The Healthcare Hub
How important is value analysis to your health care organization, its financial viability and its patient outcomes? In today's environment of cost cutting pressures, value-based care, a push for evidence based practice, and demands to enhance the patient experience, the value analysis process is something supply chain leaders can't ignore.
The value analysis journey weaves its way through entire hosital ecosystems, involving multidisciplinary teams tasked with evaluating the clinical and cost benefits of supplies used in patient care delivery. It is a key driver for engaging clinical leaders, reducing supply chain silos, understanding the cost and quality impacts of physician preferred items, and enacting change for optimal patient care.
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"Healthcare value analysis contributes to optimal patient outcomes through an evidenced-based systematic approach to review healthcare products, equipment, technology and services. Using recognized practices, organizational resources collaborate to evaluate clinical efficacy, appropriate use and safety for the greatest financial value."
The value analysis process is a key component of a clinically integrated supply chain, where a hospital's supply chain specialists engage physicians and other key stakeholders in collaborative product evaluation and purchasing decisions, with data provided to help drive evidence based practice, product standardization efforts, and clinical and cost benefits.
With the Centers for Medicare and Medicaid Services (CMS) aiming to have all Medicare beneficiaries and most Medicaid beneficiaries enrolled in accountable, value-based care programs by 2030, a hospital's progress on its value analysis journey is more critical than ever.
Value Analysis Committees (VACs) are multidisciplinary groups that manage medical and surgical product use within a hospital or integrated delivery network (IDN), as described by Advisory Board:
"VACs determine product value, control the product formulary, and ensure clinicians comply to the formulary."
Multidisciplinary team engagement is critical to value analysis program success. With many hospital departments collectively offering their own insights, data, expertise and experience to the comprehensive evaluation process in the form of an analysis committee, these key stakeholders help drive product selection aimed at optimal patient care and cost savings.
Value analysis teams in health care organizations often include: supply chain specialists, operating room (OR) and service line managers (e.g., orthopedics, neurology, etc.), finance team representatives, infection prevention (IP) professionals, risk mitigation specialists, physicians, nurses and other clinicians.
"Hospital system value committees stand as gatekeepers to the adoption of new products based on their ability to deliver health care value. The committees represent the hospital’s interest in delivering the triple aim of medicine – improving the experience of care, improving the health of populations, and reducing costs."
As Advisory Board points out, some healthcare organizations have multiple value analysis committees to evaluate different categories of products. For example, one value analysis team may be tasked with the analysis process for perioperative supplies, while another value analysis program could focus on cardiovascular product evaluation.
Here are the steps in a standard process for value analysis and key elements of the Advisory Board's analysis toolkit:
"The selection of products and services used in the delivery of care has become more complicated as new technologies and increasing severity of patient illness drive a need to balance cost and quality of patient outcomes."
Health care cost cutting pressures increased with the pandemic and lingering economic and supply chain challenges. Value analysis programs enable health care organizations to simultaneously address hospital's supply costs, patient care quality and financial outcomes through product choices that impact all three.
Key benefits of a value analysis program include:
The increasing number of medical and surgical supplies and devices, and their growing complexity necessitate a comprehensive value analysis approach to compare the costs and benefits of products available in today's health care marketplace.
Over the past 20 years there has been mounting evidence demonstrating how the value analysis process generates cost savings for health care organizations, from supply standardization initiatives that overcome the expense of physician preferred items, to evidence based practice that reduces procedural variability by standardizing products based on patient outcomes data - in some cases, mitigating the costs and risks of adverse outcomes, infections and readmissions.
Here are a few recent health care value analysis program success stories:
Healthcare organizations tend to have a wealth of data,
but it is often contained within disjointed systems.
One of the greatest challenges in value analysis is for the value analysis committee to equip its analysis toolkit with credible and actionable insights on product clinical and cost benefits, including data on patient outcomes, hospital's supply costs, patient experience, and other elements of value-based care.
There are supply chain silos of data within the health care organization's ERP system, silos of patient outcomes data housed within the EHR system, and silos of financial data contained within the health care organization's financial system.
A successful value analysis program requires meaningful access and analysis of all these data sources, combined with external evidence based practice metrics. While many medical sales representatives are eager to share their company's own product evaluation data, this information must be balanced with data derived from third party evidence based practice.
Crucial to a successful value analysis program is stakeholders' ability to break down barriers, share information and work collaboratively toward a more comprehensive evaluation process for products.
With cloud-based technology solutions, automated processes and digitized data, hospital value analysis committees have what they need today to overcome historical challenges to evidence based practice.
Here are four technology and data best practices that your health care organization can leverage to support an effective and efficient value analysis program.
💡 Find out more about GHX's value analysis and strategic sourcing solutions
Cost cutting pressures have no sign of abating for U.S. health care organizations. The latest National Hospital Flash Report from Kaufman Hall offers solid evidence for ongoing financial challenges, and lends evidence to why value analysis will remain a top priority for health care organizations in 2023 and beyond.
Value analysis will be a critical strategy to embrace the challenges ahead," said AHVAP's Cindy Christofanelli, RN, MSN, CMRP, in a recent article. "It will assist healthcare organizations in making decisions that not only impact their own financial health, but more important, the clinical outcomes and health of the patients they serve."
In its report, What to expect in US healthcare in 2023 and beyond, McKinsey & Co noted how it anticipates "an accelerated adoption of value-based care as stakeholders, including a broader set of providers and payers, aim for enhanced care management and effective cost management through improved utilization and other measures, such as increasing the use of alternative sites of care."
As priorities in health care delivery shift, so are the goals of value analysis teams. In a May 2023, GHX's Vice President of Healthcare Value, Karen Conway, led a discussion with value analysis stakeholders and supply chain leaders on the evolving role of value analysis teams as they navigate sustainability, environmental impact resiliency, and risk management.
Joining Conway were Thomas Lubotsky, Vice President, Supply Chain, Allina Health; Mary Larsen, Senior Sustainability and ESG Advisor; and Elizabeth Eisenberg, Director of Clinical Value Analysis at Scripps Health. They agreed that value analysis leaders need to develop a new set of skills to balance cost, quality, environmental impact and persity in their product decisions.
Given its growing importance in supporting the health of patients and financial viability of health care organizations, a hospital's value analysis program will stay front and center in product evaluation for the foreseeable future. While its structure, objectives and sources of information may shift, value analysis will remain at its core a fundamental function in delivering high-quality, cost-effective care.
Disclaimer: The third-party contributor of this piece is solely responsible for its content and accuracy, and the views expressed do not necessarily reflect the opinion of GHX.