Value analysis optimization always starts with a problem. It could be that your cost/utilization is running high in a product category or infection rates are climbing dramatically in relation to a particular product category that has changed recently, and therefore the product is being blamed. It could be even more straight forward – like you keep jumping out of compliance with your GPO contract at one hospital in your health system and it is costing you dearly. What do you do next? Where do you begin to peel the onion back on this problem? That is the big question for most Value Analysis and Supply Chain Professionals when dealing with these ever-important cause-and-effect challenges.
We Live in a Cause-and-Effect Supply Chain
Everything is about cause and effect in the healthcare world. You use too much product and then your costs are increasing; you dial back utilization too much and your patients could suffer; you choose products that fail more than they work, and you are jeopardizing outcomes and quality. Hospitals and health systems are constantly playing the balancing game on optimizing costs while maintaining quality.
What is Apparent May Not Be So Apparent in the Eyes of Your Customers
One of the simplest things to do about any problem or challenge you are having is to interview the end customers, users, stakeholders, and experts to find out what their take is on why this problem or cost overrun is occurring. Keep in mind, we really like our customers’ involvement in the value analysis process, but they may not always have a feel for certain problems and may just be giving their opinion as to what they believe is happening. The feedback is valuable, but you must do more than just enlist their feedback.
Remember – Everyone Has an Opinion but It Is Not Always Correct
For every problem, challenge, or cost overrun there is going to be a department head or manager who is going to try to brush it under the table. They will likely say that it was a one off and all is fine or that they were just busier in their department during the period in question. It could be anything they want it to be, but they will try to explain away this full analysis and subsequent changes to avoid further involvement of their department and staff. I get it, they are managing a finely tuned clinical department and have products and processes already in place and don’t want to upset the apple cart by making changes that they may or may not understand or agree with.
Trust but Verify the Numbers First
When it comes to any challenge or problem like cost overruns or quality issues, I tend to want to start with the numbers. You need to first verify that these numbers are correct and scrutinize and investigate these numbers yourself because you know that your affected end customers will surely be scrutinizing them. It is better to gain trust in the numbers now and then with this confidence you can go about finding the root cause behind these problems/challenges.
The Numbers Give You the Facts You Need to Talk Turkey with Customers and Stakeholders
Once you have verified the numbers you can then move on and discuss the numbers in depth. I like to make sure things like departmental or hospital volume are not affecting this by using activity-based cost methods to flush that out. Additionally, I try to drill down further on the activity-based costing to find out which product(s) are causing the cost overruns or quality issues. You would be surprised how valuable this information is especially when you can simplify the process hospital-wide or even by department.
Clinicians Need Proof
Let’s face it, clinicians are extremely smart, and they know their departments and the products they use better than we will ever know. Why not take the information you have in hand and share it with your clinicians? Clinicians could then work with you on developing options for mitigating the problem or cost overrun. The best part about this is that clinicians will fully understand all aspects of these products and thus will allow you to help them with whatever new product or policy change needs to happen with more confidence rather than if someone just tells them what to do in order to save a buck or two.
Simplicity works. This method I just explained to you will work with most of your value analysis and cost optimization challenges which will standardize the root cause analysis approach for you and your organization. Finding the root cause does not need to be difficult but you do have to have a process that works just about every time.
Below are some similar articles that you may find interesting.
No More Shooting from the Hip – 4 Areas You Need to Plan For in Healthcare Supply Chain
4 Steps to Go Back to Basics and Onward to Big Results with Your Healthcare Value Analysis Program
Trust but Verify in Healthcare Supply Chain and Value Analysis Optimization