What a Great Model for Any Hospital Value Analysis Program
Last week I was on site at a client’s location conducting an advanced 1-day LEAN Value Analysis Training Program for their value analysis team leaders and team members. This was this client’s annual value analysis refresher course which I think is a perfect model for all value analysis programs to emulate. Why? Because too often hospitals start their value analysis program without any training whosoever (they just tell their teams to “Go Save Money”). Therein lies the problem! That’s why I like this client’s value analysis model: Annual refresher course to keep their VA teams on target, on budget and on the money each and every year!
Let’s face it value analysis is not as easy as it looks. If you were to tell me that you could establish a Six Sigma Teams without training black, yellow and green belts and then expect these teams to achieve Six Sigma outcomes you would be just kidding yourself. Your team members would need extensive training in Six Sigma to accomplish superior results. Value analysis is a discipline very much like Six Sigma or Lean Management. To be proficient at value analysis you need to have extensive, continuous and up-to-date training for peak performance!
That’s why this client not only began their VA program with extensive training for all their team leaders and team members, but they also realize that this education is never ending and that in order to continually improve their VA program they must refresh their VA training each and every year.
For example, this client told me that they contracted with a trainer last year who focused on evidenced based management. This year they hired our firm for advanced value analysis training as well. This is not a one-time event for this client, but an ongoing stratagem to continue to hire the best value analysis trainers and on an annual basis give their VA teams new and even better strategies, tactics and techniques that they can employ to boost their VA team’s performance.
It was also important to note that this client had their Chief Operating Officer attend this training session and then spoke to the group during a break. He reaffirmed how important all of their VA work is to their hospital, especially since their reimbursement is not going to go up any time soon even though higher technology expenses are still pushing their costs up each and every year. I can’t tell you how significant it is to have an executive management sponsor, like this COO, fully engaged and very active in hospital’s VA program! From my perspective, it will certainly make these team leaders’ and team members’ job easier and their teams much more successful.
One of the reasons this client’s VA program has been so successful over the last few years is that they keep the momentum going with VA training each and every year so that their VA teams never lose focus of how important they are to the financial success of their healthcare organization.
It’s easy for any hospital, system or IDN to put a VA team(s) together and say “Go Save Money”. It’s usually followed by capturing some low hanging ripe fruit that’s ready to be harvested. Nevertheless, we have found that the true test of a VA program’s sustainability, profitability and productivity is for them to achieve measurable and meaningful savings after their low hanging fruit has been picked clean!
An annual VA refresher course on the most up to date techniques in value analysis would be a good starting point for you too to keep your VA team(s) focused and motivate each and every year.
Last but not least, it doesn’t take a lot of time, effort or money to do so.
VA Isn’t Just About Product Evaluation/Selection
Just the other day, a Value Analysis Team Leader that we were coaching asked us if it would be OK with us if his VA team started looking at the processes surrounding the products, services and technology his team was charged with to uncover any and all waste and inefficiency in their value streams.
We were delighted to hear that this team leader was moving in this direction since VA isn’t just about product, service or technology evaluation/selection. It’s all about reducing your total cost from acquisition to disposition of your products, services and technologies. We therefore have encouraged all of our value analysis clients not to isolate their product, service and technology investigations to the commodities themselves, but to instead dig deeper and broader into their value streams to eliminate any and all waste and efficiency that might reside there hidden from their view.
Over the years we have conducted numerous value analysis process engineering studies by employing a FAST Diagram*. In my opinion, it is the best value stream mapping “made simple” tool available today. I can make this declarative statement since I have used numerous value stream mapping tools in my 27 year consulting career and hands-down the FAST Diagram is the easiest one I have found to learn, understand and then quickly generate results in the shortest time.
If you’re not familiar with FAST Diagramming let me explain. FAST Diagramming will enable a value analysis practitioner to identify each function, in a logical sequence, prioritize them and then test their dependency, efficacy and relative worth to your customers in any value stream process under investigation. In this way, you can more skillfully understand the complexity of your value stream processes as opposed to becoming preoccupied and paralyzed with methods and practices of flow-charting or traditional process mapping.
We have documented, by utilizing FAST Diagrams, up to 23% in process improvements (time, labor and resources) in any business process that we have studied over the years. More importantly, we have never found a dry hole in any study to date, which is proof positive that FAST Diagrams work.
So if you want to mine even more savings for your value analysis program, don’t have your VA team(s) stop your VA studies at your product, service or technology evaluation/selection phase. Have them move on to the next phase of your VA study — process improvement.
If you do, you will find that there are both big and small savings to be achieved in this process improvement phase of your VA study that will be well worth your time and effort in doing so. Up to 23% to be exact!
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*Learn more about how to perform a FAST Diagram in “The Ultimate Value Analysis Program” pages 177 to 186.
Are your Value Analysis Arteries Clogged?
Savings Beyond Price -Weekly eNewsletter – October 23, 2008
Robert T. Yokl
President & Chief Value Strategist
Greetings!
Are your Value Analysis Arteries Clogged?
I have identified a new disease called Grouppurchasingsclerosis that most healthcare organizations that have supply value analysis programs are at risk of developing or are already experiencing serious symptoms. This new disease is clogging or narrowing hospitals, systems and IDNs vital saving arteries with big fat GPO contracts and could be fatal to your healthcare organization’s financial health.
You heard me right, if your healthcare organization has Grouppurchasingsclerosis then very little savings is moving through your Value Analysis funnel® because it’s clogged up with new or renewal GPO contract evaluations. This disease can be silent and deadly for those hospitals, systems and IDNs that don’t pay attention to the warning signs.
Just recently a MM told me that his hospital had several symptoms of this fatal disease. He has personally observed that his two value analysis teams (clinical and surgical) spend 70% of their time evaluating new and renewal GPO contracts and spend very little time investigating the waste and inefficiency in his hospital’s products, services and technology’s value streams where the greatest savings opportunities reside.
I then gave this MM a prescription to stop the pain and suffering he was experiencing. This called for his hospital to establish a new GPO contract team that would be dedicated to evaluating and selecting new and renewal GPO contracts, so that his present two value analysis teams could get down to their real work of performing value analysis studies without being bogged down with their artery clogging GPO contracts.
This is not to say that your GPO contracts aren’t a vital and essential element of your supply chain expense management program. What I am saying is that your GPO contract due diligence process shouldn’t supplant your value analysis efforts if you don’t want to develop this dreaded and hideous disease that I call Grouppurchasingsclerosis.
If you don’t heed this warning you will be putting your hospital, system or IDN at risk of never wringing the towel dry of ALL of your best supply chain savings opportunities since you will be clogging your VA arteries with your GPO contracts that should be analyzed with a separate and distinct contract team. With this said, isn’t it time that you check if you have any symptoms of Grouppurchasingsclerosis at your healthcare organization?
Your Partner In Savings Beyond Price™,
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
800-220-4274
P..S. Legally, we cannot say our Utilizer™ Dashboard is the worlds best savings finding tool in healthcare today, but our clients thinks so which is all that matters to us.
P.P.S. Don’t forget to check out my new blog article, “Supporting Multiple Projects Doesn’t Need to Give You a Big Fat Headache”. This blog will show you how to get more done in less time with less hassle.
How Many Value Analysis Courses Have You Had? None? or Not Enough?
If 50% of your success as a supply chain professional is tied to having a dynamic and sustainable supply value analysis program that is action oriented, customer, process and data driven, creative and innovative, and self-managed, then how come you’ve never taken a course in it?
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.
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.
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
