STRATEGIC VALUE ANALYSIS ^TM NEWSLETTER

Element #5: “A Value Analysis Program Must Be Technology-Driven

(Part 6 of 6)

In the last five to seven years, by my estimate 80% of hospitals and systems in the U.S. have installed new material management information systems to manage their supply chain. While this is a great leap forward in supply chain management it hasn’t provided the technology-driven environment (figure 1) that is necessary to move healthcare organizations to the next level of non-salary savings performance. It instead has created information overloads, disarray, and disconnects that have held back technology advances in supply chain management, not moved it forward.  So, how does this impact your value analysis program?

 

Figure 1: 5 Value Analysis Mission Critical Elements

 

Team-Based

Technology Driven

Customer Centric

Strategic Planning     Driven

Value-Based

 

In 2003 we cleansed, normalized, categorized and optimized over 45 hospital material management system databases that weren’t in an utilizable format that is essential for value analysis diagnostic analysis, data mining and the discovery of unfavorable utilization trends and practice patterns. Without these analytics, healthcare organizations don’t have the in-depth knowledge of their cost drivers that is compulsory to make critical non-salary cost management decisions.

 

Value Analysis Should Be A Technology-Driven Process 

Our time and peoplepower are in limited supply today.  So how do you make savings happen with your limited time and labor resources?

The answer, as we all know, is to use technology as the great equalizer.  Technology when employed innovatively and productively can effortlessly identify your cost drivers, discover your best value analysis opportunities, and target the waste and inefficiency in your supply/value chain. This information can then be shared electronically with your customers, stakeholders and experts, as members of your value teams, to make these identified value analysis savings opportunities happen.

 

What’s Holding Back Technology-Driven Value Analysis

The biggest challenge facing supply chain managers in the development of technology-driven value analysis programs are: (i) the poor quality of their purchasing data (ii) disorganization and disarray of their purchasing data, and (iii) the lack of analytics to identify the best value analysis candidates to target for savings.

My answer to this dilemma is that supply chain managers hire full- time MMIS administrators (if you don’t have one already) or outsource this function to reinvent and streamline your MMIS database into its purest form, then develop the analytics to analyze this data. Otherwise, you will be fighting the battle of poor quality data forevermore with limited or no success.

If by chance or because of financial circumstances, you are still utilizing an old DOS based MMIS system or have no MMIS system at all, do your healthcare organization and yourself a favor and investigate upgrading you old system now, so that you too can move to the next level of savings performance. I can assure you that the benefits of doing so will outweigh the cost ten-fold.

 

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