Value Analysis in a Patient-Centric Environment: Take Control of Your Own Destiny

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:

Strategic goals

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.

Data governance: it’s not what you may think it is

In today’s healthcare environment, the subject of data governance is at the top of the list for hospital executives. Within the framework of strategic planning, quality, big data and regulation, your data reflects everything you do: patient care, cost practices and outcomes. In fact, the very sustainability of your organization relies on quality data. Dr. Elliot King, Department of Communication Chair, Loyola University, MD, makes the powerful point that “Data is an organization’s most valuable asset.

Data governance is a proactive process that provides the necessary framework to ensure data can be trusted and that there is clear accountability in place should an adverse event occur as an outcome of poor data quality. This structure is vital in managing the use, monitoring, maintenance and protection of an organization’s data. Without it, you may be missing crucial information needed to align clinical and business goals while reducing risk.

Data governance is not the routine maintenance of your data with oversight by the Information Services/Technology department. Data governance is a commitment organizationally to a process that manages the integrity of data. In turn, there is increased consistency and confidence in clinical and business decision making. There is better organizational planning, data transparency and optimized staff effectiveness through less re-work and decreased risk of regulatory fines.

In 2001, Congress passed The Data Quality Act (also referred to as the Information Quality Act). Embedded within a two-sentence rider was the requirement that the information you provide to any Federal agency must be consistent, of high quality and have data integrity. In other words, you are required by law to provide quality data.

Consider these notable comments:   

  • When asked about the biggest challenges and opportunities associated with the significant influx of data in healthcare, Anil Jain, MD, Vice President with (IBM) Watson Health responded: “The biggest challenges relate to the interoperability of data and then standardizing and cleansing the data.” “Just because you can get the data, that does not mean you can make sense of it.”
  • “Accurately measuring costs and outcomes is the single most powerful lever we have today for transforming the economics of health care” Dr. Robert Kaplan, Emeritus Professor of Leadership Development, Harvard Business School

The American Health Information Management Association (AHIMA) has been a leading authority on health information management since 1928 and was one of four parties responsible for ICD-10 Coding Guidelines as well as a contributor to the AMA’s CPT terminology. Some important AHIMA tenets are that Information Governance (IG) should ensure information is trustworthy, actionable, and aligned with organizational strategy. It is needed for all information, whether it is in electronic or paper form. EHRs are assets. Like other critical assets—people, capital, inventory, etc.—information is a strategic asset that requires high-level oversight in order to effectively use it for organizational decision-making, performance improvement, cost management, and risk mitigation. Information Governance requires a system-wide, multidisciplinary team (clinical, finance, decision support, materials management, risk management, pharmacy & IT) with executive-level sponsorship.  

How “Bad Data” Can Increase Risk

The Controlled Risk Insurance Company (CRICO) is the patient safety and medical malpractice insurer for the Harvard medical community. The Massachusetts-based company has expanded its proprietary coding system to capture EHR-related problems that have contributed to patient harm, and to guide the hospitals, physicians, and other providers it serves toward addressing vulnerabilities in their systems.

Results from a 2013 analysis of 147 medical malpractice cases were found to have an EHR-related contributing factor:

Top Issues in Claims w/EHR factors % Cases
Incorrect Information in the EHR 20%
Hybrid health records/EHR Conversion issues 16%
System failure – electronic routing of data 12%
System failure – unable to access data 10%
Pre-populating/copy & paste 10%
Failure of system design to meet the need 9%
EHR user training/education 7%
Lack of integration/incompatible systems 7%
EHR user error (other than data entry) 7%

These errors can range from faulty data entry (inches vs. centimeters can distort BMI calculation), unexpected automatic data conversions (2.5 becomes 25 impacting medication error), accessing wrong patient file or field, and repeated errors (mistakes that persist in patient records for years). Which EHR vulnerabilities are most troubling? CRICO’s early analysis reveals that incorrect information in the EHR was a factor in 20% of the 147 medical error cases reviewed. Half of the cases resulted in severe injury with $61 million in direct payments and legal expenses. This risk can and should be eliminated.

How Good Data Goes Bad

EHR system conversions are one of the most prevalent sources of data issues. Whenever data from different sources (multiple hospitals, physician office, and outpatient clinics) is merged, the result can be inconsistency, duplication and questionable validity. Data may not be compatible when different systems are linked/interfaced together. Additionally, formal data standards can be old or not consistently applied over time.  Without standards, you may end up with data that can’t be used for accurate comparisons or other analytics.

Deferring ownership of clinical data to IT is all too common; everybody uses data but nobody really knows who “owns” it. Your IT department needs to know how to resolve technical issues with data; don’t assume they know what the content should be. Data content issues fall into the overview of clinical and informatics staff, working hand in hand.

What is Good Data?

Your data must be available and easily accessible. This requires integration to enable all caregivers to see patient data in the right location at the right time while supporting patient care decisions and optimum utilization of resources.

You must have standardization as a bedrock of your data tables/files.

  • Any information that is recorded using free text is not reportable.  
  • Non-standardized procedures, for example, can result in duplicates or incorrect selection while documenting a patient’s surgical procedure. Procedures that cannot be tied to industry standards may introduce insufficient specificity.
  • A recent study published in the Journal of the American Medical Informatics Association found that a lack of standardization of observable markers of diabetes being collected in the EHR resulted in a significant variation from the standards created by the American Diabetes Association to diagnose the disease. The findings point to the need for standardization to avoid confusion among symptoms related to other conditions the patient may have.

Data must be complete. You must be able to show improved outcomes, regardless of the acuity mix of your patients. Data must be consistent. Necessary information is collected for all patients, all the time and data must be accurate.  A single source of truth ensures that each time a data element is used, it means the same thing everywhere it appears.

Introducing Data Governance

The most important point of data governance is to recognize that senior leadership and stakeholders must be engaged to ensure that your data meets the requirements of “good data;” not only within your EHR but also with every other system with which it interacts. Governance means putting a strategy and process in place for the proper proactive management of good data practices.

Some example considerations in the development of a successful strategy for the management of data are:

  • Put audit and validity checkpoints in place to keep your data accurate. Any interaction with humans will generate data errors – your aim is to identify and remediate as part of everyday activities across your hospital/health system.
  • Institute a schedule of routine audits of information that crosses from one system to another to find items that impact accuracy of cost and charge for supplies used during patient care.  Missing supply, implant or pharmacy charge coding and inaccurate mapping to codes can have a significant impact on revenue and case costing analytics.
  • Challenge the content of your reports. “Apples-to-apples” comparisons aren’t always what they seem to be. Do you collect data that does not result in action? If so, why are you collecting it? Can you see your data in real time to allow proactive action to mitigate unplanned barriers to efficiency?
  • Find any free text that can be converted to a standardized list of selections.
  • Review all of the lists of options selected by staff during the documentation process to search for duplicates, missing options and “home grown” areas that need to be updated to today’s clinical and regulatory standards.
  • Ensure that you are meeting all regulatory requirements by examining the data used to report to outside entities.

Introducing and establishing data governance is a challenging endeavor that takes discipline and time. Check out The American Health Management Association for more information.