Value Analysis

Expensive Healthcare

The Journey to Maturity

The industry’s ongoing transition from fee-for-service to value-based healthcare requires that hospitals be more clinically focused and fiscally responsible than ever before. This, too, has created a shift from supply chain- to evidence-based purchasing. But how do organizations go about maturing their value analysis program to achieve increasingly greater process rigor, transparency and physician engagement?

Lowering Costs Not the Only Goal

Traditionally, supply chain decisions were based largely on cost. Given the changing healthcare landscape, physicians, registered nurses and other clinicians are more often being introduced into the decision-making process which, at its optimum, simultaneously focuses on achieving the best financial, quality and patient outcomes.

Attaining full value analysis maturity is no easy feat—only one in 10 organizations fall into this category—but it delivers the most rewards. The requirements include sustained top-down support, a clinical evidence review process, engaged physicians across multiple specialties and geographies, and a physician with the requisite skills to lead the charge. Indications marking achievement include:

  • Everyone understands and embraces the rules for introducing new products
  • Standardization initiatives are the norm
  • Best utilization practices are embraced

Where Is Your Organization on the Maturity Curve?

HealthTrust’s value analysis maturity questionnaire asks members to consider some of the following:

  • Do you have a physician leader (other than your CMO) to chair the value analysis committee?
  • Does your organization have a process specific to change management? Does it have a program to help personnel understand the cause for change?
  • Is the program able to achieve consensus on decisions and then support them?
  • Are team members networking with one another and sharing best practices across departments and hospitals?
  • Do they have the problem-solving skills to handle complaints and resistance to change?

To review the questionnaire, contact Victoria Alberto, VP, clinical resource management, HealthTrust, at victoria.alberto@healthtrustpg.com.

From Reactive to Strategic

“The information age has brought value analysis to a new level because clinical evidence is more readily available,” explains Victoria Alberto, vice president of clinical resource management at HealthTrust. “Better access to clinical studies helps us identify the products that produce the best outcomes and marry the financial with the clinical. Good data takes center stage because it ‘creates an epidemic of common sense.’ ”

Identifying clinical variation from best practices is an exercise that should happen using a multidisciplinary team of experts by service line, Alberto continues. Supporting evidence is easier to interpret when physicians bring their real-world experience and data analysis mindset to the product selection process—more quickly getting at an accurate calculation of long-term value. The team thinks broadly with questions such as, “How might this eliminate downstream care?”

A value analysis journey can be prompted by a number of factors, some of which might include a service line that is gearing up or sunsetting, a change in physician leadership or a contract that is ready to expire. Regardless of the impetus, it’s critical (and sometimes challenging) to get clinicians to commit to the product evaluation process, and communicate policies and procedures across departments. It helps to start with easy wins to build confidence for tackling the next phase of maturity. The ultimate goals are to move supply expense management from being reactive to strategic and to develop a culture of accountability.

The Four Levels of Value Analysis Maturity

Years of experience operating one of the nation’s largest IDNs, and consulting with many other provider organizations—from stand-alone facilities to multi-hospital systems—gives HealthTrust a unique perspective on the requirements for successfully maturing a value analysis program. Maturation happens in four overlapping phases:

1 Foundational

Facilities that have insufficient infrastructure for value analysis (e.g., decision-making resides solely with supply chain, no formal product evaluation process, no upfront clinician involvement) will need to start by establishing a framework. Even then, team members need time to become accustomed to the new normal before organizations are ready to move to the next level of maturity.

Implementation Goals: Value analysis charter, standard agenda, multidisciplinary committee and product evaluation process

2 Standardization/Utilization (3–5 percent savings)

For standardization initiatives to succeed, the value analysis team needs to keep both the supply chain department and outside distributors in the loop about impending changes so they can make the necessary inventory adjustments. If product conversions are a possibility, the team also needs to decide which hospital departments will first evaluate the new products and then develop a communication plan about any pending changes. The plan should cover any necessary education and training as well as conversion assistance.

Implementation Goals: Communication plan, assigned accountabilities, monitoring of key metrics and initial focus on easy wins

3 Optimization (15–20 percent savings)

In this phase, spend data is examined in the context of best practices, clinical outcomes and the patient experience. Within the facility or health system, products and services are largely standardized, and processes are consistent. All major service lines also have a clinician or physician to champion the reduction of unwarranted clinical practice variation.

Implementation Goal: Decreased clinical practice variation across specialties

4 Clinically Integrated Decision-making (20 percent savings)

A value analysis program can engage physicians and empower them to assist in—or lead—the product selection, optimization and utilization processes that improve patient outcomes and payer reimbursement. The value analysis committee has the means, and the resolve, to examine spend data in the context of best practices. The rationale for product selections and changes is also effectively communicated.

Implementation Goals: Lower staff frustration, better allocation of space (due to lower inventory levels) and high level of physician engagement

HealthTrust offers subject matter expertise combined with analytics—plus a proprietary database of more than 1,000 best demonstrated practices—to help members move their way up the maturity curve. Our methodologies focus on engaging physicians and key stakeholders to equip them with an effective, repeatable and sustainable means to stay ahead of continuous cost and quality pressures.

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