Why You Should NOT Lay Off Your VA Coordinator?
I have observed a troubling trend that is popping up all over the healthcare landscape. This trend in hospitals, systems and IDNs are laying off their value analysis coordinators, managers and directors because of the affects of the new economy. This doesn’t make any sense to me, but it is a reality!
In fact, I was shocked when I called one of our Certified Value Analysis Leaders only to find out that she was laid off from a major teaching hospital last month, who I considered one of the best in the field. How could this happen?
I have a theory; see if you agree with me. I believe that this Value Analysis Manager didn’t show the intrinsic VALUE of her position to her senior management every day, in every way, and when every opportunity came her way. Therefore, her senior management, when the chips were down, didn’t see the VALUE of her position, so they eliminated it.
Don’t make this same fatal mistake! If you are a value analysis coordinator, manager or director take a lesson from this story. You MUST make yourself highly visible to your healthcare organization’s senior management and make sure they recognize you as an essential, indispensible and important cog in your hospital’s supply chains wheel. This can be accomplished by these four visibility tactics:
1. Sending a monthly, quarterly and annual report to your senior management on your VA savings and activities.
2. Publish a monthly Value Analysis Newsletter and circulate it to all of your senior management, department heads and managers talking about your VA successes.
3. Make sure that there is a member of your hospital’s senior management team on ALL of your value analysis teams.
4. Facilitate an annual value analysis strategic planning retreat and invite your senior management team to participate in this important planning process.
I think you get the idea, it’s your job to show the intrinsic VALUE of your position and this won’t happen unless you start to promote yourself and your value analysis efforts shamelessly, if need be, to ensure that your important position is recognized as mission critical to the success of your healthcare organization. Don’t leave anything to chance!
Are You Really Practicing Value Analysis?
Most hospitals, systems and IDNs have so-called value analysis committees or teams, but are they and you really practicing value analysis? From our experience, most healthcare organizations aren’t really practicing value analysis but doing something else and calling it value analysis.
Let me give you an example of what I’m talking about. A few years ago I performed a study at the request of one of our clients’ CFOs to determine if his university teaching hospital was really practicing value analysis. I did so by reviewing this hospital’s fully documented savings report for one year.
Here’s what I found: 69% of their savings were price related, i.e. rebates and price savings for a given year. While only 31%, in my opinion, was actually value analysis savings or savings beyond price. However, this is more value analysis savings than most hospitals, so I must congratulate this client for moving in the right direction where 79% of all new savings reside.
My question to you is how much of your savings are really value analysis savings at your hospital? If it’s not 50% or more, then I would suggest that you need to re-evaluate what you are doing.
Your Best Savings are Below the Waterline
Most healthcare organizations have attacked their cost (above the water line) with their GPO, capitation, standardization and custom contracts strategies, which is only yielding them 1%, 2% or 3% savings annually — at most. But did you know, as one of our clients astutely observed, “That it isn’t about price any longer (that is slowly disappearing), it’s about utilization”. Especially since the inflation rate this year could be as high as 3.4%. All of your savings gains are being washed away.
On the other hand, if you attack your utilization savings (below the water line) I can almost guarantee you that you can achieve 7% to 15% savings that aren’t affected by inflation. Value analysis is the key to doing so!
This is due to the fact that your hospital’s staff are generally so swamped that they don’t have time to stop and analyze whether this is the best use of this product, service or technology, is it being wasted or is there a lower cost alternative that could meet this function.
Here’s an example of what I’m talking about. At one hospital we worked with, the staff was using only a primary IV set. No secondary set had been purchased (yes, you heard right). The staff used these primary sets for every patient for a year without anyone questioning it, until we pointed it out, and this wasn’t a cheap oversight. The hospital spent close to a million dollars it didn’t need to spend until this utilization misalignment was resolved.
No that you know the facts, where do you think you should be focusing your savings efforts: Price or Utilization?
Supply Chain Mastermind Groups Percolating
I had a phone conversation last week with a vice president of a state AHRMM association who shared with me his idea of forming what I call a “mastermind group” of like-minded supply chain professionals who would meet regularly to talk about their challenges on specific topics, and then brainstorm to find answers to them as well as find support in a group setting.
Kayn Greenstreet of The Success Alliance says that “The concept of the “mastermind group” was formally introduced by Napoleon Hill in his timeless classic, “Think and Grow Rich.” He wrote about the mastermind group principle as:
“The coordination of knowledge and effort of two or more people, who work toward a definite purpose, in the spirit of harmony.”
He continues …
“No two minds ever come together without thereby creating a third, invisible intangible force, which may be likened to a third mind [the master mind].”
The beauty of mastermind groups is that participants raise the bar by challenging each other to create and implement goals, brainstorm ideas, and support each other with total honesty, respect and compassion. Mastermind group members act as catalysts for growth, devil’s advocates and supportive colleagues. This is the essence and value of mastermind groups.”
I have noticed that more and more supply chain “mastermind groups” have been percolating around the county at the national level, but not at the state or local level. I believe it is time for supply chain managers throughout the country to consider this “time tested” performance improving stratagem to move you to the next level of performance.
I have personally been involved in “mastermind groups” in my career and can tell you from experience that it will give you unfiltered feedback, more big ideas and new ways of doing things. And peer support that you won’t find anywhere else. If you want to get better at what you do this is one proven way to do so!
Have You Planted Your Seeds?
Savings Beyond Price -Weekly eNewsletter – April 8, 2009
Robert T. Yokl
President & Chief Value Strategist
Have You Planted Your Seeds?
Greetings,
What do perennial flowers and recurring supply expense savings have in common? The simple answer is that both can grow and bloom for many years if you use the right tools, provide adequate nourishment, and the proper care and placement.
Why? We have found that healthcare organization must plant seeds today in order to generate new savings tomorrow, next quarter or even next year. Otherwise, your supply expense savings will be short-lived or worst yet, die on the vine before being harvested.
Think about it this way. Your price savings are getting harder and harder to achieve since you and your GPOs have squeezed your suppliers’ margins to the bone. But that doesn’t mean that there isn’t BIG robust savings to be obtained by more effectively managing and controlling your healthcare organization’s products, services and technologies’ in-use cost or as we like to call them utilization misalignments.
In fact, our studies show that there is as much as 7% to 15% in NEW supply expense savings available to you right now. You can do this by attacking your wasteful and inefficient consumption, misuse and misapplication within the millions of dollars of products, services and technologies that you buy annually.
Case Study: One of our 223-bed community hospital clients was getting an excellent price and rebates on their contrast media, but then they found using our UTILIZER™ Dashboard that their contrast media in-use cost was $42,666 higher than their peers. When this utilization misalignment was investigated by one of their hospital’s value analysis project managers, they found that their radiology department had standardized on 155cc prefilled syringes to administer their contrast media. Their community standard was 100cc doses! After several negotiation sessions with their radiology director, he finally agreed to only use 155cc doses on his liver function patients; thereby immediately reducing his hospital’s contrast media cost by $41,298 annually. This was a win-win for all involved parties!
Question! “How would you know where your utilization misalignments are hidden at your healthcare organization without having a power tool to plant the seeds to grow and bloom your savings every month, every quarter, and every year?”
The typical healthcare organization has 7,000, 14,000 or even 30,000 SKUs (stockeeping units) they must track, manage and control continuously to ensure that their pricing and utilization is truly within acceptable limits. This is an almost impossible feat for super busy supply chain professionals to accomplish without leveraging technology to do this hard work for you.
A new era of supply chain expense management has arrived: Utilization Management. In fact, a new survey by Novation reported that 44% of healthcare organizations have decided to focus on utilization as their new path to savings for their hospital, systems and IDNs. This is the reality of the supply chain of the future, since price savings are slowly, but surely disappearing!
Isn’t it time that you jump on this fast moving utilization train so that you can reap the full benefits of new and better supply expense savings that are not only sustainable, but inflation proof?
at a time.
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 want to know more about what utilization management is all about may I suggest that you download our Utilization Management Special Report. This is the future of supply chain expense management.
What Every Supply Chain Leader Should Know
One little known secret of supply chain management is that “nothing happens without supply chain making it happen” at any and all healthcare organizations. That’s why supply chain leaders should take pride in all of their big and little accomplishments because they are a major player at their healthcare organization keeping the train on time and on the tracks.
Think about it! Nothing happens at your healthcare organization without supply chain’s input, action or consultation. Even a new hire requires equipment and supplies on their first day on their job provided by supply chain management. No new program or procedure that your hospital introduces can be kicked off without supply chain being involved. No new building can be deemed operational without supply chain buying everything that is needed to get the doors open.
I’m sure these examples will give you a vivid picture of how important supply chain is to the service excellence of your healthcare organization. It is a department that touches everybody and everything in your hospital, system or IDN sometime, someway, and somehow in its life cycle.
That’s why we need to do everything possible as a profession to elevate supply chain management to the highest level of management in our healthcare organizations. No longer are supply chain leaders just buyers, but are senior level executives that merit respect, recognition and adequate compensation for the important work that they do.
This should be your mission as a supply chain leader. Make sure that your senior management understands and internalizes that “nothing happens without supply chain making it happen”. Then and only then, will you be able elevate supply chain management to its rightful place as a senior level executive in your healthcare organization with all of the prestige, appreciation and high regard that it deserves.
Benchmarking Still Drives Savings
Savings Beyond Price -Weekly eNewsletter – April 1, 2009
President & Chief Value Strategist
Benchmarking Still Drives Savings
Greetings,
Industry embraced a simple idea in the 1980s. The idea was that it was possible to search for the best practices that will lead to superior performance by comparing cost, time or quality of one organization to another. This process is called benchmarking and it has been immensely successful in all industries — including healthcare — for almost three decades!
Here’s the rest of the story! One BIG gap that we have found in healthcare benchmarking practices is that this technique is not universally applied to the identification of supply expense savings opportunities. Yet, healthcare organizations that are benchmarking their supply expenses systematically have found that benchmarking is “what drives savings” for their hospital, system or IDN.
No longer do these progressive healthcare organizations need to guess where their supply savings are hidden, they now know precisely what to target for their next savings opportunity since their benchmarking has illuminated the way.
For instance, one of our clients, who is a subscriber to our Utilizer™ Dashboard, quickly discovered that their hospital wasn’t recycling their Oxisensors at the level that they should have been reprocessing, thereby losing $32,692 in savings annually.
How would this hospital have known this important fact if they weren’t continuously benchmarking to improve their performance? The answer is they wouldn’t have known unless they had stumbled over this anomaly in their supply chain by happenstance. Then it would be too late to recoup their big losses!
If you want to be on top of your supply chain game, benchmarking your supply expenses shouldn’t be ignored or be a “one time event”. It should be a regular (we recommend quarterly), systematic measuring of your healthcare organizations’ supply chain expenses against those who are recognized as best-in-class practitioners in healthcare or even in other industries. In this way you can make certain that you are the best of the best in ALL of your categories of purchase.
at a time.
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 want to know more about benchmarking best practices I would recommend that you sign up for our Healthcare Supply Value Analysis webinar on April 16th.
How to Get a Bigger Dose of Creativity
Supply chain professionals have stepped up their savings game due to the effects of the recession of 2009, but are they really creatively driving the last dollar out of your supply chain or just nibbling around the edges? Here are five big ideas that will give you an even bigger dose of creativity to ramp up your savings in these unsettling times:
1. You don’t have all of the good ideas
I can’t tell you how many times I’ve seen the door closed on good ideas because they weren’t invented by the supply chain department. It’s now time to encourage new and better ideas to bubble up from your vendors, staff, co-workers and department heads to bring new inspiration to the job at hand.
2. You need to collaborate more with your peers
Too many supply chain professionals act as if they are lone rangers as opposed to collaborating with their peers in teams to make savings happen. As an individual you can only accomplish a minuscule amount of work on a daily basis, but you can supercharge your savings efforts by teaming up with your peers to get this hard work done.
3. You need to have more diversity in your teams
Teams that act, look and think alike won’t generate new, different and better solutions to your challenges. One little known secret to boosting your creativity is to get people with different backgrounds and expertise to work together as creative contributors.
4. Accept some failures and dry holes as inevitable
Don’t be frustrated by some failures and dry holes that your team(s) will experience in searching out savings, but instead consider them a learning experience. It’s your job to make your team members feel safe, confident and risk averse so that they can filter the best ideas for implementation and kill projects that are leading to a dead end.
5. Give your team members as much responsibility as possible.
Your team members should be given as much responsibility for their projects as possible. They shouldn’t be second guessed by your team leaders or senior management on their findings and recommendations. Most importantly, they need to be given sufficient time and resources for exploration and implementation of their projects.
Getting a bigger dose of creativity for your supply chain initiatives is more about the process you follow to get results — than luck. It involves tapping into the ideas of right people with the right diversity, accepting some failures and dry holes, and giving your team members as much responsibility as possible. Simply stated, it’s not about being a lone ranger!
