Savings Beyond Price -Weekly eNewsletter – January 7, 2009

Robert T. Yokl

President & Chief Value Strategist

 

Your Secret Weapon for 2009

I had some time over the holidays to think about how the financial crisis we are now experiencing has affected almost all healthcare organizations’ census, investments and revenues, I came to this conclusion: Hospitals don’t need more patients, investment income or even revenues to be profitable.  All they need to do is to become more efficient to be profitable!

This is your hospital’s SECRET WEAPON for 2009 to ensure your healthcare organization’s viability.  I can’t think of any hospital that isn’t wasting their time, money and resources. But the good news is that you can cut 7% to 11% from your supply chain budget now if you waste less.

Here are six ways you can waste less in your supply chain in 2009 to survive in these hard economic times:

1.                      Lock Down Your GPO Contract Compliance

Most hospitals aren’t fully realizing their GPO contract cost benefits (i.e. food, service contracts, paper products, chemicals, physician preference items, etc.) because of their department heads’ resistance to change.  This is unacceptable behavior in this harsh economic climate. Now is the time to lock down the compliance on all of your GPO contracts to realize your full savings potential.

2.                      Attack Your Utilization Misalignments

I can’t think of a better time to attack the biggest waste in your supply chain: Wasteful and inefficient consumption, misuse and value mismatches in your value streams which are costing your hospital 8% to 14% in unnecessary cost. If not now, then when would there be a better time to do so?

3.                      Shrink Your Inventories to a Minimum

Your hospital needs more and better cash flow than ever before. What better way to do so then to take cash off your shelves in the form of unnecessary and unneeded inventory and put it in your hospital’s bank account?   

4.                      Re-energize Your Supply Value Analysis Program

I haven’t seen a supply value analysis program that couldn’t be renewed to be faster, better and to yield more savings beyond price. To do so you will need to refocus your savings on utilization of the products, services and technologies you are buying — not just on price.

5.                      Implement a Productivity Management System

If you don’t have productivity standards for all of your supply chain activities and a monitoring system to hold your staff accountable for their efficiency, then you are wasting a whole lot of time and money getting your work done. Remember: What is measured and monitored will improve!

6.                      Increase Your Use of Technology

There is no better way to cut waste and inefficiency in your supply chain than having technology lead the way.  Using faster, smarter and better technology than you have now gives you ultimate visibility into your supply chain, not just using it for your transactions. In 2009 you need search out better technologies that will make your job easier and more productive!

Yes, we all will have a rocky start in this New Year due to our weak economy, but it doesn’t need to be a catastrophe for those supply chain professionals who decide that there is too much waste and inefficiency in their supply chain that now needs to be removed for increased profitability for your healthcare organization.

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 are looking for faster, smarter and better technology in this New Year to give you ultimate visibility in your supply chain, why not “test drive” our Utilizer™ Dashboard for even greater savings yield this year.

P.P.S. Don’t forget to check out my new blog “Why Do You Need a Team Mission Statement?” that will show you how to give your teams a common purpose and a firm foundation for their savings work.

I can’t think of any another profession (yes, value analysis is a legitimate and growing occupation in healthcare) that doesn’t require any training or educational requirements in order to be a value analysis leader or practitioner. Even bus drivers must have training, education and a special license to drive a bus.

Yet, value analysis leaders and practitioners make million dollar decisions, year-in and year-out, for their healthcare organization without any training. Is their something wrong with this picture?  I would think so!

If you aren’t aware of it, value analysis is an acknowledged and respected discipline with a 60-year history that has a defined six-step process (called The Value Methodology*) that needs to be religiously employed by VA leaders and practitioners in order to save money and improve quality. If you aren’t applying this value methodology in your value studies then you aren’t practicing value analysis – you are doing something else instead.   

To be truly called a value analysis professional (i.e. conforming to the standards of skill, competence, or character normally expected of a properly qualified and experienced person in a recognized disciple) you will need to upgrade, improve, and advance your skill sets to the next level of proficiency in this growing art and science.  This can only be accomplished with formal classroom training and education in this discipline.  

Isn’t it time you search out specialized value analysis training for yourself, value team leaders and your value team(s) so that you can become qualified and experienced in order to drive your value analysis bus?

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* If you are ready to upgrade, improve and advance your value analysis skill sets and learn the value methodology, may I suggest that you consider registering for our Certified Value Analysis Leadership™ Training Program to be held on November 4-6, 2008.

• 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

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