PRODUCTS & SERVICES Value Analysis: Deserving a seat at the table?
Looking back on the healthcare industry’s response in 2020 to the global pandemic, should providers carve out Value Analysis for its own place on the organizational chart – particularly to address COVID-19 during 2021? If so, where? And to whom would such a newly designated department report? Clinical? Financial? Operational? Reviews remain mixed among supply chain and value analysis experts, but themes emerge.
Dan Hermes, Senior Solution Advisor, Lumere, a GHX company “I would have Value Analysis report into both Clinical and Finance leadership. If it reports into one or the other, there is a misconcep- tion that supply chain decision making is colored by the priorities of that given depart- ment’s leadership. “Value Analysis must retain its neutrality and act as a bipartisan player within a hospital or healthcare system as it’s responsible for looking after both clinical and financial out- comes. The benefit of Value Analysis sitting in between these departments is quicker consensus building and greater engagement from Clinical and Financial departments in the Value Analysis process, which is critical for achieving optimal patient outcomes. “COVID-19 made it abundantly clear that
these departments cannot function in siloes. To achieve greater resiliency requires an in- tegrated supply chain where evidence-based data is used to make clinical and financial decisions. This collaboration will help improve the stewardship of available resources and enable greater agility and flexibility. This is especially critical during a crisis.”
Marc Phillips, Senior Vice President, Corporate Sales, Medline Industries “I would ideally see this group reporting to Operations with a dotted line to Clinical Af- fairs. There needs to be a focus on total cost and impact to the organization, not just the transactional cost. Operations provides great- er visibility into considerations such as total cost of ownership, utilization, SKU impact/ rationalization, contingency planning and finally, resiliency. If this approach is coupled with clinical outcomes, you begin impacting the overall budget through reduced acquisi- tion costs, labor and staffing improvements, and patient outcomes.”
Jenny Sydnor, RN, Director, Healthcare Consulting, Advisory Services, Premier Inc. “Value Analysis should be housed under Operations, and specifically, Supply Chain to support a strong understanding of con- tract penetration and process, total cost of
ownership and supplier/GPO partnerships. But again, [Value Analysis Teams] should be multidisciplinary with stakeholders from a variety of departments and service lines. “For example, strong clinical leadership is needed for each VAT as clinical integration promises advancement toward highly reliable care and cohesive operations, and accounts for the vital perspectives of staff who are directly caring for patients. Providers should also look to include product end users from various disciplines including Surgical Services, Pharmacy, Nursing and Facilities/Environmen- tal Services as well as subject matter experts from Infection Control, Sterile Reprocessing, Risk Management, Finance, Legal and Regu- latory/ Compliance. “A unified structure – in which the goals of supply chain, clinical and finance leaders are inextricably linked via targeted clinical initiatives and tied to the budget – is the best way to achieve meaningful results and ensure long-term success.”
Doug Heywood, Managing Partner, Ron Denton & Associates LLC “Historically, Value Analysis started in Supply Chain as a replacement to the ‘product evalu- ation’ process. However, Value Analysis’s scope has evolved from a scope of 10 percent of an operating expense budget to cover more than 45 percent of a hospital’s overall operating expense budget. In addition, it has expanded from just measuring savings to measuring savings, quality and outcomes. It encompasses supplies, purchased services, pharmacy and capital expenses and spans multiple departments, facilities and physi- cians/stakeholders. There are Value Analysis initiatives that are clinically focused, others that are operationally focused and others that span multiple functions and depart- ments (e.g., clinical, financial, IT, etc.). Value Analysis requires collaboration and executive leadership across multiple departments and executive levels – including the Board.”
Angie Haggard, COO, Ron Denton & Associates LLC “Since Value Analysis crosses multiple depart- ments and engages service-line leads, execu-
58 February 2021 • HEALTHCARE PURCHASING NEWS •
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tive stakeholders, etc., it should be part of administration and led by a CXO level (e.g., Chief Supply Chain Officer or CFO). A CXO has the recognition with the Board and other CXOs to transform and execute the needed strategy for Value Analysis success. An or- ganization’s strategy and goals may or may not impact Value Analysis. Value Analysis effectiveness will determine an organiza- tion’s timeliness to achieve its financial and clinical goals.”
Fred Crans, Business Development Ex- ecutive – Healthcare, St. Onge Co. “The Value Analysis approach applies to virtually every aspect of an organization’s operations and templates and methodolo- gies should be devised and implemented that provide a consistent rigor and meth- odology in the decision-making process. I [recently] participated in an Executive Forum led by Brent Petty. He highlighted an approach titled, ‘SBAR (Situation, Back- ground, Assessment, Recommendation),’ which he had used at several places where he worked. The idea is to bring structure to the decision-making process. SBAR can be used everywhere, including the clinical Value Analysis process. “As to where that clinical VA process should be housed, I would pick Clinical Af- fairs, and would include input from Finance, Operations, Supply Chain and other depart- ments as needed. One of the impacts of the post-COVID world will be the need to create alternative strategies for the acquisi- tion of mission-critical items such as PPE. Contingency plans will need to be developed — what is known in the auto industry as ‘A plan for every part.’ There won’t be a need for a plan for EVERY part, but there will need to be plans developed for key critical ones, and since most of these items will be clinical in nature, Clinical Affairs seems to be the appropriate place from which the process should be managed.”
Barbara Strain, CVAHP, Managing Prin- cipal, Barbara Strain Consulting LLC “’Difficult roads often lead to beautiful destinations...’ – Zig Ziglar
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