January 22

The Four Stages of Value Analysis Maturity: Where Do You Fit into this Continuum?

By my estimation, healthcare value analysis has a 40-year history in the healthcare industry.  Along the way, hospitals, systems and IDNs have developed, sometimes in a vacuum, their own value analysis model.  Based on our empirical experience, here are the four stages of value analysis maturity and where we see healthcare organizations on this continuum:

  1. Sole Practitioner (80%): This is where your value analysis manager, coordinator, or facilitator does all the work of his or her hospital value analysis program. They may, or may not, have a value analysis committee or team advising them on their decisions. This model gets results, but their scope is limited by their work bandwidth, they can only do so much.
  2. New Products Committee (5%): Whether you call it a committee or team who advises and consents on the approval of new products, they have a  limited scope and mission. In fact, it has been our empirical experience that they sometimes spend more money than they save for their healthcare organization.  There is much more to value analysis then just new products.
  3. New Product Evaluation & Value Analysis Committee (10%): For the most part, these committees or teams work on reviewing and approving new or renewal group purchasing contracts. This isn’t value analysis but vetting of GPO contracts. Remember, price savings from an overall standpoint is diminishing in results so you need to look to more mature models to get the next generation of savings in utilization and process related savings.
  4. Value Analysis Teams (5%): These VA work teams (i.e., share the workload as project managers) are led by a team leader and charged with functionally analyzing of the thousands of new, current and future products, services and technology’s a healthcare organization buys annually. VA Coordinators do great work and carry most of the load in VA initiatives, imagine if we expand to a true team model what results your organization can achieve!  Keep in mind, all of your team members are normally department heads and managers who own their own budgets, so this is a good exercise to help them learn and manage their own budget dollars as well.

I’m sure you see your hospital, system or IDN’s value analysis model from these descriptions or some sort of mix and match in the continuum.  Although, 80% of healthcare organizations are at maturity level #1 they are stunting the growth of their value analysis program, since one, two or more VA practitioners can’t replace or compete with a value analysis work team’s (#5) productivity and performance.  Therefore, it’s our recommendation that if your VA program is in stage #1, #2 or #3, you need to jump to stage #4 to reap the full benefits of a classic value analysis model.


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