Getting Unstuck
Savings Beyond Price -Weekly eNewsletter – February 24, 2009
Robert T. Yokl
President & Chief Value Strategist
Greeting,
Getting Unstuck
Failure to “get unstuck” can put your career as well as the health of your healthcare organization – at risk. By this I mean in times of peril, like we are experiencing now, the old ways of doing things (price, standardization and capitation) aren’t going to lead you to NEW paths of success.
You must develop a new vision and a new fervor for your supply chain operations in order to move past what you have been doing so that you can create a new roadmap to lasting success. A good way to start on this new path for “getting unstuck” is to imagine what savings strategies you would pursue if price, standardization and capitation savings opportunities completely disappeared from your radar screen.
This scenario actually happened to my firm 10 years ago when GPOs took away all or most of the price saving opportunities that we were identifying for our clients. We then had to “get unstuck” and move on to new and better savings strategies, tactics and techniques (utilization, value analysis, and contract management) so that we could continue to bring value to our clients. In doing so, we found new paths to longer-lasting savings for our clients – beyond price — then we ever thought possible.
The vivid picture that I just described to you isn’t fiction, but a fact! Price, standardization and capitation savings are rapidly fading from your radar screen. If you don’t decide to “get unstuck” and move on to new paths you will be at an impasse that will put you and your healthcare organization – at risk.
Your Partner In Savings Beyond Price™,
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
1-800-220-4274
P.S. If you are really looking to “get unstuck” by traveling on new paths you will want to sign up for our latest webinar “Game Changer: 2009 Recession” where we will discuss this topic in detail.
P.P.S. I want to remind you to take a look at our latest version of our Utilizer Dashboard Software today. You have to see how this software tool will give you fast, efficient and easy to use low cost tool to help you drive out all of your savings beyond price then you need to take a look at the Utilizer today! You have to see the Utilizer to Believe it!
***Just Released***
Free Special Report
Supply Chain Utilization
Targeting your next big savings opportunities
“Could a misalignment that comes with a simple (and less costly) fix be eating away at your savings?”
“Beware of Standardization”
“Managing utilization costs can save six to 10 percent on total supply expenditures”
Buying What Matters Most to Customers
We buy millions of dollars of stuff a year for our customers without thinking much about what matters most to them. No…the answer isn’t quality, service and price. It is however, based on our extensive studies, function, utility and reliability!
How could this be possible? We have found that most customers (nurses, doctors, technicians, etc.) don’t know the price of the products you buy for them. And service is a given, not at option with them, so they don’t think about service much. While quality is always a factor in making a product buying decision, most customers make their buying decision subjectively not objectively. In so doing, they don’t always get this right. That is why quality, service and price isn’t really a good criteria for buying anything!
The truth is that your customers do know what functions (things it needs to do to make their jobs easier) they want in their products and the utility (usefulness) the product inherently brings to the job at hand. They also quickly know if the product is reliable, consistent, dependable and unfailing. In many ways, decisions made based on these criteria are rarely wrong.
Once you understand this simple, but little known insight, you can then better understand how to buy lower cost alternatives to meet your customer’s function, utility and reliability which is really what matters to them.
Is Standardization Now Holding Us Back?
Savings Beyond Price -Weekly eNewsletter – February 18, 2009
President & Chief Value Strategist
Challenging Conventional Wisdom in Supply Chain Management
We all get trapped into believing what we have been taught over the years about what works in supply chain management, or what we call the CONVENTIONAL WISDOM (ideas or concepts that are accepted without question as being true). I call this “getting stuck” in the old ways of doing things. This can be dangerous to your healthcare organizations financial fitness.
In fact, most ideas and concepts that are considered CONVENTIONAL WISDOM today do change over time, and therefore need to be challenged and reevaluated if you are to stay relevant, progressive and forward thinking in our supply chain practices.
One such CONVENTIONAL WISDOM that has outlived its useful life is that standardization is the one key to supply chain success. This fact is standardization is actually holding back new and better savings for your healthcare organization.
Here’s why. No one size, shape, color, formulation or mix of products, will not universally meet ALL of your customer’s exact requirements. You will either over-shoot or under-shoot your mark if you believe every customer has the same functional requirements thereby one size fits all situations. That’s why you have found it impossible to standardize on pacemakers, ICDs, orthopedics, spinal implants, etc. It just won’t work because every patient has different medical requirements that can’t be standardized. Your goal should be customization (built to the exact specification of each customer group), not standardization which is now becoming the new CONVENTIONAL WISDOM in this new healthcare economy.
I would also ask you to challenge and reevaluate the CONVENTIONAL WISDOM that everything you buy must be disposable. The healthcare organizations that we have worked with who have the lowest total cost are the ones who recycle, launder or reprocess more reusable kits, trays, gowns, towels and custom packs than their peers.
Summing up, everything that you have learned over the years that was thought to be true, isn’t always based on fact. You must constantly be challenging and reevaluating what you are doing so that you don’t fall into the trap of believing that what you are doing is the most cost effective or efficient way to do business. There could be a better way
Never…ever stop questioning the CONVENTIONAL WISDOM that once was thought to be infallible because very few things last forever!
Your Partner In Savings Beyond Price™,
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
1-800-220-4274
P.S. If you would like more information on how to reorganize, reinvent and reinvigorate your value analysis teams to be better than good you might want to download my White Paper” Strategic Value Analysis®: Savings Beyond Price™” that will give you an insiders’ view on how to do it.
What Were They Thinking?
I just viewed a slide show from a national GPO on their concept of value analysis where they stated that “value is a relative thing”, which to me means, that value represents different things to different people.
While there is some truth to this definition of value analysis this GPO never once mentioned that value analysis is the study of FUNCTION and the SEARCH for alternatives to meet those functions reliably. This is the “holy grail” of value analysis and the time-tested methodology taught by Larry Miles (the Father of Value Analysis) for defining value in our customers’ eyes. This thereby isolates the functions (primary, secondary and aesthetic) that are most important to our customers that are then ranked and weighted by their order of importance and cost.
Why did this GPO get it wrong? Because it didn’t fit into their world view of value analysis or they don’t really understand the classic tenets of value analysis — but think they do.
This convoluted or self serving thinking about value analysis is promoting half-truths that will only lead value analysis leaders and practitioners along a path of confusion, frustration, missteps and ultimate failure.
Let’s get it right! As an industry that has embraced value analysis as a best practice to manage and control our supply expenses shouldn’t we start to actually understand and then apply the system of beliefs that Larry Miles taught us vs. listening to false prophets that are leading us down the wrong path?
Unintended Consequences
Savings Beyond Price -Weekly eNewsletter – February 11, 2009
President & Chief Value Strategist
Unintended Consequences
I won’t argue with the conventional wisdom that standardization is one key to success in supply chain management. However, did you know that standardization can have unintended consequences that can greatly affect your healthcare organization’s financial fitness?
How could this happen? What we are seeing over the last few years is that healthcare organizations are over-standardizing on their product lines (I.V. sets, PICCS, electrodes, pacemakers, etc.) thus causing them to have higher total costs that are unnecessary, wasteful and unconscionable.
For example, we frequently see hospitals standardizing on one I.V. set throughout their healthcare organization at a cost of $7.86 or higher. These feature rich IV sets should only be employed in the operating room and emergency room, and not in every department in your hospital. By doing so, these hospitals are BLOATING their expense budgets by hundreds of thousands of dollars (maybe millions) each and every year.
The point I’m trying to bring across here is that standardization is a powerful cost management tactic when used artfully, but you need to have a set of rules to prevent over-standardization since this is uneconomical.
The first rule I would recommend you adopt is to not standardize on one product, service or technology without first understanding your customers’ (we call them “value groups”) exact functional requirements. In the case of IV sets you could have 7 to 9 value groups (OR, ER, Nursing Floors, Clinics, etc.) that you need to observe and interview to uncover their specific functional requirements, before you make a decision on what IV sets you will stock for them.
REMEMBER: One size of anything doesn’t fit ALL of your customer requirements. If they did we could hire monkeys to manage our storerooms because it wouldn’t matter what the monkeys gave out since it would be all the same to our customers. We all know that this would be an unrealistic and even laughable situation.
Your Partner In Savings Beyond Price™,
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
1-800-220-4274
P.S. If you would like more information on what rules you should be following to avoid over-standardization, I would suggest you listen to our “Value Analysis 2.0” podcast where you will learn new rules, systems and models to move you to the next level of savings performance.
4 Ways to Save Big with Both Arms Tied Behind Your Back!
The tough economy is hitting the healthcare supply chain in a big way. We are losing staff members, freezing spending and eliminating our capital budgets. That’s why our hospitals are counting on us to keep the big supply chain savings machine humming. This is all happening at the same time you are asked not to spend a dime on valuable resources that could offer huge returns to improve your healthcare organization’s bottom line. You might say, we are being asked to save big with both our arms tied behind our back. To assist you with this challenge, here are four ideas for you to consider in order to smooth the road to savings:
1. Get Organized to Save – Who do you think will save more with less, a supply chain manager who has an organized strategic written plan or a supply chain manager who is just going along with the flow or as we say “winging it?” Of course the answer is going to be the supply chain manager with the written plan who can look at the macro and micro picture of their supply chain performance. Don’t leave anything to chance, plan for success! Need a Savings Plan Template? Check out our Targeted Blueprint for Supply Chain Savings!
2. Stop Thinking Price – Let’s face it, the effort it takes to scrape up price savings is not worth the effort any longer. We have our GPO contracts in place and we are lucky to hold the line on increases as opposed to the big savings that we are accustomed to seeing. One answer is to start looking for “Savings Beyond Price™ which we have calculated could be as much as 79% of all new savings opportunities available to you! Look for waste, inefficient use, over-standardization, and value mismatches that could be easier to attack than price savings if you really look for them. Download our Free Supply Chain Utilization Report here!
3. Ask Your Colleagues Where They Are Saving Big – Start asking your colleagues where they are finding savings and see if their efforts translate into opportunities for you too. This could be achieved by using the AHRMM listserv. Another idea would be to create your own “Savings Tip Groups” with your colleagues that you can share your best practices and savings ideas. Why reinvent the wheel when you can learn from your colleagues and they can learn from you as well?
4. Get Your Vendors Working For You – You have valuable expert resources that could be put to work for you in order to save big money for your organization. As we see it, you are only utilizing a fraction of your vendor’s product lines. There are many cost-saving products to choose from that you may have overlooked. Tell your vendors that you would like to have them make recommendations that would reduce your costs inside their existing product lines. This will ensure their importance to your organization as not only a vendor that provides product, but as a valued partner that actually does more than just sell you products.
We know it’s tough out there and I hope that these ideas can assist you in taking your organization to the next level of savings. In addition to these savings ideas, I want to make you aware that we have a huge archive of articles and savings ideas available for FREE on our www.strategicva.com web site and blog. Go ahead and check them out at our expense. I can guarantee you, that you won’t be disappointed!
New Supply Chain Webinar – Game Changer: the 2009 Recession
Healthcare Supply Chain Best Practices Webinar Programs
GAME CHANGER:
The 2009 Recession!
Breakthrough Stratagems for Supply Chain Professionals to Survive and Thrive in the New Healthcare Economy
Webinar Objectives:
-
Gain Valuable Insights into How You Can Meet This Big Challenge Head On
-
Learn Where the Hidden Opportunities are in This Crisis
-
Learn What the Best Practices and Strategies Are to Defend Your Hospital’s Bottom Line
-
Learn How You Can Not Only Survive this Recession but Thrive in it As Well!
Thursday, February 26th – 1:00pm Eastern
All Registered Attendee’s Will Receive a Copy of the Webinar Slides and Audio Replay at No Cost to You!
Strategic Supply Chain Webinar Series Leader – Robert T. Yokl, President/Chief Value Strategist and Robert W. Yokl, VP of Operations, Strategic Value Analysis in Healthcare
Remember…The Webinar May Be FREE But The Information is Priceless
Leading Change
Savings Beyond Price -Weekly eNewsletter – February 4, 2009
President & Chief Value Strategist
Leading Change
Every crisis has seeds of opportunities for those who are prepared, persistent, persuasive and fearless! If ever there was a time when supply chain professionals need to LEAD CHANGE at their healthcare organizations…it’s now!
With few exceptions hospitals, systems and IDNs are bleeding red ink or at best are having one of the worst financial years in decades because of reduced census, growing receivables, shrinking investment income and higher capital cost. I liken this to a tsunami!
To lighten the load on your healthcare organization’s finances, supply chain professionals need to LEAD CHANGE in their healthcare organizations by:
1. Developing a new vision and strategy for change
The old vision and strategy of just saving on the price isn’t going to work in this new healthcare economy since prices are going up – not down. Your new vision and strategy should be focused on your utilization or in-use cost where on average 26% can be saved almost overnight. That’s were your new and better savings reside!
2. Communicating your change vision to all levels of management
Making change happen is a team effort, not an individual endeavor. Therefore, you must get your senior management and department heads and managers to buy into your vision.
This can best be accomplished with white papers, presentations, and newsletters circulated throughout your organization that would get everyone talking, working and supporting your vision. Yes, this does take some time and effort, but this is what leadership is all about. Talking and walking the walk!
3. Creating high-performance value analysis teams
To implement your new vision and strategy you will need to create high-performance value analysis teams, and not accept your current so-so value analysis team’s performance. I haven’t seen a value analysis team(s) that can’t raise their performance by as much as 10-fold if they are reorganize, reinvent and reinvigorate to save money in new ways.
4. Generating sustainable, measurable and new utilization savings
As I have already mentioned, price savings alone won’t lead your healthcare organization out of this crisis. Only by attacking your utilization misalignments will you make a BIG dent in your supply expense budget. And these sustainable, measureable and new savings will go right to your bottom line where your healthcare organization needs the impact most.
I have just outlined an action plan for you to LEAD CHANGE in your healthcare organization in these uncertain times. This will position you to be a hero instead of a victim in the tsunami that hit us in October 2008.
As I see it, supply chain professionals have an extraordinary opportunity to LEAD CHANGE in their healthcare organization because there are still millions of dollars of untapped savings beyond price to be liberated in your supply chain that you never thought was possible.
Now go and LEAD CHANGE before it’s too late to do so!
Your Partner In Savings Beyond Price™,
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
1-800-220-4274
P.S. If you would like more information on how to reorganize, reinvent and reinvigorate your value analysis teams to be better than good you might want to download my White Paper” Strategic Value Analysis®: Savings Beyond Price™” that will give you an insiders’ view on how to do it.
5 Ways to Speed Up The Time It Takes to Perform Value Analysis Studies And Save More in the Process!
Are your value analysis studies taking too long? You probably have heard the old song “Endless Summer”. This song reminds me of the song played at many value analysis team meetings across the country. You may have heard this tune at your own value analysis meetings as well: Endless VA Studies!
In my 27+ years as a coach and facilitator of value analysis teams I have observed that the one challenge value analysis professionals experience is getting their VA studies accomplished quickly and efficiently. This quickness and efficiency will have a positive impact on your hospital’s bottom line.
To assist you with this challenge, here are five of my best practices I teach teams that have helped speed up any and all VA studies:
Plan Your Studies – There is an old adage in the business world “A Business with No Plan is a Plan for No Business.” I think this sentiment applies to value analysis in the sense that a value analysis study with no plan is a plan for no savings or quality improvements. Therefore to improve your outcomes you must set goals for your VA study along with a detailed action plan. Remember: A VA study plan is always written and then discussed with your team leaders to improve it. Most importantly, you need to update your team members as to your progress against your plan frequently for feedback. Your plan does not need to be elaborate but it should be easy to understand, thorough and constantly updated as well. In doing so, you won’t need to tax your brain trying to remember the little details or forget important action steps.
Get it Done in 60-90 Days (2 to 3 Months!) – This is one of the most important aspects of any value analysis study. Setting a due date for studies so you don’t suffer the endless study syndrome. Let’s face it, your project managers will not like making a time commitment at first, but it is a commitment that will be worth its weight in gold once you make it a best practice. We have found that 60-90 days is a reasonable timeline for just about every type of study in your healthcare organization, especially if you follow the advice of step-1 above.
Stop “Winging It” – In this day and age would anyone be the project leader on a LEAN Management or Six Sigma Team without having been trained as a Green Belt (or a Black Belt) in the disciplines that are deemed best practices? Well of course we wouldn’t. Yet we take for granted the fact that value analysis is a process and system that is very similar to LEAN and Six Sigma and does require extensive training and a thorough understanding of the best practices of value analysis in order to be highly effective at meeting your savings and quality goals. Training is the key to your success; don’t ignore the incredible advantage it will give you. I guarantee you it will make your value analysis studies faster, better and more timely with advanced VA training.
Track Your Project Managers Study Process – This goes hand in hand with having an action plan, but it is very important that you track every aspect of your value analysis studies especially if you are a VA Coordinator or a VA Team Leader. You MUST know the status of each and every VA study if you are to avoid the endless study syndrome. At every team meeting you should have your VA Project Managers submit a progress report which would require them to update the team on what was accomplished from your last meeting. You may get some push back on this idea. But really how hard is it to fill out a Word template to say that this is my progress since last meeting and I did A,B,C and D, as well as, to report that I will be doing E, F and G by next meeting. It’s a simple one page task all team members can do!
Don’t Let One Person Do All the Leg Work – This is one of the biggest mistakes Value Analysis Coordinators, Managers or Directors make who do all the leg work on all their hospital’s VA studies. If you allow this to happen your VA Team isn’t really a team but instead is a steering committees whose members are asked to makes decisions or give input on a hospital’s value analysis projects without getting their hands dirty. This isn’t a productive way to do business!
Let’s face it, the number of VA studies that can be accomplished by one VA Coordinator, Manager or Director pales in comparison to the number of studies that can be completed by a value analysis team with 10-12 members who all take on one VA study each. An outstanding VA Coordinator, Manager or Director could probably work on 4-6 studies at a time but if you can double or even triple your savings yield through real teamwork your VA study productivity will explode.
Times are tough, therefore it is even more important than ever before that your value analysis supply savings engine is hitting on all eight cylinders in order to generate as much savings for our hospital in the least amount of time with the best quality results possible. Good enough isn’t good enough anymore. Better, quicker and more efficient savings is the name of the game today!
