direct connection to subsequent sourcing and contracting activities needed to execute on committee recommendations and track results.”
Power among people
Sydnor insists that successful value analysis programs require strong relationships and ongoing collaboration among multidisci- plinary teams that incorporate the engage- ment and support of executive leadership as well as collaboration with suppliers. “Robust and contemporary value analysis programs focus on the intersection of cost, quality, safety, outcomes and patient expe- rience,” she continued. “Alongside these goals, the scope of value analysis moves far beyond that of product evaluation reuir- ing a strong people element and coordinated effort across provider departments, service lines and vendor partners.”
Value analysis is all about relationships across providers, clinicians and supporting departments all aligned with the strategic vision of the organization and its providers, according to Deborah Roy, Principal, Vizient.
“A solid clinically inte- grated value analysis pro- cess empowers providers to work on initiatives that are
Deborah Roy
most important to their patient care,” Roy indicated. “That effort includes a review of variation in practice, which gives providers a burning platform for change. This results in measuring the total cost of care across departments and into the post-acute space. Organizations need to structure what works
56 February 2021 • HEALTHCARE PURCHASING NEWS •
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best for their culture, establish executive guidance, communication methods and an alignment strategy. They must also share success stories and develop a widespread education plan that becomes a standard part of daily work activities for all staff.” Marc Phillips, Senior Vice President, Cor- porate Sales, Medline Industries, embraces Clinical Value Analysis as multiple teams promoting systematic change based on areas of care or service line. “This allows subject mat- ter experts within particular areas to have a refined approach and build strong
Marc Phillips
relationships with critical physicians and clinicians,” Phillips said. “This approach engages clinical stakeholders and leads to conversion and changes that sustain value over time. As a result, it can also develop greater trust in Supply Chain leadership to make the tactical decisions that are in the best interest of the health system.”
Depth and maturity Fred Crans, a veteran healthcare supply chain executive with extensive experience in hospitals, healthcare systems, group purchasing organizations and consulting/service firms, delineates the terms
Value Analysis Supplies, Purchased Services, Pharmacy, Equipment
Includes executives, physicians, stakeholders, supply chain – with clearly defined roles and meeting consistency with executive leadership
CQO analysis and review prior to sourcing decision Physician engagement plan and communication Escalation path in place to resolve conflicts Proactive meeting and initiative planning
Specific financial goals (savings, quality, outcomes) Complete 50-100 initiatives per year
Fred Crans
with surgical aplomb, dissecting title from function.
“Value Analysis is process-driven. Product Evaluation is acceptance and price-driven,” summarized Crans, Business Development Executive – Healthcare, St. Onge Co. “One focuses on the best way to approach a situa- tion while the other focuses on the best way to do things the same way we are doing them now. The challenge is to define and enact the process in a real-time manner so that it
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