Yet, until I actually reviewed the results of the exercise I didn’t realize how important a scorecard could be in identifying and then targeting where a healthcare supply chain organization needs to focus their supply utilization management efforts to get better than just good.

Here are the eight areas of our scorecard rated that we believe are the most important supply utilization indicators to be tracked for success:

Moreover, our methodology for this rating system was to compare these measurements against all of our clients in the same categories based on a statistical scale of 100 being the best in class.  It was a pleasant surprise to find that the two clients who requested our supply utilization management scorecard didn’t fall below the 75^th percentile in any category that we measure.  In most categories, these clients were at the 90^th or 95^th percentile which was the motivation for them signing on to our Utilizer® Dashboard subscription service in the first place: To Improve their utilization management in all areas of their supply chain expense operations.

We also provided these same two clients with specific utilization supplies and purchase service categories (Custom OR Packs, Urologicals, IV sets, freight, postage, pacemakers, etc.) where they were “best in class” vs. their cohort group, which gave them even more particulars on how they stacked up against their peers. 

Overall, I thought this exercise met its intended goal of shedding light on what was working or not working in our client’s supply utilization management program, thereby, providing these clients with specific targeted savings opportunities for this current fiscal year.    

Now that you understand this rating system, how do you compare to your peers?  If you know the answer to this question then you don’t need to read further. However, if you aren’t currently comparing yourself in all areas of your supply chain operations to your own cohort group then you are flying blind. To put it bluntly, you will never reach the level of “best in class” in any supply chain category you choose to excel in without first investing the time, money and resources to do so.  You can’t win the game without first knowing the score!

A good way to look at this emerging trend is check out what other industries are doing when they HIT the wall on savings. Over the last 5 years or so manufacturing, energy, financial, airline industries, etc., have been attacking the in-use cost of their products, services and technologies. Why? Because their price savings have disappear!

The tactic industry uses to drive out all of their waste and inefficiency in their value streams is called demand management or as we like to call it in healthcare — utilization management. This approach has saved billions of dollars without hurting their customer’s quality.

In brief, the demand management (i.e. utilization) methodology focuses its efforts not primary on suppliers or price, but on how products, services and technologies are deployed in an organization. Are there wasteful and inefficient practices, are they being misused or misapplied and are there lower cost alternatives to meet these stated functions at a lower cost? Its not uncommon for companies to cut 7 to 15 percent off their expense budgets and the savings can begin in as little as three months.    

Extensive Industry research confirms the future of supply chain management isn’t about suppliers or price, it’s about your CONSUMPTION, where 79% of all of your new savings reside. Since most healthcare supply chain best practices (e.g. spend managers, just-in-time, ERP systems, etc.) are adopted from other industries, this is one trend that you don’t want to overlook, ignore or disregard because … it’s the future of supply chain management! This isn’t a prediction, but a fact!

So if you want to start creating the future of supply chain management at your own healthcare organization you need to start today by focusing on your own products, services and technology consumption. That’s where other industries are finding a GOLD MINE of savings, not just by bidding, negotiation or joining a new GPO to obtain a better price.

The most common advice a VA facilitator (I hope you have one) usually gives to his or her VA team members is “Call me if you need me”. The end result is that your VA facilitator never hears from your team members for various reasons (time constraints, embarrassment, or awkwardness in asking for help) and consequently your team members never become proficient in the art and science of value analysis. This then leaves hundreds of thousands of dollars in savings on the table at your healthcare organization — untouched. 

On the other hand, if you have a structured, proactive coaching approach, where a coaching schedule is followed by your VA facilitator, team leader and team members, you will improve your overall team performance by 90%.  Just as important, your savings performance will improve by 2, 4 or even 6-fold over your current savings performance.

There’s a lot more to effectively coaching your value analysis team members (qualities of an effective coach, duration and content of sessions, sponsor and team leader involvement, accessibility, documentation, etc.), but we will leave these topics for other blog articles.

What the lesson learned from this blog article should be for you is that telling your team members to “Call me if you need me” is the worst advice you can give your team members.  Only with a structured, proactive coaching approach can you dramatically improve your value analysis teams and team member’s performance.

Savings Beyond Price -Weekly eNewsletter – June 10, 2009

Robert T. Yokl

President & Chief Value Strategist

 

Dollarize to Save Big

Greetings,

One of the techniques that we teach in our advance value analysis training programs is to “dollarize to save big” so that you can, for the first time, negotiate out unwanted and unneeded functions and features on your customer’s requested new (or existing) products, services and technologies.  This is a powerful tactic that you need to understand and then consistently employ in all of your commodity negotiations with your customers.

Here’s an example of what I’m talking about!  There was a recent study conducted by J.D Power asking potential car buyers what functions and features they desired in their cars. This was done without showing them the price of these options. Naturally, one of the highest rated features (second on this list) was a navigation system, but when these same buyers were shown the cost of the navigation system ($1,500) their ranking for this option dropped from second to 10^th on their wish list.  

Why did this happen?  Because when you dollarize the functions or features for any commodity purchase you give your customers a REALITY CHECK to make sure that they absolutely, positively need it.  In most cases, they won’t select a high price option if they can’t value justify it in their own mind. 

Here’s another example?  If you would dollarize how many ports you clinicians need in your IV sets ($1.00 each), you will find most clinicians won’t select more ports then they actually need to get their job done. On the other hand, if you ask these same clinicians how many ports they require in their IV set without dollarizing, every one of them will select the maximum amount available. It’s just human nature to ask for more then you really need to give yourself a safety zone to work in. 

So, if you want to dramatically reduce the total cost of everything you are buying don’t forget to “dollarize to save big” when you are negotiating with your customers on the things that they say are really important to them. You will be pleasantly surprised at the savings results!

Your Partner In Savings Beyond Price™,

Robert T Yokl

Chief Value Strategist

Strategic Value Analysis® In Healthcare

Bobpres@strategicva.com

1-800-220-4274

 

P.S. Is it time to think about advanced training for your value analysis team/committee?  With many hospitals about to start a new Fiscal Year with more challenging savings goals than ever before, you may want to give your teams an added advantage with advanced value analysis training.

 

Savings Beyond Price -Weekly eNewsletter – June 3, 2009

Robert T. Yokl

President & Chief Value Strategist

 

No Magic Bullet

Greetings,

I think that there is a tendency in healthcare for supply chain professionals to seek out a “magic bullet” that will be a quick fix to ALL of our supply chain expense management challenges. But is this really the best path for you to take to improve your supply chain performance?

For years we all thought that the big quick fix was to have high compliance with our GPOs. Then every one thought the road to success was to purchase a new MMIS system to give them high visibility in their supply spend. This was followed by a massive movement by hospitals, systems and IDNs to cleanse their data. Now we all seem to be jumping on the data analytics train as if this is ultimate quick fix to all our supply expense management issues.

This is the road often traveled by supply chain professionals in their search for better performance, but these quick fixes will never sustain long-lasting bottom-line results. If you want to be better than good in your supply chain performance you will need to choose systemic solutions, not quick fixes.

We have worked with numerous healthcare organizations that have employed all of the quick fixes I just talked about, but they still haven’t optimized, institutionalized or operationalized their supply chains’ savings efforts. This is because these organizations haven’t systematized these efforts into a cohesive operating plan, but instead jump from one quick fix to another hoping that this new “magic bullet” will be the definitive answer to all of their supply expense management problems.

It is now high time for healthcare organizations, with limited time, money and resources, to ditch these quick fixes in favor of a strategic, systematic and programmatic performance improvement effort that seamlessly fits into a carefully thought out supply chain expense management short and long-range plan.

This way when a new saving idea, suggestion or scheme comes across your desk you won’t get caught up in quick fixes, band-aids or costly fads that don’t meet your exact strategic or tactical goals and objectives for any given year.

Your Partner In Savings Beyond Price™,

Robert T Yokl

Chief Value Strategist

Strategic Value Analysis® In Healthcare

Bobpres@strategicva.com

1-800-220-4274

 

P.S. Don’t forget to sign up for this ONE-TIME-ONLY “How to Create, Manage and Maintain High Performance Value Analysis Teams”  NO COST webinar on June 17^th (Eastern). This webinar is exclusively designed for those hospitals, systems and IDNs who are seriously looking for new and better strategies, tactics and techniques to take your supply value analysis program to the next level of savings performance.

 

For years value analysis was something we told our bosses and colleagues we were doing to make them think we were on the cutting edge of supply chain management. We knew however in our heart of hearts that our team(s) or committee(s) weren’t generating the savings and quality improvements that they could or should be. We knew our team or committee members weren’t attending meetings, that we weren’t getting management support that we needed to be successful and that our department heads and managers too often placed barriers in our path that prevented us from making savings happen.

That was then, this is now!  We are now seeing hospitals, systems and IDNs providing formal advanced training for their senior management and value analysis teams in the classic tenets of value analysis, organizing their teams to save and seeking out new power tools to manage, monitor and control their supply value analysis program. They are hiring professional trained value analysis coordinators, managers or directors to manage their supply value analysis program.

Why Now, not then? No hospital, system or IDN, with their dip in revenues due to the recession, can leave a significant 7% to 15% in utilization supply expense savings on the table untouched. In the past this 7% to 15% seemed nice to have, but now is critical to their survival.  That’s where value analysis comes to the rescue!

Value analysis, if practiced patiently, fervently, artfully and scientifically is the vital savings engine that all healthcare organizations (large and small) need to make Savings Beyond Price™ quickly happen. But this budding success story won’t materialize unless your senior management, team(s) or committee(s) has the requisite tools, training and executive management support required to create, manage and maintain high performance value analysis teams.  

So if your hospital, system or IDN is getting serious about value analysis just remember this important salient fact: value analysis isn’t about establishing a value analysis team or teams and then telling them to GO SAVE MONEY!  It’s all about having highly trained, motivated and incentivized VA team leaders and team members that understand, internalize and vigorously apply the six-step value analysis methodology to uncover and then implement any and all savings opportunities for your healthcare organization. 

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!

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?

Savings Beyond Price -Weekly eNewsletter – April 1, 2009

Robert T. Yokl

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

Bobpres@strategicva.com

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 16^th.   

FREE Educational Webinar

GAME CHANGER:

 The 2009 Recession!

Breakthrough Stratagems for Supply Chain Professionals to Survive and Thrive in the New Healthcare Economy

 

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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

Register Here

All Registered Attendee’s Will Receive a Copy of the Webinar Slides and Audio Replay at No Cost to You!

Register Here

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

Savings Beyond Price -Weekly eNewsletter – January 21, 2009

Robert T. Yokl

President & Chief Value Strategist

 

Excellence is an Art Won by Training

Aristotle is quoted as saying that “Excellence is an art won by training and habituation”. Training is the sure path to improvement, reducing the resistance to change and changing people’s behaviors. It is the only way that I know of to “unfreeze” existing thinking, replace it with new habits, and then “refreeze” these new ideas, behaviors and practices that have been learned to create a whole new way of doing things.

We see this truism play out every time we train a new value analysis team(s) for our clients. Prior to this training, our client’s department heads and managers are skeptical, risk adverse, lack trust, and are indifferent to new ideas about how to save money – beyond price. But then we win them over by teaching them that there is indeed a better way to save money, by having them practice the new skills we have just taught them and then by repeating the process until they achieve the desired results. 

After 22 years of training value analysis teams in the art of excellence, I can tell you that I have found NO better way to change people’s minds and hearts than training and as Aristotle calls it “habituation” or practice makes training perfect.

This is just one example of how excellence is an art won by training, but it should be your best practice in everything that you are trying to accomplish. When you are installing a new MMIS system your staff needs training. Before you take your annual physical inventories your staff needs training.  When you hire a new buyer they need training. Nothing new, different or experimental should happen in your supply chain operations without training.  It’s your key to quality, financial fitness and operational excellence! 

So now that you know the secret to changing people’s behavior and changing the “status quo” in your healthcare organization, I would encourage you to take one small first step in this direction: develop a training program for ALL of your new hires in order to build, not hope for, excellence into your supply chain operations. Once you have accomplished this small footstep, then move on to even bigger training challenges over the next few years. You will be absolutely amazed at the results of doing so.

Your Partner In Savings Beyond Price™,

Robert T Yokl

Chief Value Strategist

Strategic Value Analysis® In Healthcare

Bobpres@strategicva.com

1-800-220-4274

P.S. If you are interested in viewing a clip from our training video to see how we do our training, as well as pick up a few tips on what your training should look like please be our guest.

P.P.S. Don’t forget to check out my new blog “Getting to the Next Level of Savings!” now that your GPO savings are slowly disappearing.  

 

 

The answer is maybe yes or maybe no! It all depends on what you or your management are trying to accomplish with your metrics. If you are using them as performance standards that are measured over time against your peers, that’s a good use of your metrics. If your management is using your metrics to embarrass, harass or worry you, that’s a bad use of your metrics.  You need to find a healthy balance!

With this said, I find that the most mature healthcare organizations that I talk to “measure what matters” — no more and no less. More importantly, these hospitals, systems and IDNs measure more than one metric to truly understand the supply chain’s movement, velocity and activity for any given period. 

At SVAH, we track, trend and monitor eight global metrics, five department metrics and 133 supply categories of purchase to measure our client’s financial fitness on a quarterly basis with our Utilizer™ Dashboard.

Is this too much measurement? I don’t think so, since we have found that by doing so we are “measuring what matters” for our clients.  By finding out what matters to you and your management, you will be on the road to operational excellence at your healthcare organization too.

Savings Beyond Price -Weekly eNewsletter – November 20, 2008

Robert T. Yokl

President & Chief Value Strategist

 

Greetings!

Celebrate Success

 

Teams are just like people, they need to be rewarded and recognized for their success.  Otherwise, why would your department heads and managers want to serve on your teams (i.e., value analysis, LEAN management, Six Sigma, etc.) again and again?  It’s just human nature!

It doesn’t need to be a big reward or recognition either; small signs of appreciation will do the job. I remember a CEO coming to one of his value analysis team meetings — unannounced — after they had met their 90-day milestone goals. He then personally thanked each and every member of his value analysis team for their exceptional good work. 

That’s not all! Before the CEO left the team meeting he gave each team member two tickets to a movie that was playing down the street.  The team members were blown away by this reward that only cost this CEO $142.22 to do so.  So you see it’s not just the size of the reward that matters, but the acknowledgment for the good work from senior management that counts.

Other CEOs we have worked with have given days off when their value analysis teams met their annual savings goal. Or, better yet, have agreed to and then remitted cash rewards as high as $3,500 per team member for exceeding their team’s goals.

It’s not important how you decide to structure, organize, fund and administer your Incentive  Program. What’s important is for your healthcare organization’s senior management to acknowledge and recognize the accomplishments of your teams by frequently celebrating their small and big success every month, every quarter and every year.

 

Your Partner In Savings Beyond Price™,

Robert T Yokl

Chief Value Strategist

Strategic Value Analysis® In Healthcare

Bobpres@strategicva.com

800-220-4274

P..S. If you want to learn more about how to celebrate success with your teams I would suggest that you listen to our most recent podcast “Incentivize-To-Save™: which will give you the most up-to-date information on this topic. 

 

P.P.S. Don’t forget to check out my new blog article “Shaping the Perfect Value Analysis Team”.  This blog will give you the critical success factors in selecting your “perfect” team members vs. selecting them by chance.

 

New Software Opens up a Whole New World of Supply Chain Savings Previously Thought Impossible

Utilizer™ Dashboard version 3.2 just released! Finally, there is a user friendly software that will enable healthcare organizations to quickly identify their supply utilization misalignments from the 30,000 foot level, right down to the ground level. This simple, effective and affordable Utilizer™ Dashboard will open up a whole new world of supply chain savings most think is impossible.

Skippack, Pa (SVAH) November 14, 2008 – Healthcare managers won’t be at all surprised to hear that the healthcare industry is rife with utilization misspends and misalignments. The root of the problem, according to expert research, is that despite their best efforts, healthcare managers have yet to uncover where their true utilization savings are buried. 

Robert T. Yokl, President of Strategic Value Analysis® in Healthcare (SVAH) and a         recognized supply chain management expert, recalls talking recently to a healthcare supply chain manager, who told Yokl that he, employing a spend manager, an analytics manager and clinical manager tools, was unable to locate their organization’s utilization misalignments. The job was not impossible, though, as SVAH’s was able to find nearly $4.2 million dollars in utilization misalignments for this organization.

“This very skilled and highly qualified supply chain manager was unable to pinpoint his savings opportunities, but this failure was in no way related to the managers’ skills or                 qualifications,” Yokl says. “He simply did not have the right tool to accurately find the savings that consistently remain buried in his supply chain data.”

 Yokl’s solution is simple:  Use the right tools for the job.  Over the last eight years, SVAH has conducted hundreds of utilization benchmarking studies for hospitals, systems and IDNs by employing a proprietary utilization dashboard, which has identified close to a half a billion dollars in utilization misalignments for SVAH clients. Yokl says his company’s Utilizer™ Dashboard is the precision tool that hospitals and healthcare institutions really need. “The bottom line is that healthcare organizations can’t do it alone; it’s an impossible task to ask supply chain managers to find thousands, and even millions in supply chain savings using old-school strategies, tools and techniques.”  

With this said, SVAH has just recently upgraded its Utilizer™ Dashboard to version 3.2 which now includes an easy to use contract management module that takes the hassle out of managing and controlling the hundreds (maybe even thousands) of contracts healthcare organizations must manage, archive and bid/negotiate almost on a daily basis.

The Utilizer™ Dashboard is available as a subscription service on a fixed monthly fee basis.  It identifies all potential utilization savings, and subscribers also receive unlimited phone and e-mail coaching to assist them in translating, strategizing and implementing the savings uncovered with their Utilizer™ Dashboard.  Yokl says one of the best features of the dashboard is that “SVAH does all of the heavy lifting and our clients get all of the savings.”

About The Company: Strategic Value Analysis ® in Healthcare, (SVAH) Skippack, Pennsylvania, is a software, training and consulting firm specializing in supply utilization management. SVAH’s mission is to give clients greater control over their supply chain by providing them with better information, better focus, and better systems so that they can make better decisions on their second biggest expenditure.