Larry Miles (the father of value analysis) once said, “It should be obvious that money consumed in waste and inefficiency is gone and permanently out of our (organization’s bank account). It will not be returned to the (healthcare organization). The money that value analysis could have (saved) is wasted. It’s neither a profit to the (organization) nor does it go back to where we can get at it again.”
In most situations, your hospital’s staff have no idea they are being wasteful and inefficient with the products, services, and technologies they are employing to get their jobs done. They are worried about patient care, operational issues, and compliance to protocols – not waste and inefficiency in their supply streams. This is where value analysis can play an important role by detecting these anomalies in your hospital, system, or IDN’s supply streams to prevent or eliminate them completely.
There are two methods for doing so that we recommend to our clients. The first is to employ a checklist detailing all of the steps necessary to approve a new product, service, or technology that includes a section for utilization of the product, service, or technology it is replacing. Meaning, you need to benchmark your current commodity being replaced to ensure it is being used appropriately so that any wasteful practice won’t continue over the long-term.
Healthcare Value Analysis to the Rescue
For instance, one of our clients uncovered through benchmarking that they were using 3x the amount of I.V. pump sets than their peers, only to find upon investigation by their VA team that their I.V. pumps were defective (always alarming) and therefore their nursing staff changed the I.V. set unnecessarily to stop the alarm. This wasteful and inefficient practice was costing this client $100,000 annually. This is how value analysis can come to the rescue.
The second technique is to track, trend, and benchmark all of your commodity groups to ensure they are all within acceptable limits. Then have your value analysis team members investigate any and all commodities that are falling into the danger zone on an ongoing basis. This is a more systematic approach that can speed up the identification of your utilization misalignments and is the preferred practice by most of our clients who want to stop the bleeding.
As we see it, hospitals, systems, and IDNs have two options when it comes to waste and inefficiencies in their supply streams. They can ignore them, at a cost of millions of dollars a year in losses to their healthcare organization’s bottom line, or they can attack them with value analysis to prevent and completely eliminate these wasteful practices. It’s your choice!
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