Over the last two and a half years, it has been value analysis practitioners’ job to assist in the sourcing, substitution, and switching of products to enable their healthcare organization to survive the effects of the pandemic. Although value analysis practitioners are still dealing with supply chain shortages, it has eased up a bit. That’s why we are now seeing our hospital value analysis community returning to their primary purpose: Saving money and improving the quality of the products, services, and technologies their healthcare organization is buying. With this in mind, here are three surefire ways to keep your hospital value analysis savings humming:
How to Keep Your Hospital Value Analysis Savings Humming
1. Attack Your Utilization Misalignments (Consumption & Waste). For every dollar your healthcare organization spends on products, services, or technologies annually, we have documented that 7% to 15% is wasted due to misuse, misapplication, and value mismatches in supply streams. Therefore, your cost management job isn’t done until your utilization misalignments are effectively controlled or eliminated.
2. Perform A New Product Functional Analysis. Every new product, service, or technology specification that is requested at your healthcare organization isn’t always medically or functionally required. That’s why performing a Functional Analysis (or the study of what a new product, service, or technology is required to do to achieve the desired outcome) can reap savings in the range of 26% to 54% of the commodity’s cost.
3. Conduct A Lifecycle Analysis On All Commodities. All of the products, services, and technologies you purchase have a beginning, middle, and end to their lifecycle. There is a cost at each stage of their lifecycle that needs to be value justified. For instance, an IV pump costs $3,000 to $5,000 but the cost of supplies in the middle stage could range during its lifecycle from $300,000 to $500,000. At an average savings of 26%, a Lifecycle Analysis has the potential to save $78,000 to $130,000. Now, I’m sure you can see the value of such an analysis.
Savings Beyond Price
More and more, value analysis practitioners are given budgeted savings goals to meet each year. Yet, their price and standardization savings are slowly disappearing which makes it harder to save more each year. Consequently, it is smart to start applying some of these Savings Beyond Price™ techniques outlined above to your value analysis model to ensure that you can meet your saving goals each and every year without fail.
P.S. For more ideas like this, the new issue of Healthcare Value Analysis and Utilization Management Magazine is now available at www.ValueAnalysisMag.com. HVA & UM Magazine is specifically tailored to provide leading cost and quality strategies, tactics, and techniques for supply chain and value analysis leaders. It is the industry standard that should be in every supply chain and value analysis professional’s library.
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