March 24

Hospital Value Analysis Teams for Capital Equipment


There are only a few hospitals in the United States, which we know of, who are employing value analysis teams to proactively evaluate their healthcare organization’s capital equipment purchases. This is disappointing to us since we know from experience that your hospital, system, or IDN can save millions by doing so.

Value Analysis Teams Can Save Millions

With few exceptions, it is our observation that administrative capital equipment review committees don’t look for lower cost alternatives on their capital purchases. They instead just value justify these purchases. This is where hospital value analysis teams can save their healthcare organization millions of dollars by functionally analyzing these same purchases.

Now that your hospital, system, or IDN’s capital funds are limited or scarce at best, this technique could be one answer to greatly expanding your capital funds, in the range of 18% to 25% per purchase, without hurting quality.

The crux of this powerful technique is for your hospital value analysis team to identify the functions (primary, secondary, and aesthetic) for each and every capital request for any given year. This would entail a team member meeting with requesters to understand their functional requirements on each of their purchases.

Next, each functional requirement must be approved by the team as absolutely, positively required. We have seen situations where an upgrade for a laboratory system costing $300,000 was denied because the team uncovered that the upgrade wouldn’t meet the functional requirements of the laboratory department. By the way, this hospital’s administrative capital committee had already approved this purchase.

Most Capital Requests are Feature-Rich

One of the best opportunities to save money with capital equipment is in the aesthetic functions or features. Most capital equipment requests are feature-rich and should therefore be analyzed carefully to ensure that each of the features are really needed.

Once a requester’s functional requirements are defined, refined, and vetted, it is time for your team to search for functional equivalents. With few exceptions, there are two, three, or more competitors offering comparable equipment at a lower cost. A Google search should surface these companies that then can be placed on your hospital bidders list for when your hospital is ready to purchase.

It is important to understand that the reason this technique works so well in saving money on your capital purchases is that your requesters either don’t search out functional equivalents, don’t believe there are functional equivalents, or are wedded to the company they have been buying from for years. That’s why it takes an independent third party to review these capital requests to ensure they have been carefully investigated before being purchased.

Articles you may like:

Supplier Site Visits

Healthcare Supply Chain Professionals: Document Your Value to Your Senior Management

Healthcare Supply Chain Strategic Planning

Request Demo of SVAH’s Value Analysis and Utilization Tools


capital equipment, healthcare supply chain, Healthcare Value Analysis, hospital supply chain, Hospital Value Analysis, value analysis, value analysis team, value analysis teams

You may also like

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}

Subscribe to our newsletter now!