Value analysis is full of very important decisions that as practitioners and leaders we must get right for the product to meet functional requirements, reliability, sustainability, quality, revenue, and cost results. You miss one of these and your organization, customers, and stakeholders suffer the consequences of a bad decision. On the other hand, they can also reap the benefits of decisions that you get right which is the main purpose of value analysis for your healthcare organization. Today I am going to highlight what I feel are the 4 critical decisions that you must “get right” to have a successful outcome for your value analysis studies/reviews/audits.
1. Set a Goal and Scope for All VA Projects – No matter what you are working on, whether it is a new product request or fixing a product problem or dealing with a recall, you need to set your scope and have a goal for your outcome. This may sound too basic or mundane, but the reality is that VA studies can go on and on for a long time, chewing up a lot of resources and dollars trying to obtain a result that was not specified and is fluidly changing as the evaluation goes on. Let’s face it, there are those that will use a VA study to get things they want or stretch the scope to ensure that they get a particular vendor’s product and only that product when there are lower cost alternatives. To ensure this does not happen, try to identify the functional requirements for that new product request or the requirements for the product that is not performing to aid in making decisions and keeping your scope in line.
2. Get All the Upfront Data to Make the Right Decisions – It does not matter whether you are working on a new product request (NPR), fixing a problem with a product or category, or dealing with a recall. You need to have solid information to drive your assessment and the next steps towards your decision one way or another. In the case of new product requests, you need to have a solid NPR form system (hopefully online) asking all the most pertinent questions including pricing, evidence studies, brochures, case studies, revenue information, etc. If you are missing any one of these or if they are submitted in poor condition, why are you even proceeding?
Let’s face it, it is 2025 and we must have this information. We must not only have this information, but it needs to be rock-solid as healthcare organizations cannot afford to make any missteps because of bad data. The same goes for fixing issues with products or recalls, you must have all the right information at hand to make the correct decisions.
3. Cost Increases/Decreases – There has got to be a compelling reason to increase costs in a value analysis environment and it needs to be weighed carefully. For instance, new ENT adenoid surgical energy instruments that increase costs by $350 per case but eliminate 89% of patients returning to your hospital’s Emergency Department with bleeding. Also take into consideration that if you have a problem that you are trying to solve but your mindset is that you are going to just throw more money at a higher priced instrument or medical device every time, then you are going to blow the budget quickly with that thinking. VA is a creative process that uses functional analysis to search for lower cost alternative products. To avoid increasing costs, try broadening your search within your contracts to find those lower cost alternatives.
Cost decreases are the perfect outcome if they still meet your customers’ functional requirements exactly. All too often, products are accepted because they are cheaper but may fail in reliability or overall life cycle value. What good is a 20% cheaper product when the nurses are using 2-3 per patient stay when they should be using 1 per stay? The key to these decisions is to address all the functional specifications of your end users, customers, and stakeholders. Leave price to the end because it should not matter until you find the functional matches. Only after the functional requirements have been met should price decisions be made.
4. Revenues are Paramount – New and existing products have revenues tied to them whether they are a drug, lab test, implant, surgical instrument, or other medical device. With health systems having such tight profit margins (1% to 3% in many cases), your value analysis program must incorporate revenues into your decisions. I know most VA programs validate CPT codes and reimbursements up front and with that information go on to make decisions within teams – but that is not enough. Just because you find out there is valid reimbursement does not mean you are getting the projected dollars. The new trend is to audit your clinical trial evaluations of products and services and look at the actual payments in those trials to ensure that you have a valid revenue source as planned. Then you can make a decision about moving forward.
Making a decision without all the right information can lead to issues down the road that you don’t want to have to go back and readdress. The goal is to get it right the first time with solid functional data, solid analysis, and solid cost/revenue information that leads to the outcomes you are setting. We must train our value analysis/supply chain teams, salespeople, distributor reps, GPO reps, doctors, nurses, etc. in our next generation of requirements for our VA teams. We must do this in the name of better data, better decisions, and better outcomes.
Keep in mind, when you raise requirements on your organization for what they need to provide your value analysis teams, you will be raising your standard of value analysis outcomes as well. Just doing the same old same old is not good enough any longer. We must compel everyone upstream and downstream to provide the best information possible. A little bumpiness with these changes is well worth the short and long-term results you will bring about with your enhanced value analysis decision making.
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