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Did You
Know...?
That Value Analysis Was Developed Back
In the 1940's After World War II as a Way to Find Lower Cost but Higher
Quality Alternative products and methods. This was Due to the
Lack of Material Resources At The End of The War.
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Savings Beyond Price -Weekly eNewsletter
- July 13, 2011
 A
Note from Robert T. Yokl,
President and Chief Value Strategist
I was happy to see the last space shuttle get safely off the
ground last Friday, but did you know it cost $1.2 billion
every time they shoot off one of those birds? Maybe NASA
needs some value analysis to keep their cost from ballooning
out of the stratosphere and then still keep flying their
shuttles.
That’s a good segue for my feature article this week “The
Good, The Bad and The Reality of Value Analysis Today”, in
which I give my observations on where we’ve been and where
we are going with value analysis in the 21st century.
In my blog this week I talk about an new idea I call “’Must
Have’ Information Toolbox” that works for us and just maybe
will work for you, too, to store, retrieve, update, manage
and easily disseminate your mission critical information.
Last, but not least, we have a new case study “Eliminating
Hidden Waste Leads to Bigger, Sustainable Savings” that we
are publishing on our website this week. It was written up
in HFMA’s Healthcare Cost Containment Newsletter last April,
but we are just getting around to posting it.
The Good, The Bad and The Reality of
Value Analysis Today
I have been writing in my columns, articles and blogs about
value analysis based on my hands-on experience for over
12-years, therefore I feel that I have a good handle on what’s
going on in the healthcare value analysis community. So I
thought it would be a good time to give you my impressions of
the good, the bad and the reality of value analysis today to
help you in your quest to improve your own value analysis
program.
The Good: I’m happy
to report , based on our surveys, that just about every
hospital, system and IDN in the USA has a value analysis program
(or some variation thereof) in place to evaluate their new
product requests and vet their new and renewal GPO contracts. We
are even seeing value analysis activity in other countries
(Turkey, India, Saudi Arabia, etc.) who are contacting our firm
by phone and e-mail for advice and guidance on developing their
own value analysis programs. So as you can see, healthcare value
analysis is alive and well in healthcare organizations today and
is even catching fire worldwide!
The Bad: I’m sorry to
say that even though value analysis has high name recognition in
healthcare and it is saving money, its practices are universally
still centered on price vs. function. Almost every healthcare
organization is missing the point that value analysis by
definition is “The study of function and the search for lower
cost alternatives”, not price. Hospitals, systems and IDNs
that get this salient fact are saving 10x more than healthcare
organizations that are just fixated on price with their value
analysis programs.
The Reality: Every
conversation, over the last few months, that I have had with
supply chain professionals regarding their value analysis or
other savings programs has told me that they are hitting the
wall on their price savings. In fact, most have told me that
this reality is keeping them up at night! This is why healthcare
organizations need to look beyond price for their value analysis
savings of the future. But I’m not talking about the “so-called”
value analysis that is being practiced today. I’m advising that
healthcare organizations return to the classic tenets of value
analysis developed by Larry Miles in the 1940s that always
considers price the last element in the value analysis equation
– not the first.
Well, there you have it: My view of the good, the bad and
reality of value analysis today in healthcare. It’s an idea with
promise, that hasn’t reached a level of maturity yet to be
called a “best practice, since healthcare organizations still
see value analysis as a price evaluation tool vs. a value-based
methodology with a 71-year history that can completely reinvent
the way a hospital, system or IDN buys anything.
Warmest Regards,
Robert T. Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
Bobpres@strategicva.com
1-800-220-4274
Your Partner In
Savings Beyond Price™,
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RECENT ARTICLES
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