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.
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