4 Ways Value Analysis Analytics Can Help Hospital Supply Chain Professionals Make a Difference

Value Analysis Analytics (VAA) isn’t just another fancy way to describe organizing your spend data more effectively as we have seen it used lately. VAA is much more than that! In practice, it’s the integration of your clinical, financial, and operational data to identify your healthcare organization’s supply chain’s cost drivers and improvement initiatives. To prove my point, here are four ways VAA can help you reduce your cost and improve your quality and outcomes:

1. Proactive Diagnostic Tool: If your CFO comes to you and asks you to justify a 28% increase (not census driven) in your cardiac rhythm management devices (CRM) in the past six months, you need to get him/her the right answer – pronto! VAA can do that for you by scanning your CRM’s practices, patterns, and anomalies to give you the answer to this question.

2. Standardization Optimization: Standardization is more than standardizing by brand name or manufacturer. To optimize your standardization by 5%, 8%, 12% more, you need to standardize based on “best value” products, services, and technologies which can’t be identified by the naked eye. Only technology can help you discover these lower cost alternatives. Think, standardizing by customer groups and departments instead of the organization as a whole, all within your current contract manufacturer’s product line.

3. Performance Improvement: The best way to improve your supply chain cost performance is to establish standard key performance indicators (KPI) across your supply chain streams to drive cost performance and quality improvements. Remember, what is measured improves dramatically! There are over 500 major product groups that you purchase – you need to set up measures to proactively tell you when things need attention. Alternately, you need to be aware when you are working on an area that is already a best practice so that you won’t cause issues with cost or quality.

4. “Closed-Loop” Savings Validation: Supply chain and value analysis professionals are estimating projected and promised savings on their price, standardization, and value analysis projects. Yet, an estimate or promise of savings in today’s healthcare economy isn’t good enough. In the 21st century, “closed—loop” savings validation is what professionals do! Think of all the standardization items that your GPO has you working on to improve costs by $5K here, $13K there, $42K on another, etc. These are great and straight forward but they all must be verified to ensure they did not go south or affect the product mix in any way. Just one issue could wipe out big savings, and you wouldn’t know it’s happening without reporting.

The requirement for supply chain professionals to dig deeper and broader into their supply chain expenses to uncover new savings should be self-evident to you. Consequently, it is mission critical for you to discover, interpret, and manage your supply chain expenses more efficiently, effectively, and prudently in the years ahead. Technology is the enabler to allow you to make the jump from spend management to value analysis analytics to make this vision possible. There is no better time than the present to get started down this road!