What is Healthcare Value Analysis?
- Reducing Costs?
- New Product Selection?
- Improving Quality?
- Increased Value?
- Spend Management?
- Contract Administration?
- Evidenced Based Medicine?
- Getting Better Pricing?
- Technology Assessment?
- Physician Preference Product Management?
- Maximizing Spend?
- Reduce Waste?
- Contract Compliance?
- Inventory Management?
Defining Healthcare Value Analysis Following the Classic Tenets
Value analysis is a creative, analytical, systematic study of the functions of products, services, technologies, and processes. It’s objective is to determine the lowest cost alternative that will provide equivalent or better performance of the required function.
Value analysis is a system used to evaluate/select, at the lowest cost, an equivalent or better alternative to some product, service, technology, or process under investigation.
Function is the job which the product, service, technology, or process does. Or it’s reason for being!
Function can be reduced to a two-word definition with measurable parameters (active verb, measurable noun). E.g., Dry hands, inject medication, provide warmth, keep time, circulate air, protect mattress, etc.
There are many definitions that have been applied to the hospital value analysis world as to what value analysis is and what it is not.
Value analysis was originally created by a Value Engineer named Lawrence (Larry) Miles at General Electric in the 1940’s. Here are some key points from Larry’s teaching about value analysis.
When most people evaluate a product, service, or technology, they only look at its aesthetics and not its reason for being….FUNCTION.
The more one understands the functions of a product, service, technology, or process, the more opportunities arise for dramatically reducing the cost of the product, service, technology, or process. This is accomplished by substituting and/or, in some cases, eliminating an element of a product, service, technology, or process with an equal or better product, service, technology, or process.
Frequently Asked Questions About Value Analysis
What are the skills that are required to make you successful in healthcare value analysis?
- VA Project Management – The value analysis world is filled with multitudes of VA studies, initiatives, and conversions. You must be ready to handle all the product, service, technology, and process studies on an ongoing basis.
- Team Leadership & Facilitation – You will be responsible for not only facilitating the value analysis teams but also interacting with the individual leadership councils and committees in the hospital/health system. You need to have solid leadership skills to keep your projects and your team moving forward in a positive manner.
- Advanced Analytics – It is a given that you must be an expert with a spreadsheet but that is only a small part of the reporting and analysis picture. You must start to embrace the world of relational databases that are the backbone of all advanced analytics platforms and reporting tools. Once you understand and use the database tools, you will learn how you can make your best analysis automatic, repeatable, and with less work and better results every time.
- Value Analysis Process – We are not talking about the process in which a new product request is filled out and then sent to the VA Coordinator and the VA Committee. That is considered the workflow. What we are talking about is the value analysis approach that is used for studies based on functional analysis. This is the process that will streamline and guide all of your studies and help you get a better understanding of any and all products, services, technologies, and processes without being a subject matter expert. The VA Academy has this program available to you.
- Good Interview Skills – You are not just walking products through a VA Team or Committee but you are dealing with highly technical and extremely busy professionals such as physicians, clinicians, and other hospital technicians/professionals who are experts in their disciplines. The information you need is with them, your subject matter experts and product users, and you need to be able to ask good questions in order to bring out the exact functional requirements for your VA studies.
- Benchmarking – Most people do not like being compared to anyone else and told that they could do better in this area or that area, but there is no better tool or skill set that will let you know exactly where you stand or where you should be. That skill is benchmarking, or the search for the best practice with apples to apples comparisons in functional characteristics. Remember, there are so many different types of benchmarks that you can benefit from (historical, cohort, system-wide, pricing, utilization, etc.).
Do you have to be a nurse to be a successful value analysis professional?
Value analysis is multidisciplinary in nature as products, services, technologies, and processes are. You don’t need to be an expert in any particular discipline other than the value analysis methodology and process in order to perform value analysis.