The dynamics of value analysis (value management) in the healthcare industry have radically changed over the last twenty years. We have watched as healthcare organizations moved from sole practitioner to VA teams to determine the relative worth of product, service, and technology purchases. Yet, with few exceptions, hospitals and healthcare systems have not reached the superior performance stage of maturity in this discipline. As value analysis matures in the healthcare industry, the basics need to evolve, thus taking your VA performance to the next level of maturity. This leap forward is crucial if your healthcare organization is to thrive and survive in the 21st century.
Our surveys show that 80% of healthcare organizations today are employing product evaluation committees or value analysis committees to manage and control their non-salary expenses, which is a great leap forward from the days when sole practitioners tried to manage and control their hospital’s supply/value chain expenses. Nonetheless, this improvement in value analysis hasn’t set the stage for superior performance, which requires a committed culture, new organizational architecture, new skills, technology, and reshaping the way you evaluate and select your product, service, and technology purchases.
What’s Holding Back Superior Performance?
8 key factors that are holding back superior performance in value analysis at our nation’s hospitals and healthcare systems today:
1. No Road Map: Most VA programs are started without much thought about strategy development and deployment, thereby getting off on the wrong foot before they get started.
2. Time-Knowledge-Manpower: There is never enough time, knowledge or manpower for VA programs, because material management believes this is their area of responsibility alone.
3. Winging It: The lack of a defined scientific process for evaluating products, services, technologies, systems or processes. The belief that it is much easier to just “wing it.”
4. The Puzzle: No central database – just multiple spreadsheets being continuously pieced together without capturing vital documents, studies, and projects.
5. Who Did What, When, and Why: No follow up, follow through, or accountability for studies or projects.
6. Round Peg In A Square Hole: The conventional wisdom that standardization of products, services, technologies, systems, and processes is the goal of value analysis, when in fact, the goal should be customization.
7. Trial and Error: Consuming clinicians’ time trying this product or that product in their particular department to see if they “like it” without first defining their exact functional requirements.
8. Clinician Push Back: The practice of pushing and pulling clinicians in the direction of change as opposed to partnering with them.
As these eight factors suggest, moving from the awareness stage to the superior performance stage of value analysis is an evolutionary process, which usually requires high-level skills and new processes. To move to the next level of performance you must evaluate your current state and envision your future, then develop and prioritize your plans to get there.
At Which Level Of VA Maturity Is Your Healthcare Organization?
There are four levels of value analysis maturity: Awareness, Understanding, Competency, and Superior Performance. At which level of maturity is your healthcare organization? How effective and efficient is your value analysis system?
The Value (Analysis) Management Maturity Model (VMM2) shows that there are varying levels at which a healthcare organization can perform value analysis. This means as an organization grows and matures its capabilities should progress along a continuum that should become more proficient and effective over time. The purpose of the VMM2 is to determine where your internal practices have large variations or gaps in VA maturity. It is our vision that a healthcare organization will use the VMM2 to measure its VA maturity against best practices to determine any gaps, and then put in place the mid-course corrections needed to move to the next level of VA maturity.
Taking Your VA Performance to the Next Level
Over the last 20 years, we have observed healthcare organizations’ VA performance maturing from an awareness stage to an understanding stage. Yet, few hospitals or healthcare systems have reached the competency or superior performance stage in the 21st century due to performance gaps in their VA programs. As VA skills and methodologies mature, the basics of the discipline must evolve to the next level of maturity to enable your healthcare organization to survive and thrive in this century.
For the purpose of having a common language to measure VA maturity at any healthcare organization, we have developed a rating system.
- AWARENESS STAGE
Healthcare organization is aware that changes in their VA program are needed since it isn’t working. (Rudderless, low cultural commitment, inadequate organizational architecture, low direction, low support, price oriented, no training, no decision support or knowledge management.)
- UNDERSTANDING STAGE
Healthcare organization understands some of the basics of value analysis, but doesn’t know how to get to the next level of performance. (Adaptive and innovative, medium cultural commitment, value analysis steering committee, high direction, low support, customer focused, TQM training, utilizes templates for decision support, minutes for knowledge management.)
- COMPETENCY STAGE
Healthcare organization is competent in utilizing most VA best practices, but is challenged by time constraints, accountability issues, and clinician resistance. (Creating purpose, high cultural commitment, VA steering committee, VA teams, low direction, high support, outcome-based results, 40 hours of VA training, utilizing value analysis software and spreadsheets for knowledge management purposes.)
- SUPERIOR PERFORMANCE STAGE
Healthcare organization has obtained mastery over VA strategies, tactics, and processes and is now performing at a superior level of performance. (Strategic planning driven, board approved as mission critical, employs Team-Based Project Management Model, Situational Leadership®, function oriented, continuous training, utilizes VA software with data warehouse.)
With these definitions in hand, you will now have an opportunity to objectively measure the maturity of your current VA program.
Value Management Maturation Process™
While the VMM2 can be helpful in identifying the performance stage of your VA program today, a more in-depth VA Maturation Process™ is recommended to determine the areas that you need more focus and improvement in to enable your healthcare organization to progress to the next level of VA performance. The VA Maturation Process™ is a systematic and defined planning process leading to the reinventing of your VA program. The process itself will enable your healthcare organization to appraise the strengths and weaknesses or gaps in your current VA program and envision its future state or next stage of maturity. This process could take 60 to 90 days to complete.
Evaluating the Current State of Your VA Program
The VA Maturation Process™ begins with an evaluation of your VA program’s current vision, mission, values, objectives, etc., to understand where you are today. Without this understanding you may make critical assumptions that are wrong and will hold back the maturity of your VA program. We have listed below the valuations that are required to determine your current VA maturity stage:
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CATEGORY |
EVALUATE YOUR CURRENT STATE
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MISSION |
Describe your current VA program mission or basic role or purpose today. |
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VISION |
Describe your current VA program vision or what you perceive your VA program will look like when you meet your mission. |
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VALUES |
Define the values (principles, standards, and ethics) of your current VA program. |
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OBJECTIVES |
Describe your current objectives (savings and quality) for meeting your mission and vision. |
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CULTURAL COMMITMENT |
How would you describe your organization’s cultural commitment to your VA program? ( ) low ( ) medium ( ) high or ( ) board approved |
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ORGANIZATION ARCHITECTURE |
Describe how your current VA organizational architecture is structured (administratively and operationally). |
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LEADERSHIP |
Describe the leadership of your VA program at each operational level (from low support/low direction to Situational Leadership®). |
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POLICIES AND PROCEDURES |
Describe the policies and procedures for your current VA program. |
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VA PROCESS |
Describe the VA process you follow repeatedly to evaluate and select your products, services, and technologies. |
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DECISION SUPPORT |
How do you ensure that a scientifically repeatable process is being utilized by your value analysis team members? |
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KNOWLEDGE MANAGEMENT |
How are you capturing and sharing the best practices that are being identified by your value analysis teams? |
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OUTCOMES |
What have your outcomes been (saving and quality) over the last 12 months? |
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MEASURE |
How are you measuring the success of your value analysis program? |
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BASELINE |
What is your baseline or benchmarking to determine the savings that are obtainable? |
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TARGETS |
What areas have you targeted in the last 12 months for savings or quality gains? |
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STRATEGIES & TACTICS |
What strategies and tactics are you employing to improve your VA program’s performance? |
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PRIORITIZATION |
How have you prioritized your savings and quality initiatives (list them)? |
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REWARD AND RECOGNITION PROGRAM |
Describe your current reward and recognition program (if any). |
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EVALUATION SYSTEM |
How will you evaluate whether or not you have met the stated goals and objectives? |
Envisioning the Future State of Your VA Program
The VA Maturation Process™ ends with your vision of the future state (mission, vision, values, objectives, etc.) of your VA program. In this step, you are able to formulate a written plan to meet your stated future objectives based on the gaps you have identified in your current VA program. Without this vision exercise to determine the future state of your VA program, it is impossible for you to formulate goals or to reinvent your VA process. Below is a list to assist you in determining your future VA state:
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CATEGORY |
ENVISIONING YOUR FUTURE STATE
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MISSION |
Describe your future VA program mission or basic role or purpose. |
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VISION |
Describe your future VA program vision or what you perceive your VA program will look like when you meet your mission. |
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VALUES |
Define the values (principles, standards, and ethics) of your future VA program. |
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OBJECTIVES |
Describe your future objectives (savings and quality) for meeting your mission and vision. |
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CULTURAL COMMITMENT |
How will you increase your organization’s cultural commitment to your VA program? |
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ORGANIZATIONAL ARCHITECTURE |
Describe how your future VA organizational architecture is structured (administratively and operationally). |
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LEADERSHIP |
Describe how you will increase the leadership potential of your VA program at each operational level. |
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POLICIES AND PROCEDURES |
Describe your new policies and procedures for your refined or reinvented VA program. |
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VA PROCESS |
Describe the VA process you will follow to improve the evaluation and selection of your products, services, and technologies. |
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DECISION SUPPORT |
How will you ensure that your value analysis team members are utilizing a scientifically repeatable process and have the tools necessary to complete their projects? |
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KNOWLEDGE MANAGEMENT |
How will you capture, document, and share the best practices that are being identified by your VA teams? |
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OUTCOMES |
What outcomes (saving and quality) will you have over the next 12 months? |
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MEASURE |
How will you measure the success of your value analysis program? |
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BASELINE |
What will be the baseline or benchmark you will be employing to determine your savings and quality potential? |
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TARGETS |
What areas will you target in the next 12 months for savings or quality gains? |
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STRATEGIES & TACTICS |
What strategies and tactics will you employ to improve your VA program’s performance? |
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PRIORITIZATION |
How will you prioritize your savings and quality initiatives (list them)? |
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REWARD AND RECOGNITION PROGRAM |
Describe the reward and recognition program (if any) that you will employ to incentivize your VA team leaders and members. |
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EVALUATION SYSTEM |
How will you evaluate whether or not you have met the stated goals and objectives? |
Taking Your VA Skills and VA Process to the Next Level
Raising your VA skills and VA maturity level is an evolving process that won’t happen overnight. From our experience, it will require two to three years of hard work to reach the level of Superior Performance. Then the challenge for you will be how to maintain your VA program at peak performance. This can only be accomplished through continuous: (1) strategic thinking, (2) gap analysis, (3) process analysis and redesign, (4) education and, (5) maintenance and incentivizing of your value analysis teams to perform at even greater levels.