The new financial reality of Value Based Purchasing (VBP) is accelerating the evolution of core operational paradigms throughout healthcare organizations. VBP does not require radical changes to optimize reimbursement, instead it challenges value analysis (VA) committees to re-define themselves at the headwater of the process: selecting which items to review.
Value analysis processes have been implemented to help healthcare organizations adapt to changes in reimbursement by providing a comprehensive analysis of cost to determine the relative value of options. In a volume-driven world, selecting goods and services to review is primarily driven by clinical requests. These requests are often influenced by vendor access and/or exposure to new technology at industry trade shows. As the clinician/physician are primarily accountable for clinical outcomes, they enjoy the freedom to define value as the natural outcome of acquiring the requested item. This framework provided the flexibility to approach the assessment of value based on what is in the best interest of the individual (i.e. surgeon, clinician, department). The question is: does this approach still work in a value-driven environment?
First, how do we define value in the patient-centric environment? In their book: Advanced Lean in Healthcare, Craig T. Albanese MD, MBA; Darin R. Aaby MS; and Terry S. Platchek MD, define value at the intersection of four elements:
- Provide patients with the best-known options to improve their health or alleviate their suffering (deliver clinical quality).
- Provide patients an exceptional service experience.
- Provide empathetic, compassionate care by implementing a system that does not overburden staff and instills a sense of professional development and mission.
- Provide services affordably and in a sustainable (profitable) manner to ensure success over the long term.
It is within this framework that we find the greatest opportunity to create and sustain a new culture of patient-centered value while considering the most fiscally responsible option to purchase. The discipline Albanese, Aaby and Platchek propose streamlines the VA process by impacting the very first step: proactively determining what items to review.
Instead of simply responding to requests, proactively select groupings of items to review based on the following:
If your organization is focusing on expanding a given service line (Orthopedics, Neuro, Cardiology), reach out to the vendors that support these initiatives and begin the value analysis conversation proactively. By the same token, if your hospital has decided to reduce your footprint in Podiatry, you need to question the value of allocating dwindling resources to review products in this area.
Customer satisfaction goals
In the larger sense, it is easy to recognize that the primary customer in this discussion is the patient. Without the patient, nothing else in healthcare is necessary. Materials Management on the other hand may be unique, within Value Analysis, in that we must acknowledge an internal customer: the care giver. As materials managers, we must adopt the attitude that “if you do not provide care to the patient at the bedside, then you work for someone who does.”
Clinicians are satisfied when they have the greatest impact on the patient experience and have the necessary resources to do so. Patients feel satisfied when they have a positive outcome, was shown empathy and treated holistically. These examples explore a common theme: satisfaction is enhanced when there is direct and ongoing interaction between the patient and the clinician.
From this context, it may be argued that anything that impacts the clinician’s ability to spend more time with the patient erodes both patient and clinical satisfaction. It is imperative, therefore that the amount of time the clinician spends with the patient must be woven into the definition of “value.”
Most Value Analysis programs have expanded the traditional analysis of unit cost to include total cost and life-cycle cost. For example, purchase price, rebates, shipping costs, etc.
The assessment of quality must shift from clinical preference to clinical acceptability. Each organization must define these terms within a framework that includes patient safety and clinical outcomes. This framework will shift the conversation from subjective preference to the objective selection of items based on cost, defined risk and measurable patient outcomes.
As we look at the role of clinical involvement in purchasing, the role of the surgeon is undergoing the most radical changes, compared to other key stakeholders in the VA process. Although the surgeon has justifiably been viewed as the lynchpin and/or barrier for deciding what products will be used in the OR, surgeons and service line leadership now find themselves in an expanded role of facilitating the balance between clinical innovation and fiscal reality. To accomplish this, most VA teams are adding or expanding the role of clinical specialist in the process. These are not simply token representatives of clinical departments, but instead integrated liaisons with clinical backgrounds that provide a bridge between the clinical and financial imperative. Their role is to help foster understanding and provide independent clinical and supply chain expertise to the VA product review process. In addition, they facilitate representation of critical information to effectively bridge any communication gaps between physicians/clinicians and cost-minded financial stakeholders thereby enabling comprehensive consideration to VA decisions.
Once the Value Analysis process is complete, it is entirely possible that the patient-centered analysis of the proposed alternatives has determined that the impact to patient satisfaction is insufficient to justify a change in the existing clinical protocol. However, if the decision is made to implement a new product, organizations should seize the moment.
New product introduction is a structured process of implementing the decisions of the VA process. The most critical element in this process is timeliness. In most cases, the VA process has identified products and/or services that will result in any combination of cost savings, improved clinical outcomes, improved patient satisfaction or operational efficacy. Delays in implementing these decisions, not only result in additional costs, lower patient satisfaction and inefficiency, but erodes the effectiveness of the VA process itself.
After implementation of a VA decision is complete, an ongoing dynamic review will help to:
- Ensure the organization has achieved and continues to receive the benefits of the proposed change.
- Measure & demonstrate results and identify if real-time adjustments are needed.
- Identify new areas for improvement.
- Recognize, acknowledge and celebrate the successes created by the hard work of the Value analysis team.
Every item we buy has an impact on cost, quality, and customer satisfaction. The question is: where is the sweet spot? Where do these key decision points intersect to form the optimal definition of value in a patient-centric environment? Put more simply, “How is this going to change how I get reimbursed, and/or improve market share”?
At your next Value Analysis committee meeting consider tackling the following:
- Re-charter the purpose of the committee within the framework of value in a patient-centric environment and communicate to all Stakeholders.
- Adjust culture to reflect a focus on optimized savings & patient outcomes.
- Define additional variables to analyze within this framework.
- Transition to a prospective process used to introduce new items for consideration.
- Refocus analysis to incorporate patient and clinician satisfaction.
- Stay focused.