Value Analysis Programs do a lot in our health systems but are they doing all they can do or are they stopping short? Most VA Programs today focus on new product requests, contract conversions, and managing recalls. Beyond these three elements, there does not seem to be much more agenda space left to do more. Healthcare organizations need even more value from their Value Analysis Programs than ever before, mostly in the form of savings which will go right to their bottom line.
Value Analysis Programs Can Bring Further Bottom-Line Results Rather Quickly!
“Time is money, money is time,” is an age-old adage, but it really is true when it comes to healthcare non-salary expense reduction and most importantly what Value Analysis can add to the mix. Yes, Supply Chain and Finance leaders want more savings but may think that VA doesn’t have time to fully engage in a new initiative like cost optimization/management. To have your VA Programs flip the switch and further engage in the now mission critical business of dramatically reducing supply costs to the lowest possible levels while maintaining quality and reliability, you must make changes.
Below are our recommended highly effective yet simple changes that will start saving your health system big dollars very quickly. Keep in mind that you may only choose to do one or two of these which will put you on the road to flipping the switch to saving big.
1. Reprioritize Current VA Initiatives – Take a look at your VA agendas and work out how much time is taken up with new product requests, contract conversions, recall management, and product problem solving. Give a percentage to each and find out where you can free up more time or reprioritize the level of engagement while you are in cost management mode. Figure out if there is ample room on the agenda to work on cost optimization projects or just reprioritize resources that you currently have and get working on your savings projects.
2. Dial Back on New Product Requests – It is not unheard of in cost management times for organizations to put all new product requests on hold. There is one exception which is the new products that add more revenue to your bottom line, and these should continue with their normal approvals, but all other new product requests should be put on hold. This would eliminate the added expenses that you incur from these small but incremental increases to your supply expenses. Lastly, with less new product requests to work on, this will free up valuable VA Team agenda time that you can put towards cost optimization projects.
3. Move to Bi-Weekly VA Meetings – If there is not enough time in your current meetings and your leadership is unwilling to dial back new product requests or reprioritize current VA configuration, perhaps you should move to bi-weekly meeting schedules which will add a whole new meeting to the mix. Now you have just doubled your productivity when it comes to meetings and added a whole new 50% to your agendas. You will be surprised how easy this one is once you make the change, and it does not double up your work but instead makes you much more productive.
4. Form a New Cost Optimization VA Team – In a perfect world you would just call upon your VA Teams to take on cost optimization and help generate an additional 3% to 7% savings but that is not always how VA Teams work in healthcare. VA Teams are very active entities with full agendas and may not be able to morph into a cost optimization arm for a few reasons. The easiest thing then would be to form a Cost Optimization VA Team(s) which can focus 100% of their time on cost optimization only. If you are a large enough system, you may want to create new cost optimization VA Teams for all your major areas, i.e., Nursing Cost Optimization VAT, Surgical Cost Optimization VAT, etc.
Making changes to well-entrenched active Value Analysis Programs is not always an easy thing for healthcare organizations to engage in but the upside of finding and saving big dollars is incentive enough to make this happen. Remember, every dollar saved goes right to your organization’s bottom line, whereas things like new revenue sources have to trickle through the organization to the point that there are only pennies on the dollar that hit the bottom line. By implementing the small changes outlined above you can make big savings happen and continue to make it happen over the short and long term.
Below are some similar articles that you may find interesting.
The Critical Success Factors of Healthcare Supply and Purchased Service Cost Optimization
Cost Optimization Training is More Important Than Finding Major Savings Opportunities