Just as the definition and parameters of value vary from person to person, organization to organization, so goes the definition and parameters of value analysis.
Short of universal acceptance and implementation, value analysis seems to slide along a scale of convenience. Some consider value analysis to be a synonym for “product evaluation,” even though the former tends to be more strategic, less tactical and transactional than the latter. Further, value analysis concentrates more on people – patients, staff, etc. – through personal and professional relationships as key to process improvement, whereas product evaluation focuses on technology and device use connected to costs and outcomes.
Unfortunately, delineation between the two can be murky.
But not everyone thinks so. For example, Lumere subscribes to product evaluation as a function of the larger and more encompassing value analysis process.
Smith encourages Value Analysis teams “to create a charter that defines product evaluation as a component – not the sole purpose of the function. This charter must then be broadly socialized within the organization to ensure uptake. If you want something to stick, you must preach it to anyone who will listen!”
Smith contends it’s critical that the Value Analysis charter connects to an organization’s strategic goals – particularly now during the pandemic.
“What many failed to recognize – until COVID-19 brought perspective – is that the Supply Chain department is a strategic partner in helping organizations realize these goals,” she noted. “They have the data and insight to help connect the dots.”
“The profession may have started out by evaluating products, but it’s evolved into informing evidence-based decision making that’s integrated with clinical practice,” Hermes said. “It’s about clearly communicating that Value Analysis goes above and beyond evaluating a product’s cost or efficacy. To do this, you must have a champion that’s willing and able to build a coalition of Value Analysis supporters across departments and service lines. This doesn’t happen by osmosis. You need to change the culture.”
“Value Analysis is the collaborative structure and process to make decisions for products, services, capital and pharma that are used across multiple departments,” she said. “More importantly, it is a decision structure and process that incorporates CQO [Cost, Quality and Outcomes] – not just price. Value Analysis can be used for product evaluation but Value Analysis is much more. Value Analysis evaluates process, services, equipment and their impact on clinical outcomes. It is a structure that is driven by clinicians, facilitated by Supply Chain and led by a CXO.”
“Looking beyond product evaluation and selection, today’s value analysis enables enterprise-wide decision making on high-quality supplies, services and equipment by first considering care delivery, safety and outcomes as well as total cost,” she noted. “It strives to balance issues related to quality, patient and staff safety, revenue enhancement and reimbursement optimization across the continuum of care.”
“The confusion or equating of the two terms is certainly understandable, particularly as organizations continue to mature their value analysis processes,” Lohkamp said. “For many organizations, the initial driver for setting up value analysis is to expand on the product evaluation process by coordinating more inputs from more teams and including evaluation of the impacts on how care is delivered. We’re starting to see organizations look to tools like Workday Strategic Sourcing to formalize intake processes to prioritize value analysis projects and keep stakeholders involved. This allows a direct connection to subsequent sourcing and contracting activities needed to execute on committee recommendations and track results.”
Power among people
Sydnor insists that successful value analysis programs require strong relationships and ongoing collaboration among multidisciplinary teams that incorporate the engagement and support of executive leadership as well as collaboration with suppliers.
“Robust and contemporary value analysis programs focus on the intersection of cost, quality, safety, outcomes and patient experience,” she continued. “Alongside these goals, the scope of value analysis moves far beyond that of product evaluation ─ requiring a strong people element and coordinated effort across provider departments, service lines and vendor partners.”
“A solid clinically integrated value analysis process empowers providers to work on initiatives that are most important to their patient care,” Roy indicated. “That effort includes a review of variation in practice, which gives providers a burning platform for change. This results in measuring the total cost of care across departments and into the post-acute space. Organizations need to structure what works best for their culture, establish executive guidance, communication methods and an alignment strategy. They must also share success stories and develop a widespread education plan that becomes a standard part of daily work activities for all staff.”
“This allows subject matter experts within particular areas to have a refined approach and build strong relationships with critical physicians and clinicians,” Phillips said. “This approach engages clinical stakeholders and leads to conversion and changes that sustain value over time. As a result, it can also develop greater trust in Supply Chain leadership to make the tactical decisions that are in the best interest of the health system.”
Depth and maturity
“Value Analysis is process-driven. Product Evaluation is acceptance and price-driven,” summarized Crans, Business Development Executive – Healthcare, St. Onge Co. “One focuses on the best way to approach a situation while the other focuses on the best way to do things the same way we are doing them now.
“The challenge is to define and enact the process in a real-time manner so that it becomes what the title implies, i.e., analyzing the ‘value’ of doing something – and ‘value’ includes more measurements than simple price. The Association of Healthcare Value Analysis Professionals (AHVAP) has extremely clear-cut definitions and guidelines as to what constitutes a legitimate Value Analysis operation. The key is to have a title mean something. You can’t just take down the Standardization Committee sign and replace it with one that says, ‘Value Analysis Committee’ and have a legitimate VA function any more than you can take down the ‘Materials Management’ sign, replace it with one that says ‘Supply Chain’ and have a functional supply chain operation.”
“For so long the notion of basic patient care products evaluation was synonymous with value analysis with a focus on price, along with the vestiges of product standardization to eliminate variation,” Strain added.
During several live and virtual workshops and panel discussions the past 18 months, Strain recalls sharing the maturity curve and asking participants to place themselves along the curve. She found that roughly 75 percent of provider value analysis participants ranked themselves between Levels 3 and 4, while five percent selected Level 1 and seven percent Level 5. Suppliers, who based their positioning on their perceived readiness to address customers, posted similar results within a few percentage points, according to Strain.
Enter COVID-19.
Prior to 2020, healthcare value analysis was evolving to the point that providers recognized and understood it was not a person, a team or a program, Strain cites. “Value Analysis is a profession based on proven processes that move organizations from one level of maturity to the other all the while improving quality of care at reasonable costs,” she added.
“In 2020, however, healthcare leaders, physicians and clinicians quickly became aware of the value [that] value analysis professionals play,” Strain continued.
AHVAP hosted a podcast series from mid-April through mid-July 2020. The content ranged from vetting supplies and suppliers to lab tests, communication, collaboration and community outreach. The subject matter experts in the last few podcasts were value analysis professionals from various sized provider organizations that were asked, “What is value analysis like today?” Strain recalls the participants expressing a contextual understanding of the process against the backdrop of the pandemic.
Strain also envisions a “new value analysis” emerging from 2020 that will spend time differently on the medical/surgical supply process and more time on “need-to-have” initiatives that will move organizations to population health and quadruple aim maturity levels.
Alternate states
“The organizations that we serve asked us to innovate a means by which products and services could be evaluated objectively, without the emotional attachment, to brands and brand representatives oftentimes present throughout the process,” Caldwell stated. “Our User-Directed Strategic Sourcing process begins with Decision Teams and Affinity Groups comprising clinicians and end users who evaluate products and services based on attributes. By defining the attributes required, we identify a wider range of clinically acceptable products that are well established in the market but may not be top of mind for clinicians who may be considering a singular brand with which they may be comfortable and familiar. While this may seem similar to Value Analysis, evaluation of attributes of a product rather than the evaluation of a product as a whole has proven highly effective. The process has resulted in the establishment of a comprehensive and highly accepted contract portfolio that has delivered $1.2 billion in annual savings to our participants.”
“When asked about this topic, I always like to say that value analysis is one of the most misunderstood terms in supply chain management,” Yokl noted. “By definition, value analysis is the study of function and the search for lower cost alternatives as described by Larry Miles, ‘the Father of Value Analysis.’ Unfortunately, this definition has been lost in translation in healthcare. Instead, in healthcare value analysis is just another name for ‘product evaluation,’ thereby misinterpreting the true purpose of value analysis, which is to reinvent the way we specify, analyze, and classify our products, services and technologies. I suggest that VA practitioners read Larry Miles’ book, ‘Techniques of Value Analysis and Engineering’ if they want to gain the full benefits of this powerful cost and quality management technique.”