“For healthcare organizations to take their cost optimization and savings programs to a whole new level with bigger and better results to combat our inflationary times, you need to take a step back and plan/budget for advanced training.”
Whenever we provide training in value analysis and cost optimization for healthcare organizations, we inevitably get the VA/Cost Leaders asking us predictable questions like, “Does the training have to be 3 to 6 hours? Doesn’t everyone know what value analysis and cost optimization is in this day and age? Can we shorten this training and get to the VA/cost optimization savings initiatives sooner?” Everyone assumes that their entire team is up to date and can just hit the ground running with advanced cost optimization strategies and methods with a nice juicy savings opportunity that we work up for them. This happens all the time.
Let’s face it, everyone thinks they are the master savings optimizer and know everything there is to know about saving money. The reality is that the majority of Value Analysis Teams and Supply Chain Teams have had little or no formal cost optimization training. Yes, you can rely on your GPO to hand you price and standardization savings opportunities but is that really cost optimization? Not really. If I had to define cost optimization using value analysis terminology it would be to provide the required functional results of a product at the lowest possible cost reliably. Products provide outcomes and those outcomes and customer requirements as well the products’ ability to reliably achieve these are what cost optimization really is.
Why Is Cost Optimization Training So Important?
The Savings are More Difficult to Come By – The savings you find today are not the same low-hanging fruit savings that your GPO cued up for you 5-8 years ago. They are more challenging to find, especially savings beyond price, as it takes a whole new level of skills to find and wring the towel dry on these savings. There is no easy button for these savings, you must delve into these with many strategies and triangulate the savings in just the right way without upsetting your end customers and stakeholders. This is a fine art and skill to say the least.
You Are Leaving Money on the Table – There is not just one go-to way to save money on any supply or purchased service. You may have to employ different strategies and methods on one product versus a different product. The bottom line is that without the full cost optimization know-how in your toolbox, you will be leaving money on the table. For instance, one of our clients had the best price for a particular product commodity that was meeting their exact functional requirements on the nursing floors, but they were using 61% more product than any of their cohort benchmark hospitals and similarly within their own health system. Clearly this was something different like overconsumption and without advanced training and methods, the team working on this commodity category would have stopped short since they had the best price and their customers were happy. They would have left 61% on the table because they would not have known what to do about overconsumption.
You Only Have One Shot at a Savings Opportunity – In my 33+ years of providing VA and cost optimization training, solutions, and support to healthcare systems, I have learned that you only have one shot at working on a savings initiative. The window to go after an identified savings is short because your end customers and stakeholders will put a stop to second and third efforts to start a savings project in a certain window. Say you have a savings initiative on oxisensors from March to May 2025 and you only find a few percentages of savings (when in reality you were looking for and know there is much more) but the team working on the project did not have advanced training in cost optimization and thus are stumbling. You cannot come back and restart the project again for at least another 6-8 months because those department heads and managers won’t let you do this because they already put their nurses through the ringer with the original project that did not garner results. Train them all up front and find all your savings the first time. Lastly, nobody is knowingly leaving money on the table.
They Only Know What They Know – Your department heads and managers sit on these VA/cost optimization teams. They are the budget holders, stakeholders, and users of the products and services that are procured for them. But they only know what they know, and some don’t know as much as you may think about cost optimization because they have never been trained. It just makes sense that you will want to train them in the latest and most advanced strategies of cost optimization so you can call on them to not only take part in the VA cost optimization efforts but also in their everyday departmental activities. Right now, with little or no training, you can’t rely on them to bring the best results because they lack the advanced training and experience that goes along with next level cost optimization.
The Bottom Line
For healthcare organizations to take their cost optimization and savings programs to a whole new level with bigger and better results to combat our inflationary times, you need to take a step back and plan/budget for advanced training. This advanced cost optimization training will instantly pay for itself because you can task your teams to go after that next level of savings that you know is there. There will be no excuses for not wringing the towel dry because you will have covered all of your bases with this next level of training. Lastly, you will have brought your entire organization up a level or two with this advanced training to which you should make a requirement of all new department heads and managers in the future. Your best assets are your own teams!
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