How to Identify Your Best Value Analysis Team Members
Most hospitals, systems and IDNs have value analysis teams that evaluate and select the products, services and technologies that they are buying. The question I would like to pose to you is how do you identify the best VA team leaders and team members? Is it by chance or fact?
For years, we allowed our clients to select their value analysis team members by title or position, only to find that we were leaving this selection to chance – not facts! Our studies were showing that 76% of the team members that were selected by this chance method were failing in their team member roles.
We then realized that this selection process was really a hiring decision and it had to be made more scientifically if our clients were to have the best talent on their value analysis teams. That’s when we instituted our “Team Leader and Team Member Placement Test” based on the top value analysis team member competencies that we have observed were the most successful, more often, in the past.
The result, after eight years of using this test with our clients, shows that if you have a placement test for your team leaders and team members you have a 97% probability of having the best candidates for
your team’s jobs and you can, up front, eliminate any mismatches for this teamwork before it becomes too late or too embarrassing to do so.
So if you want to hit the bull’s-eye every time by truly predicting the performance beforehand of your new value analysis team leaders and team members you need to design a “Team Leader and Team Member Placement Test” for your new team hires based on FACTS, not chance.
Fail Often to Quickly Succeed!
At our CVAL Training Course last week one of my students, a supply chain operation’s manager for a large system in the Mid-West, told me that he goes out of his way to let his value team members know that it is OK to stumble, falter or even fail on the projects that they are working on given that it will lead to even more successes more often and quicker than ever before.
I was very impressed with this operation manager’s attitude toward failure since it is one of the critical success factors in trying, evaluating, experimenting, and adopting or discarding products, services and technologies that you are investigating. More importantly, “rapid decision(s) and swift follow-through are essential to keeping an organization innovative” according to Dan Quinn, CEO of Rath & Strong Management Consulting.
Unfortunately, too many healthcare organizations espouse “finger pointing” as their predominant management style which only stifles innovation, instead of encouraging rapid decision making. It should be your goal therefore, to encourage your project managers to “fail often to quickly succeed”, even if your management is preoccupied with the blame game.
As Thomas Edison once said about inventing the light bulb, “I haven’t failed; I just found 10,000 ways how not to make a light bulb”. If Thomas Edison can fail 10,000 times before he succeeded in making a workable light bulb, then I think that your project managers should be able to fail often and quickly while on their way to million dollar savings success.
How Are You Selecting Your Value Analysis Projects?
First of all, don’t confuse new or renewal GPO contracts as being value analysis projects, because they are not. This is contract management in its purest sense, which is a whole other discipline that has its own rules and models.
What I’m talking about here is the way in which you selecting your VA projects, which can unearth millions of dollars of savings in your value streams. For the best results, you should establish criteria for the selection of your VA projects. Here are five criteria I would suggest you start with:
1. Dollar Threshold: No VA project should be undertaken on a product, service or technology that has less than a $25,000 annual spend. The reason: Your ROI would be very small, if at all!
2. Projected Timeline: If your VA project will take more than 90-days to complete it might be better to break the project into smaller projects. Projects that have long timelines tend to go off track. Keep your projects in bit size pieces!
3. Probability of Success: If you only have a 50% probability of success in implementing a project (e.g. orthopedic implant study) then delay the project until you have an 80% success factor.
4. Project Alignment: If your VA project is not supported by your management then I would delay it for another day. Why fight city hall – you rarely win!
5. Solution Clarity: If you already know the solution to a problem (e.g. defective material) then don’t initiate a VA project — just fix the problem. It will save you a lot of time and effort by doing so.
These are just a few ideas to get you on the road to selecting the best VA Projects using criteria vs. gut feel with the greatest possible ROIs.
Your Partner In Innovative Savings,
Bob Yokl
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
P.S. My staff thinks I’m crazy to offer our e-newsletter subscribers a 30-day “test drive” on our Utilizer™ Dashboard and you only pay if it works! But I’m so convinced that once you try it you won’t want to live without it that I have turned a deaf ear to my staff’s objections to bring you this outrageous “pay if it works” guarantee. Email me to learn more about this special offer - bobpres@strategicva.com
P.P.S. Don’t forget to check out my new blog article “A Lean Way of Thinking! This will give you a new way of thinking about your workload.
A Lean Way of Thinking!
Doing less with more is a mantra in healthcare organizations today. Everyone is scrambling to get their routine, but important work done, while trying to find time for those special projects that seem to be coming up more frequently than ever before.
Supply chain professionals are caught up in this whirlwind of activity too and are having a hard time coming up for air. Instead of worrying about it, which is a waste of your imagination, I would suggest supply chain professionals embrace “a lean way of thinking” so that you can find time for those things that are really important to get done.
When I was a material manager for four hospitals and one system, over my long career, I never ever had enough staff, sufficient money in my budget or the technology to get everything done that needed to be done. But I did have “a lean way of thinking” that I call how thinking vs. what if thinking that led me to design new ways of doing things that reduced my workload 10-fold.
For example, I designed a “Debit Memo” that attached to my vendor’s invoice that authorized my payable’s department to deduct or adjust a vendor’s invoice’ for price discrepancy, missed discounts, freight charges, etc. that didn’t agree with my purchasing order. This tactic saved me and my hospital’s payable’s department hundreds of hours a year of haggling with vendors or waiting for their credits. Yes, sometimes we had to credit the vendor back for some of these debits, but this was a rare occasion because my PO was law. Case Closed!
The point here is that this is just one of my scores of how thinking ideas that enabled me to dig out of the holes I always inherited when I took on a new job as a material manager. By the time I left a hospital or system I had their operations humming with my “lean way of thinking”.
You can do the same thing at your healthcare organization by thinking about how you can improve your supply chain operations without spending any money or adding any staff. It’s a fun game you can win!
Finally, once you get the knack of how thinking you will be stunned at how many new and better innovations you can bring about in your supply chain. I’ve done it hundreds of times and I know you can do it too.
Stop the Madness with Your GPO Contracts
I have been told by value analysis managers throughout the country that they spend 96% of their time evaluating new or renewal GPO contracts, which isn’t value analysis at all. When I tell them that there is only 1%, 2% or 3% savings to be achieved with their GPO contracts and, on average, 26% to be saved on any value analysis project they conduct, they soon understand that they are spending their time on the wrong side of the supply chain equation – price!
The next question I’m always asked by value analysis managers is, “How do I STOP THE MADNESS with my GPO contracts, so that I can spend the required time on my value analysis projects?” Here’s three strategies that I tell them to employ to get organized, prioritize and optimize their time to save even more:
- Start a campaign with your peers to insist that their GPOs write contracts with 3, 5 and 10 year lifecycles – not one year terms. Not only will this tactic reduce the number of GPO contract renewals, but will enable GPOs to lock in their prices over the long-term, since inflation is the real threat to price stability in the healthcare marketplace. For example, Southwest Airlines has not been affected by the current energy crisis since they locked in their fuel prices over the long-term. Your GPO can provide this same price protection for you!
- Don’t change your manufacturers just because there is a new GPO contract being offered by your GPO, because the cost of change will usually cost your more than the contract savings being offered. You can do this by searching out comparable contracts with other GPOs (yes, you might need to join more GPOs to do so), so that you can continue to purchase from your preferred manufacturer at competitive prices. Your justification: Contract churn isn’t and will never be a cost effective way to do business.
- If you are a large enough healthcare organization to do so, write long-term custom contracts with your GPOs assistance, so that you can lock in your prices for the foreseeable future.
I’m sure you can think of a few more and even better strategies to organize, prioritize and optimize the time you are now expending evaluating your GPO contracts now that I have opened Pandora’s Box. It’s my opinion, that if we don’t STOP THIS MADNESS it will have a stifling effect on your supply chain effectiveness in the sort and long-term.
If you agree or don’t agree with my take on this topic, I would love to hear your comments on this pressing problem.
Your Partner in Innovative savings,
Bob Yokl
President & Chief Value Strategist
Strategic Value Analysis® In Healthcare
800-220-4274
P.S. If you would like more powerful savings and quality ideas like this one I would recommend that you sign-up for our “no cost” weekly Savings Beyond Price™ e-Newsletter at www.Strategicva.com. You will also get a copy of my e-book “Your Target Blueprint for Supply Chain Management Success”, as a bonus.
Who Needs Project Management?
Of all of the tactics that I have employed, over the years, to save money one of the most powerful advances in our programs has been project management. It’s fundamental, time-tested and successful at all organizations who have employed it to manage their savings initiatives.
Yet, throughout my travels I rarely see it used at healthcare organizations for the planning, organizing and managing of their value analysis projects. This is a missed opportunity because this tactic will enable you to set time-lines on your projects, keep things moving on your projects, monitor and control your projects, get the most out of your limited resources and enable you to manage multiple projects with ease.
Save the easy way! At one time we too didn’t use project management techniques to manage our client’s value analysis projects only to find that our client’s team members were going every which way – but forward. That’s when we realized we had to do something different to control these unruly herds. We found that by providing a practical, easy-to-use project management system for planning, organization and managing our client’s projects we could tame the herd, speed up projects and perform 10x more value analysis studies than ever before. That’s what successful management can do for you.
So who needs project management? I would say everyone who wants a systematic approach to staying on top of all of your value analysis multiple projects at once and doesn’t want to leave anything to chance, happenstance or fate! Doesn’t that sound like you?
Your Partner In Innovative Savings,
Bob Yokl
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
P.S. Almost Everyone who has seen a demo of our Utilizer™ Dashboard has told us that it is just what they have been looking for to manage and control their utilization misalignments! Isn’t it time you sign up for a demo too?
P.P.S. Don’t forget to check out my new blog article “Grow, Lead and Succeed with One Big Idea”, that will give you one big tactic that you can’t afford to miss to improve your communications with your bosses.
Are You Really Practicing Value Analysis or Are You Doing Something Else? (Revisited)
I have written often about healthcare organizations’ value teams not practicing value analysis, but are instead doing something else. But what I didn’t know, until we started conducting our Certified Value Analysis Leadership Program (CVAL) in 2007, is that value analysis coordinators, managers and directors aren’t practicing value analysis either.
What I have found from my interaction with these coordinators, managers and directors, at our three-day CVAL program, is that these individuals spend most of their time evaluating new and renewal GPO contracts! That’s not value analysis at all, that’s contract management in its purest sense.
After these very intense three days of training I’m happy to report that most of the attendees at our CVAL program finally realize that they aren’t practicing value analysis and have decided that going beyond price is where they want to go in the future with their value analysis programs.
As I mentioned last week at the North Carolina Materials Management Association annual conference, hospitals should have an annual audit of their pricing, then fill in the gaps of their contract portfolio where needed. It doesn’t make sense for these individuals to spin their wheels and waste their time trying to eke out a few more percentages savings with their GPO contracts, when there is about 26% savings on just about any commodity these individuals would investigate using the techniques of value analysis.
I went on to tell the NCMMA members that they should petition their GPOs to have more 3, 5 and 10 year contracts, with annual renewals, so their members could stop the madness of trying to keep up with their new and renewal GPO contracts that are e-mailed to them daily.
Bottom Line! Value analysis coordinators, managers and directors need to get back to basics by actually practicing the tenets of value analysis and then move away from being contract managers. Contract management isn’t your job (it’s your purchasing department’s job) and it’s not what you were hired for.
It’s your job to study the functions of the products, services and technologies your hospital is buying, and then search for lower cost alternatives to meet those functions. That’s what’s missing from your value analysis program and is holding back huge savings for your hospital.
P.S. If you would like more powerful savings ideas like this one I would recommend that you sign-up for our “no cost” weekly Savings Beyond Price™ e-Newsletter at www.Strategicva.com. You will also get a copy of my e-book “Your Target Blueprint for Supply Chain Management Success”, as a bonus.
Value Analysis 2.0: No One Size Fits all Hospitals
By Robert T. Yokl, Chief Value Strategist
I just read an article in HPN magazine recommending one singular approach to what I call Value Analysis 2.0 (beyond price and standardization) that the author suggested would fit all size hospitals. I beg to differ with the author on this point, but let me tell you first what I liked about the article.
I was happy to see the author agrees with me that big price and standardization savings are now dead, and that hospitals now need to focus on savings beyond price (i.e. utilization) to keep their savings machine humming. I also agree that a fresh approach to value analysis in now called for if healthcare organizations want to move to the next level of savings performance. And that any and all supplies and purchase services should be included in the scope of value analysis teams’ charters so that no supply related cost is exempt from value justification.
I couldn’t agree more with the author that without a total and unwavering commitment from the c-suite no real change can or will happen beyond what you are doing now. And that material management should be the data guru’s for your value analysis teams, thus pointing the way to new savings opportunities, so your value teams aren’t burdened with this complex, time consuming and arduous task.
Where I differ with the author are on two points. First, that all hospitals should be establishing product-line value analysis teams and secondly that value team members shouldn’t need to do any of the teamwork because they are too busy.
On the first point, it’s my strong opinion, that small hospitals, which represent 80% of all hospitals in the country, don’t need elaborate product-line value analysis teams because they don’t buy enough products, services and technologies to warrant the time investment to do so. Second, no one should ever be too busy to save money or not ready to roll up their sleeves to find it. Just listening to presentations from material management, then making decisions as a committee isn’t value analysis at all. This is Value Analysis 1.0, which we are trying to move beyond.
In the final analysis, I thought the author did a great job of explaining what she saw as the future of value analysis in healthcare. Nevertheless, I think we all need to remember that “one size” of anything doesn’t fit all situations. We need to customize what we are trying to accomplished based on the size, culture and complexity of our healthcare organization. Then we will get the exact fit for our healthcare organization.
P.S. If you would like more powerful savings ideas like this one I would recommend that you sign-up for our “no cost” weekly Savings Beyond Price™ e-Newsletter at www.Strategicva.com. You will also get a copy of my e-book “Your Target Blueprint for Supply Chain Management Success”, as a bonus.
Certified Value Analysis Leadership Workshop - Early Bird Special
- Added Many More Value Analysis, Utilization and Supply Savings Case Studies
- More Focused Training on Utilization Management and Benchmarking for Value Analysis Professionals
- Focus the Training to Be More Hands on with Real Time Actionable Results
- Share with you the Latest Strategies, Tools and Methods to Save More in Less Time with Less Effort
- Further Enhanced our Value Analysis Leader Web Software (included in the workshop)
- New Utilization Benchmarking Section
- More Savings Ideas to the Savings Idea and Best Practice Database
- More Members Only Webinars
Tip of the Week Article: What Value Analysis Is and What It is Not!
It’s About Commitment, Discipline and Focus!
What’s value analysis all about? It’s about commitment, discipline and focus and finding lower cost alternatives to what you are doing now! If you are missing even one of these success components you can’t and won’t have consistent, sustainable and substantial savings results.
VA is all about having your senior management commit to making savings happen for your supply value analysis program or it will slowly, but surely sputter, fizzle and die.
VA is all about having discipline (practices and methods to enforce acceptable behavior) from the top, right down to your value team level or you will be going every which way — but forward.
Value analysis is NOT about GPOs, capitation, standardization or custom contracts, but is all about utilization management: wasteful and inefficient consumption, misuse, misapplication and mismatches. If you are focusing all or most of your efforts on the price side of the supply equation, you are missing 79% of your hidden savings opportunities.
To bring these points home here’s is an example: we once were retained by a hospital CEO who intuitively understood that saving money was ALL about commitment, discipline and focusing on finding lower cost alternatives to what his hospital was doing. With our help, he organized, and operationalized his hospital’s multi-phased savings initiative. He then became the chief cheer leader for his management team and hospital staff, encouraging his staff at every opportunity to dig deeper and broader then ever before to search out and find those hidden savings. Well, as you could have guessed, within a year his hospital saved over $6.5 million.
There is no magic to this success formula; just the commitment, discipline and focus to make savings happen the old fashion way: Hard Work!
Your Partner In Innovative Savings,
Bob Yokl
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
P.S. If you are looking to establish, enhance, re-energize and dramatically improve your value analysis program (or you have hit the wall on savings) then our Certified Value Analysis Leader Program to be held on June 24-26 is the ticket for you. And, as a bonus, you will receive a one-year subscription to our new Value Analysis Resource Web at “no cost” to you. Note: Only 25 days left to save on our early bird rate of $1,192.00! click here to learn more
P.P.S. Hove you checked-out our new and improved Savings Beyond Price™ blog where I talk this week about the “Supply Chain Hall of Fame Honors Nine Superstars”.? Can you guess who the honorees are? If not, I have listed them for your review. and I hope some comments. Visit the Blog Here
Comic - Supply Savings Mumbo Jumbo
This totally new for us and hope you like it. More to come!
