The Healthcare Hub

The Importance of Healthcare Value Analysis: A Comprehensive Guide

Monday, March 11, 2024

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 hospital 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.



Table of contents

  1. What is value analysis?

  2. VAC: Value analysis committees

  3. Process and methodologies

  4. Benefits of value analysis for hospitals

  5. Real-world success stories

  6. Common challenges

  7. Value analysis tech and software

  8. Best practices for value analysis

  9. Value analysis process trends for 2024 and beyond



What is value analysis?

Value analysis in healthcare is the evaluation of medical products based on the value they deliver to a healthcare organization and its patients. The key to value is balancing cost and quality. The hospital value analysis process leverages evidence (e.g., product cost data, patient outcomes data, total cost of care delivery) to approve products that can provide value (e.g., better outcomes, lower costs). 

Healthcare value analysis teams are comprised of multidisciplinary stakeholders from departments such as supply chain, clinical and finance. The hospital value analysis process is central to the foundation of a clinically integrated supply chain that supports evidence-based practices.

"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."

Hospital Value Committees:

The Role of the Surgeon in New Technology Adoption (2021)



The Value Analysis Committee (VAC)

"VACs determine product value, control the product formulary, and ensure clinicians comply to the formulary."

Advisory Board

Value Analysis Committees (VACs) are multidisciplinary groups that manage medical and surgical product use within a hospital or integrated delivery network (IDN).

  • Supply chain stakeholders can present information and data on product costs, supplier resiliency and item availability (e.g., whether the product at hand has been subject to backorders or other disruptions), supplier contracts and savings opportunities, equivalent items already being purchased by the hospital, as well as suppliers and products aligned with the healthcare organization’s Environmental, Social & Governance (ESG) goals.

  • Clinical stakeholders can present information and data on product utilization, how the new product for evaluation compares with products already in use at the hospital, patient outcomes data related to any items intended to be replaced by the new item, and whether the product under evaluation has the potential to deliver greater value (e.g., improved quality, safety or patient satisfaction, better outcomes, clinical workflow efficiencies, etc.) based on real world evidence.

  • Financial stakeholders can bring to the table patient billing and reimbursement data to evaluate the financial impact of new product introduction. For example, the hospital might have a comparable product already in use, but when digging into the data find it is linked to costly adverse events, such as infections, prolonged length of stay and/or readmissions not reimbursed by payers.

Another stakeholder to consider when evaluating reusable medical devices that must be reprocessed in between patient procedures is the hospital’s sterile processing (SP) team. Because they are the ones responsible for disassembling, decontaminating, cleaning, assembling and sterilizing instruments and trays, they can provide insight into whether a new device design impedes safe and effective reprocessing.



The healthcare value analysis process

The value analysis process in healthcare is a systematic approach designed to ensure the effective and efficient use of resources within the healthcare sector. It involves critically examining the deployment of medical products, services, and technologies with an eye toward maximizing clinical outcomes while minimizing costs through a multi-step methodology. Here are some examples:


1. Advisory Board Value Analysis toolkit

  1. Clinicians or purchasing agents present to the value analysis team a product for consideration. In some cases, medical sales representatives play a role in presenting their products to the value analysis committee. These inpiduals are referred to as the "product sponsors."

  2. The VAC receives product input from the product sponsor(s), including why they want the product and whether the new product is intended to replace an existing product.

  3. The value analysis committee gathers clinical, operational and financial data on the product. Internal and external data sources for product evaluation can include clinical studies, peer-reviewed journal articles, and outcomes and cost data from the health care organization's systems (e.g., EHR, ERP). The supply chain team can be a source of product cost and utilization data, while end user clinicians can provide their opinions on the product in terms of patient care, process improvement and other factors.

  4. In cases where there is not enough existing evidence on which to evaluate the product, the value analysis committee might opt to run a trial of the item within the health care organization. The medical device sales industry can benefit from such trials when they provide evidence of their products' clinical and cost benefits.

  5. With evidence in hand, the value analysis committee key stakeholders meet to review the product. They vote to approve or deny the request.

  6. If the request for the product is approved by the value analysis team, supply chain handles the procurement details (e.g., working with the medical representatives, contracting, etc.).


The AHVAP 5-Step Methodology

There are 5 critical steps in healthcare value analysis methodology put forward by the Association of Healthcare Value Analysis Profession (AHVAP):

  1. Identification

  2. Gather Information

  3. Analysis

  4. Implementation

  5. Monitoring



Benefits of value analysis in healthcare

Value analysis is emerging as a critical strategic area for hospitals in today's landscape amid higher labor and supply costs, inflation, shrinking margins, limited cash flow, continued staffing shortages, supply chain disruptions and pressures to operate in a more sustainable and socially responsible manner. 

When it comes to value-based care goals and data-driven purchasing decisions, integrating value analysis into healthcare supply chain decisions can several benefits:

  • Financial resilience and cost-savings

    • Balanced cost and outcomes

    • Helps identify cost-savings opportunities

    • More efficiency and productivity among staff members

  • Quality of care and clinical outcomes

    • Reduced complications, infections, readmissions, and shorter length of stay

    • Improved patient safety and experience

    • Greater alignment between supply chain and clinical teams

  • Supply chain benefits

    • Product standardization

    • Greater resilience to disruptions

    • Reduced clinical supply waste

    • Deeper clinical alignment

    • Progress towards ESG goals



Cost-savings: Value analysis success stories

There is growing 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.

McKinsey & Company predicts 90 million lives will be in value-based care (VBC) models by 2027, up from 43 million in 2022. It’s likely that value analysis in healthcare will continue to grow as well, with more hospitals engaging in efforts to improve costs, quality and outcomes through informed purchasing decisions. Here are a few recent health care value analysis program success stories. 


Strategic sourcing savings reinvested into patient care

Leveraging robust clinical evidence, unbiased product analysis and advanced analytics, Mary Washington Healthcare (MWHC) reduced its coronary stent spend by 40-50%, achieving nearly seven figures in savings. Much of the money is being reinvested back into the healthcare organization’s departments to improve the capacity, technology, and other innovations for patients in the community.


Standardization initiative yields $450k in savings

In only four months, a healthcare consortium in Oregon successfully saved $450,000 by implementing a cardiac rhythm management device standardization initiative. This endeavor was supported by thorough evidence reviews and research articles. The supply chain team collaborated with physicians, employing evidence-based value analysis and leveraging insights derived from product reviews, recall information, adverse events, and an extensive range of clinical literature.


Evidence-based pricing yields 20% spend reduction

Oregon Health & Science University (OHSU) realized savings exceeding $400,000 on a total shoulder device expenditure of $2 million. This achievement was made possible through an analysis program that revealed the lack of clinical evidence justifying premium prices in the medical device sales industry.


Sole sourcing supply chain strategy on track to save $400k+

A healthcare system comprising 10 hospitals is poised to achieve savings exceeding $400,000 in orthopedic expenditure by adopting evidence-based product selection. By harnessing evidence-based insights across 45 categories of Physician Preferred Items (PPI), the system has shifted from expensive supplier and product variations to a streamlined sole-source supply chain strategy. This strategic transition aims to enhance patient care by ensuring optimal and consistent provision of necessary medical supplies.



Challenges for value analysis in healthcare


A recent survey conducted by the Association of Healthcare Value Analysis Professionals (AHVAP) and supported by GHX revealed top challenges facing healthcare value analysis teams, including access to data and analytics and lack of physician engagement.

  • Only 16% say they are currently harnessing data and analytics to manage care variation.

  • 22% still rely heavily on manual methods to process data, which can lead to inefficiencies and errors.

  • 36% report a reliance on clinician preference or cost-based models for decision-making, indicating an opportunity for more standardized, evidence-based approaches.

  • 18% indicate that physicians take active leadership roles in value analysis.

  • Over 40% report limited-to-no-physician involvement in their decision-making.

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.



The role of technology in healthcare value analysis

Effective value analysis in healthcare, where product selection impacts costs, quality and outcomes, requires comprehensive data access and the ability to perform advanced analytics. 

As evidenced in the AHVAP/GHX survey, healthcare value analysis professionals still struggle with disparate systems, data silos and manual data manipulation in their attempts to generate actionable data-driven insights. 

Technological advancements, including cloud-based solutions, are enhancing value analysis efficiency and effectiveness by facilitating seamless system integration, digital data capture, and analytics automation. When integrating technology into value analysis programs, pay attention to the following areas:


1. System integration and cloud ERP

While supply chain, clinical and finance stakeholders can individually bring to the table data from their respective IT systems (e.g., ERP, EHR, financial systems), assimilation of this data offers a far more powerful foundation for analysis. Cloud-based systems and solutions bridge historic gaps that have made it difficult if not impossible to bring data together in a standardized and normalized format.


2. Establish a unified data source

Developing a reliable internal data foundation is critical to the success of value analysis programs in healthcare. Once you have identified the data that supports your value analysis initiative, it needs to be stored in a centralized location. Here again, the cloud has opened the door to secure yet accessible data repositories to support the hospital value analysis process.


3. Analyze the internal data

While some larger health systems and hospitals have their own teams of data analysts and advanced analytics capabilities, most healthcare organizations lack these resources. Leverage value analysis software like GHX that analyzes your supply chain, clinical and financial data to identify evidence-based savings strategies, spend and utilization insights, and tracking capabilities to help ensure your value analysis initiatives are on-target and compliant.


4. Incorporate external data and evidence

In many cases, attempts among healthcare value analysis teams to evaluate new products or understand the impact of existing products on clinical and financial outcomes, requires data and evidence from sources external to the hospital. While team members can collect and synthesize clinical evidence of product value using websites like PubMed and other search engines (a labor-intensive process), some companies, like GHX, offer extensive product databases for such initiatives.

For example, GHX Value Analysis solutions brings together comprehensive cost, quality and outcomes data in one streamlined experience tied to clinical evidence. Healthcare value analysis teams can use this solution to understand cost drivers and variation on a physician-by-physician basis, with the ability to segment the analysis by facility, vendor, product type and product brand.



Best practices for value analysis programs


Healthcare organizations today vary in the scope and maturity of their healthcare value analysis programs, with some starting at supplier and product standardization initiatives and others engaged in full-blown analysis of all the factors that contribute to high-quality, low-cost care. Regardless of the healthcare value analysis stage, here are three best practices for success:

  1. Get the right people to the table: When evaluating products based on value, whether it is lowering costs, reducing infections, increasing patient satisfaction or another healthcare value analysis goal, make sure you engage all necessary stakeholders.

  2. Employ evidence in decision-making: Data and analytics are at the heart of any successful healthcare value analysis initiative. Coming to the table with unbiased, clinical evidence that the new product will help address a specific challenge will likely go a long way in convincing nursing and supply chain staff of the value of that change.

  3. Celebrate and share successes: In many organizations, there has been a long history of supply chain and clinical stakeholders battling each other over purchasing decisions. To help overcome doubts that the value analysis process in healthcare works, benefitting all stakeholders, including those at the center of decisions - patients – document, celebrate and share success stories throughout the organization.



Value analysis trends for 2024 and beyond


Overall trends in healthcare, including digital transformation, increased use of artificial intelligence (AI), ongoing mergers and acquisitions (M&A), a growing focus on health equity and sustainability, and non-acute care expansion, among others, will likely impact value analysis in healthcare.


Digital transformation

According to a survey conducted by GHX in 2023 involving over 100 healthcare leaders, it was revealed that almost 70% of hospitals and health systems are expected to embrace cloud-based solutions for supply chain management by 2026.

With cloud-based solutions overcoming the challenges of system interoperability and data integration, this transition is likely to improve access to data-driven evidence among healthcare value analysis teams. The application of AI also has the potential to support the hospital value analysis process by increasing the speed at which teams can process data and surface insights.


Mergers and acquisitions

As reported by the law firm Foley & Lardner, LLP, “In the fast-evolving M&A landscape, buyers in the upcoming year are set to prioritize a strategic shift toward value-based care.”

 If this prediction rings true, value analysis in healthcare is likely to become a focus for health system and hospital leaders engaged in M&A activity in their quest to enhance “the quality of care delivered to patients,” in the words of Foley & Lardner.

 The law firm also points to the growing demand for data to inform value-based decisions, stating “a surge in partnerships that facilitate the sharing of data and technologies aimed at improving patient experiences and outcomes can be expected.”


Non-acute care expansion

The market for care outside of the hospital, referred to as non-acute or post-acute care, is “forecasted to achieve substantial strides, with an anticipated rise from $824.86 billion in 2024 to $1092.06 billion by 2028.” McKinsey & Company expects ongoing shifts in care to outpatient settings, such as physician offices and ambulatory surgery centers, will continue in 2024 and beyond.

As health systems acquire more non-acute sites in alignment with payer and demand for lower care costs, they are tasking hospital supply chain leaders to take responsibility for these sites or designating specific supply chain resources to them. Therefore, it isn’t unreasonable to assume that healthcare value analysis teams may be tasked with evaluating more products for patient care outside of the hospital setting.



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.



FAQs about Value Analysis Programs in Healthcare


Q. How does value analysis impact patient safety and care delivery?

A. Value analysis in healthcare leverages real world evidence and data to assess whether a medical product has the potential to improve patient care and safety.

Q. What skills are necessary for successful healthcare value analysis?

A. Healthcare value analysis team members should be able to work collaboratively with multiple stakeholders (e.g., supply chain, clinical, finance) to share evidence and insights with the goal of making the best decision for the hospital and its patients.

Q. What are some strategies for optimizing value analysis in hospitals?

A. Establishing a source of internal cost, quality and outcomes data that is credible, complete and timely is critical to the hospital value analysis process. In many cases, partnering with an organization that integrates external evidence for product analysis not only better informs the process but strengthens the case for change.




  1. Healthcare Purchasing News Fireside Chat (HPN): Sterile Processing Insights for Today’s Demanding Landscape, HPN,

  2. Certified Value Analysis Healthcare Professional (CVAHPTM) Examination Blueprint, AHVAP,

  3. What to expect in US healthcare in 2024 and beyond, McKinsey & Company, January 5, 2024,

  4. Mary Washington Health Care Saves with Category Optimization, GHX Case Study 2024,

  5. Lowering Costs and Aligning Physicians: The Power of Strategic Sourcing, GHX Case Study 2024,

  6. OHSU saves with Category Optimization, GHX Case Study,

  7. GHX and AHVAP Share Results from New Survey Identifying Challenges and Opportunities in Healthcare Value Analysis, GHX, October 4, 2023,

  8. 2024 Healthcare Supply Chain Trends and Predictions, GHX, 2024

  9. Modernizing the Healthcare Supply Chain Through the Cloud, GHX, September 15, 2023,

  10. 2024 Predictions: Unveiling the future of healthcare mergers and acquisitions, Foley & Lardner, December 8, 2023,

  11. Post-Acute Care Market Set for Strong Growth Through 2028, Trends in Chronic Disease Management and Healthcare Innovation Highlighted, Research and Markets, January 30, 2024,

Image Description

Kara L. Nadeau

Healthcare Industry Contributor

Kara L. Nadeau has more than 20 years of experience as a writer for the healthcare industry, working for clients in fields including medical device/supply manufacturers and distributors; software, solution and service providers; hospitals and health systems; and industry associations.

2023 Value Analysis Survey Results