Most think that Value Analysis in healthcare is limited to just clinical products but that could not be further from the truth. The majority of Value Analysis Programs are run by clinicians/nurses which makes everyone think that the scope for Value Analysis is only clinical products. But smart health systems recognize the value in having Value Analysis Teams for purchased services and even capital equipment because there is untapped major savings hiding in these categories. No health system can afford to leave any money on the table in this day and age.
Purchased Services Are Still Ripe for Major Savings
Over the last 5–7 years, healthcare organizations have made a significant push to save more in purchased services and to bring this category under the Supply Chain umbrella for sourcing and management. While this aligns with best practices, Supply Chain can only source, negotiate, or bid these contracts — they have no way of knowing if they are leaving money on the table. The reason is simple: They typically do not dive deeply enough into these categories to benchmark or perform value analysis before, during, or after contracts are executed. This is a critical gap. Every purchased services contract over $30K should be reviewed by a Purchased Services Value Analysis Team, just as clinical products are reviewed by Clinical Value Analysis Teams.
The composition of a Purchased Services VA Team will naturally differ from that of other VA teams, but the objective remains the same: To optimize the features and services included in each purchased service contract. This could involve reducing courier pickups, removing unnecessary contract features, or even adding new features that save the health system time or money — opportunities they may not have realized existed. While not every contract review will uncover significant savings, the cumulative results will more than justify the team’s existence. An additional benefit is that once each purchased service contract has been thoroughly evaluated, you can be confident it has been fully optimized — an outcome that typically holds for several years. This provides substantial value as well as peace of mind, especially knowing that CFOs often question whether more could be done every time they approve vendor payments.
Capital Equipment Value Analysis Team
Most health systems rely on their board’s budget committee to approve capital requests every year, and should continue to do so. However, they have limited information and do not dive into the details that could further flush out savings opportunities beyond just the approval dollars. I understand that department heads and managers, once they secure approval for a $350K or $650K capital expenditure, are eager to spend the full amount they worked so hard to get through the budget committee. But what if they could still obtain exactly what they want and the Capital Value Analysis Team could save 5% to 15% on the purchase? That would be a true win-win.
Let’s be honest — if you’re purchasing a new magnet for your MRI system, you’re locked into buying it from the OEM. But when you’re purchasing 20 endoscopes for your rotation, you have choices. Factors like disposables and maintenance come into play. This is exactly where a Capital Value Analysis Team can dig deeper. I’ve seen hospitals use the same capital budget to purchase an additional five endoscopes because the Capital VA Team worked with the GI doctors to refine the specifications and identify options that met all functional requirements at a lower cost. Increasing the number of endoscopes in rotation ultimately benefits everyone in the GI Suite and Sterile Processing.
Trust But Verify
No dollar should be spent without a Value Analysis Team reviewing the expenditure, contract, and functional specifications to ensure costs are fully optimized. Many organizations believe they are already doing this, but in reality, these reviews were often completed years ago and have not been revisited since. Health systems already rely on teams to evaluate major policy and product decisions, so extending this discipline to Purchased Services and capital equipment only makes sense. Leave no stone unturned when it comes to identifying savings opportunities. It’s time to wring the towel dry across every purchasing category.
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