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
