Healthcare Value analysis is becoming an enterprise supply chain responsibility as more systems, IDNs and alliances search for better ways to reduce their non-salary cost. Regrettably, these same entities look to standardization of their facilities products, services and technologies as their primary tactic to reducing their supply chain expenses. Nevertheless, there are three additional ways that progressive health systems, IDNs and alliances can grow their non-salary savings if they employ a Strategic Enterprise Value Analysis Model that focuses on:
- Eliminate All Utilization Misalignments: We are seeing even the most aggressive systems, IDNs and Alliances’ price savings (annual savings/annual spend) to be in the range of 1% to 2% annually. Yet, these same entities, utilization savings can be in the range of 7% to 15%. Just as important, these savings can be achieved, in most cases, without changing your GPO or any of the products, services and technologies your entities are buying.
- Search For “Best Value” Products, Services and Technologies (PST): One value analysis enterprise strategy that we have embraced is for systems, IDNs or alliances to standardize on the “best value” products, services or technologies in every category of purchase. What this means is to benchmark not price, but the lifecycle cost of the PST that your system, IDN or alliance customers are buying to identify the lowest cost PST being purchased enterprise wide. Then, standardize on the PST that has the lowest lifecycle cost. This technique could achieve a savings averaging 26%.
- Perform Functional Analysis On All New Products, Services and Technologies (PST): One value analysis tactic that is too often, overlooked is to functionally analyze your new PST purchases to eliminate non-conforming functions and features of the new PST you are buying. The reason for this is that most PST’s functions are feature rich and your customers don’t need everything that they think they need to do their job. This technique can save up to 50% on the new PST you are buying.
Based on my observations, healthcare systems, IDN and alliances are quickly moving toward enterprise value analysis structures because of all the hundreds of mergers, alliances and joint ventures that are essential for survival in this new healthcare economy. That’s why the Strategic Enterprise Value Analysis Model makes sense, since it looks at new ways to save on your non-salary expenses vs. only focusing on price solutions that are slowly, but surely disappearing.
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