Value Analysis Technology Connection

How do we save money on high-dollar technology purchases (i.e. MMIS software) with value analysis?

 

Let’s start with the budget and purchase processes that are popular in today’s marketplace. Today, and for many years to come, the first line of defense in healthcare organizations to control spending is the budget process. This is a vital process that allows organizations to evaluate their purchase of technologies from the highest level of the organization to the requesting department. In most cases, the organization has already submitted a request for quotation to ballpark the price of the technology for the budget process. This is necessary and recommended.   

 

Who takes control of this purchasing decision in a healthcare organization once budget approval has been granted? Most likely the Director of Materials/Purchasing and the CFO/VP of Finance for the final sign off prior to purchase. In most cases, budget approval is only the first step in the purchase and will re-institute the bidding process. Next, you will:

 

  • Meet with all of the software vendors.
  • View demonstrations of all of their software with the latest bells and whistles.
  • Have key department heads sit in on the demonstrations to see how they like the software products.
  • Receive formal proposals.
  • Identify what you like and what you don’t like about each vendor’s products.
  • Identify the key features that you and your users feel will benefit your organization.
  • Ask the vendor to sharpen his pencil once you have chosen his company (give me your best price).
  • Make a final recommendation to your CFO and Senior Management on why you want the vendor you chose.

 

What’s wrong with this process?

 

Just because you have approval and theoretical best price on $750,000 of new Materials Management Information System Software (and numerous other software products) from your Finance Committee, it doesn’t mean that you are getting the best VALUE for your converted dollars.    

 

LET’S LOOK TO VALUE ANALYSIS BEFORE YOU START THE BIDDING PROCESS

 

  • Before requesting an RFP, establish a value analysis team of customers, stakeholders, and experts to evaluate your current situation and develop performance specification for your new MMIS system based on your functional requirements. For example:
  • Identify key issues/challenges that are problematic with your current software/hardware configuration.
  • Compare your organization’s challenges to similar organizations that are currently utilizing the same or similar MMIS technology and/or have recently upgraded.
  • Determine the functions (primary, secondary, and aesthetic) that are ABSOLUTELY required for your MMIS.
  • Develop performance specifications based on your functional requirements.
  • Prepare a list of only qualified vendors that can meet or exceed your performance specifications.
  • Prepare your performance specifications in the form of an RFP and submit to qualified MMIS vendors.
  • When bids are returned from MMIS vendors, rate vendors (1-10) on how well they met your functional requirements and the associated cost to meet them (this might require software demos and site visits to vendors’ customers to properly rate and weigh these factors).
  • Select the MMIS with the highest rating and lowest overall total cost that met your required functions.
  • Lastly, negotiate with this bidder to reduce their cost even further on the functions that you have identified through your VA process that are not needed or required for the optimal performance of your new MMIS.

 

Through this VA process you will find that you will save up to 25% off your theoretical best price because you predetermined what’s important to you and what’s not, as opposed to letting your MMIS vendors overwhelm you with feature-rich options that you will never use or even understand. 

 

Do not underestimate the simple yet powerful value analysis process. If you employ the process correctly, you will lower your acquisition cost, improve quality, and give your customers and yourself exactly what you need and want!