Five Reasons Why Value Analysis Has Been Weak And Puny At Driving Out All Waste And Inefficiency In Healthcare Organizations’ Supply Chains

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Millions of dollars are lost each year because healthcare organizations aren’t employing the right tools, training, methodologies and software to “wring the towel dry” on their supply chain expenses. The answer to this dilemma is for healthcare organizations to look to proven cost saving and quality models like Six Sigma to fill in the gaps where value analysis is weak and puny.

Millions of dollars are lost each year because healthcare organizations aren’t employing the right tools, training, methodologies and software to “wring the towel dry” on their supply chain expenses. The answer to this dilemma is for healthcare organizations to look to proven cost saving and quality models like Six Sigma to fill in the gaps where value analysis is weak and puny.

“The face of cost-management is changing. However healthcare organizations are still employing old, tired and outmoded models of cutting their supply costs. Most hospitals call this value analysis and it is growing less and less effective.” This is an observation of Robert T. Yokl supply chain consultant and president of Strategic Value Analysis® in Healthcare in Pennsylvania. Yokl states further that “those hospitals that embrace new savings models, employ the latest technologies, and utilize revolutionary techniques will succeed in discovering and exploiting new cost-saving opportunities that are now hidden from their view.”

Yokl has been a healthcare supply chain consultant for 27 years and by his own admission has seen “the good, the bad and the ugly in the healthcare supply chain in his long career.” What disturbs Yokl now is that healthcare organizations are fixated on a process they call value analysis. This has been a process that is weak and puny at driving out all waste and inefficiency in a healthcare organization’s supply chain. In fact Yokl says, “Most healthcare organizations aren’t even practicing value analysis, but are doing something else and calling it value analysis.”

Here are five reasons why he says value analysis alone isn’t working any longer to “wring the towel dry” on healthcare organizations’ supply chain expenses:

1.    Value analysis practitioners have focused exclusively on price and standardization issues and have ignored the appropriate utilization (or consumption) of their products, services and technologies where 67% of new supply chain savings are hidden from their view.

2.    Traditional value analysis models never even touch the edges of conformance to requirements because of the conventional wisdom that “to save money you must standardize on the products, services and technologies you purchase.” What is needed is to embrace the new philosophy of customization of the products, services and technologies that are bought. This will save 12% to 22% beyond standardization strategies and tactics.

3.    Broader and deeper supply chain reductions of 3%, 6% or even 9% re-quires a strategic approach, not a problem solving approach as is now offered by today’s conventional value analysis systems. To move to the next level of supply chain savings, hospital, systems and IDNs need to embrace a strategic approach if they are to “wring the towel dry” on their supply chain savings.

4.    Value analysis programs don’t have a built-in mechanism for holding the gains that these programs achieve, as opposed to Six Sigma where standards and measurements are continuously monitored for compliance.

5.    There is no focus on defects (or what a customer doesn’t want) in products, services and technologies with value analysis. Neither is there a scientific test to control the variation in the commodities hospitals are purchasing, even thought defects and variation can cause huge patient and staff dissatisfaction, or, worse yet, accidents and deaths.

The answer to this dilemma Yokl says “Is for healthcare organizations to look to new proven cost saving and quality models like Six Sigma to fill in the gaps where value analysis is weak and puny”. What’s holding back hospitals, systems and IDNs from doing so is that they think that value analysis was cemented in a fixed set of rules that couldn’t be broken, altered or changed, but that’s not the case. Since its creation in the 1940s by Larry Miles, the value analysis methodology has evolved almost every decade when value analysis practitioners discovered new strategies, tactics, tools, techniques or swiped them from other disciplines to modernize Larry’s value analysis model.

“Healthcare organizations are always updating their medical technologies to stay current, it is now time for them to bring their supply chain savings models up to date.”

Robert T. Yokl is an acknowledged healthcare leader in supply chain management. He is the creator of the new Supply Six Sigma System that is a new way to manage a healthcare organizations’ functions, variations, and defects in their supply chain.

Strategic Value Analysis® In Healthcare

Phone: (800) 220-4274

Fax: (610)-489-2505

Box 939, 3887 Skippack Pike

Skip-pack, PA 19474

Contact: Robert W. Yokl 800-220-4274

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