Value Analysis: The Process Connection
With few exceptions, healthcare organizations are the most complex enterprises on the face of this earth. They are composed of interconnected and interdependent parts making up the whole. In the modern business vernacular, we call these parts processes.
Processes are a systematic series of methods and practices directed to some end. In our healthcare environment, the end is “wellness” of the patients we are treating, but how many of these processes (admissions to discharge) are really of value in our customer’s eyes? The best measure we have found for determining best value is the value equation shown in figure 1 (function/cost = value).
It has been our clients’ experience, utilizing THE VALUE EQUATION as their “best value test”, that any and all processes can be reduced by 30% to 40% in complexity. 10% of what is being done can be eliminated entirely, because it has been found to have NO VALUE.
To bring this point across to you succinctly, a client of ours that had been utilizing our “process” value analysis methodology found that they could shave off 10 minutes on their mammogram diagnostic tests by: (i) having their patients fill out the required documentation themselves, (ii) not having their patients wait to see if they required a retake, since only one in three hundred patients required retakes and (iii) adding more change lockers for patients to quickly disrobe and dress without bottlenecks. This enabled our client to do eight more mammograms a day, which increased their revenue seven fold.
TRADITION is Our Biggest
Enemy In Our Search For Value
TRADITION (or “we have always done it that way”) plays a crucial role in why we do what we do and is the #1 reason that is holding back needed process changes. Tradition, in the classic sense, means handing down from generation to generation beliefs, customs, doctrines, methods and practices that worked for a long time. The drawback is, they might not be of value today.
You might have heard of the story about a young child observing her mother cooking a roast beef dinner who asked her why she cut off both ends of the roast before cooking it, only to find out that’s what grandmom did too.
When the young girl asked her grandmother why she cut both ends of a roast beef off when she cooked it, she told her, “my dear, it was because my pan was too small to fit the roast beef in, so to make it fit in the pot I cut both ends off and it fit every time without fail.” This is the fatal flaw with traditional practices, whether at home or in a healthcare organization – we keep doing what we have always done even though the original reason for doing so isn’t needed, relevant, or of value any longer.
Five Tactics To Break Through
The Tradition Barrier
No substantial process change can happen at healthcare organizations without first breaking through the TRADITION barrier. Here are five tactics to accomplish this aim:
1. Educate Your Management Team That Change Is Good
With few exceptions, management teams are averse to change because they fear that change is tantamount to risks. However, it is your job to persuade your management team that “change is good”. Nothing positive has ever happen without CHANGE – electricity, telephone, railroads, steamships, automobile, internet, e-mail, etc. – and with some upheaval and discomfort. All change agents will agree that the results of the change were worth the temporary uneasiness that change brought about.
2. Understand The History of the Traditions
Always discuss with process owners the history or past events that lead to the formation of the processes (methods and practices) that they are utilizing today. This will give you insight into why they always did it this way and raise the process owners’ consciences to consider that maybe it is time to end what began 10, 15, 20 or 100 years ago.
3. Test All Underlying Assumptions
Many traditions had their genesis in rules and regulations that have outlived their usefulness or relevancy in today’s world. If the process owner tells you that they are doing something because it is mandated by rules or regulations, check out the rules’ or regulations’ original source documents to make sure that they are still pertinent, material and applicable to the situation at hand. 80% of the time you will find that they are not! You can then easily make changes with the process owner’s agreement based on fact, not tradition.
4. Involve Process Owners and Non-Process Owners In The Change
Common sense will tell you that it is critical that you involve process owners in any change you are proposing, but it is just as crucial that you involve non-process owners too. The reason being, process owners, with few exceptions, will ALWAYS fight any change that you alone propose. On the other hand, if their peers are looking over their shoulder, process owners tend to be more objective in their decisions, especially when their peers have an opportunity to challenge their assumptions or the rationale for their decisions.
5. Perform Functional Analysis Tests
Traditional thinking can’t be sustained very long by process owners once functional analysis tests have been performed on their processes. This is because primary, secondary and aesthetic functions are either absolutely, positively required or they are not. Even tradition won’t hide this basic fact. These five tactics are the linchpin in beginning the change at your healthcare organization from TRADITION to fact and beyond.
TRADITION Means To End What Began Well
“Tradition simply means that we need to end what began well and continue what is worth (or of value) continuing (today)”. This advice given by Jose’ Bergamin in the 1800s is still good advice today. Don’t let tradition (or “we have always done it that way”) stop you from reinventing your processes. When you realize and internalize that most traditions are built on myths, legends, fables and half-truths that won’t stand up under the light of day, you will be on your way to creating new processes that will satisfy your customers reliably, consistently, and cost-effectively.
Waste and Inefficiencies In Your Healthcare Organization’s Value Chains Are Holding Back Peak Performance of Your Healthcare Workers
A recent study by the Murphy Leadership Institute has documented that “wasteful work (and inefficiencies in healthcare operations’ value chains) affects every job role, from nurses to pharmacists to managers to techs to assistants to housekeepers. It can include such activities as completing multiple forms for the same task, inefficient shift-to-shift or departmental reports, medication unavailable or delayed, and searching for a misplaced record.”
All of these transgressors that are pointed out by this study stem from inept hand-offs, massive rework and huge information gaps at our healthcare organizations today. These wasteful and inefficient practices are surfacing at the same time that healthcare executives are looking for ways to combat staffing shortages and decreasing operating margins. This gives a clear message that many of the answers to these challenges can be found RIGHT IN THEIR OWN BACK YARD!
Hand-offs, Rework And Information
Gaps Are The Transgressors
As stated previously, Healthcare organizations literally have millions of inept HAND-OFFS and massive REWORK (revising, correcting, changing or handling a task more than once) that can be as high as 35%. There are also huge INFORMATION GAPS (information not being available, accurate and timely when needed) can be as high as 68% daily at healthcare organizations in the United States.
With this evidence in mind, healthcare executives should be attacking the waste and inefficiency in their healthcare organization’s value chains with a vengeance. YET, FROM MY OBSERVATION THIS ISN’T HAPPENING! Most healthcare organizations’ approach to managing their organization’s value chain is episodic, event oriented and reactionary in nature. Healthcare organizations only react when complaints from internal or external customers rise to a level of noise that is deafening to their ears.
For example, one healthcare organization we worked with was losing hundreds of thousands of dollars a year in ER admissions, because of bottlenecks in their patient flow. They procrastinated for over a year, until their ER physicians almost went on strike. A better way to manage a healthcare organization’s value chain is to have a management system with a unifying philosophy. The philosophy should be based on value, which continuously evaluates the worth and relevance of the products, services, technologies, systems and processes in a strategic manner that a healthcare organization employs.
This system would recognize how the product, service, technology, system and process fits into the hierarchy of healthcare organizations’ overall strategic plan. Then and only then can a healthcare organization be assured that all the waste and inefficiencies will be continuously driven out of its value chain.
The Search For “Best Value”
Is A Never-Ending Journey!
The search for “Best Value” is a powerful concept (which is a never ending journey) that has been given many definitions over the years, but only rarely has this philosophy been put into action at our nations’ healthcare organizations. Conversely, healthcare organizations have decided instead to embrace Six Sigma, activity-based management and re-engineering (to name only a few management techniques that have gained acceptance over the last two decades), which are only tools that can and should be utilized for the search for “Best Value” at your healthcare organization. Nonetheless, the best TIME TESTED and PROVEN technique that can and must be employed in your search for “Best Value” is VALUE ANALYSIS.
That is, if you want to really get it right the first time. The father of value analysis, Larry Miles, tells us that VALUE ANALYSIS, “…is a disciplined (management)… system, attuned to one specific need (or goal): accomplishing (and identifying) the (required) functions that the customer needs and wants…,” no more or no less than is necessary to fulfill the customers’ requirements, thereby bringing about the acknowledgement of “Best Value” in our customer’s eyes.
In just these few words Larry Miles has defined the CONCEPT OF VALUE that he advanced during his lifetime. This is a search that is never-ending and ever-lasting, because our customer’s requirements are ever-changing at an accelerated pace every year.
You may be searching for a management system that can be easily understood, accepted, and embraced by your management and employees, that will drive out all waste and inefficiency in your value chain, and will quickly adapt with changing times of flux and flow and will never become obsolete. If this is the case, then you need to embrace the value analysis methodology as your first defense in your battle to continuously maintain and improve your bottom line results.
Business Process Re-engineering Is An
Old Way Of Thinking About Renewing or Reinventing Your Processes. A Much
Better Way Is To Apply The Value
Equation To Your Process Orientation
For over a decade the fundamental tool of business process re-engineering has been process mapping (or flow charting) to renew or reinvent an organization’s business or clinical processes. By utilizing this instinctive tool hundreds of thousands of businesses and healthcare organizations world-wide have improved their processes’ quality, service, cost and cycle time. So why is there still waste and inefficiencies still running rampant in our businesses and within our healthcare organizations today?
Based on our research and empirical experience, the reason for this dichotomy is that process mapping is limited in its design, application and effectiveness in truly identifying what our customers absolutely, positively require in their processes. Process mapping is an old way of thinking about renewing or reinventing your processes.
A much better way is to apply the value equation (function/cost = Value) to your process orientation by utilizing an advanced tool called FUNCTIONAL ANALYSIS SYSTEM TECHNIQUE (FAST). In this way you can more skillfully understand the complexity of your business processes as opposed to becoming preoccupied and paralyzed with the methods and practices of process mapping.
Function Analysis System Technique (FAST)-
Value Analysis/Engineering Best Practice
If you are looking for a higher level of thinking, communicating, empowering and decision making when you are contemplating renewing or reinventing your business or clinical processes your tool of choice should be the Functional Analysis System Technique or FAST. The FAST Diagnostic System was originally developed by Charles W. By the way at Sperry Rand Corporation for the intense study of functions and function interactions of complex products, services, technologies, systems and processes by value practitioners.
This system gives value practitioners a better understanding of the complexities of any product, service, technology, system or process than just the traditional process mapping approach the renewal and reinvention process that we have been talking about.
The FAST system is a logical approach for determining the primary, secondary and aesthetic functions (higher and lower) as well as the supporting systems and technology necessary for a process to meet its reason for being…FUNCTION. The FAST system starts by asking three questions. Why is this function performed? How is this function accomplished? And when is this function performed? These questions are asked about each function under investigation and then we diagram the results as show below in Figure 2: Overhead Transparency FAST Diagram.
By functionally diagramming any complex product, service, technology, system, business or clinical process as we have done with the Overhead Transparency FAST Diagram in Figure 2, you will be able to quickly substitute lower cost functional alternatives to meet your customer’s requirements exactly.
Naturally, I can’t teach you all of the complexities of FAST DIAGAMMING in just one White Paper, but it was my goal to raise your consciousness that process mapping alone has intrinsic weaknesses when determining the value of your business and clinical processes.
The Danger Of Using Process
Mapping To Determine Value
If you have done any carpentry of any kind you will know that any small or big construction or repair project gets a lot easier, done faster and with better results if you are using the right tool for the right job.
As an example, I started to install a new screening system for my porch this summer using a screening tool I had owned for many years only to find that when I finally purchased (after many days of frustration) the right screen tool that was recommended by the screening system manufacturer, I was then able to perform the required work easier, faster and better than I had before, because I was using an inappropriate tool for the screening job.
It’s the same with renewing or reinventing your business or clinical processes. If you are using the wrong diagnostic tool, such as, process mapping to determine the relative value and worth of a business or clinical process, you will find that it is much easier and faster to generate better outcomes when you utilize the FAST system to do so.
About The Author
I Guarantee You That I Can Give You A Healthy Bottom Line Again This Year Or Help You Build Reserves For Future Years
Robert T. Yokl, President, Strategic Value Analysis® In Healthcare, ( a division of The HCP Group, Ltd.) has over 37 years of experience as a consultant and trainer in the field of Healthcare Supply Chain Management.
He is one of the country's leading healthcare experts in value analysis, value engineering, non salary expense reduction and materials management. He is the developer and program leader of the award winning Certified Value Analysis Practitioner Training Program™.
Mr. Yokl is also the co-developer of the healthcare industry's leading ValueNetCentral™ Supply Chain Optimization software. Over the past two decades he has trained 5,426 healthcare managers in his patented Strategic Value Analysis® and Team-Based Project Management™ systems and has assisted scores of organizations in developing their own supply and process value analysis programs.
He has published 13 books, videos and audios on supply/value chain management. His latest book being, “ Strategic Value Analysis™: The #1 Smart Strategy for Taking Cost Out of a Healthcare Organizations’ Supply/Value Chain”.
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