The Benefits of a Successful Value Analysis Program

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The Benefits of a Successful Value Analysis Program WellStar Health System Tony Trupiano, VP Supply Chain Michael O’Toole, Director Value Analysis Carla Stephens, Value Analysis Facilitator Bindi Shah, Value Analysis Facilitator

Transcript of The Benefits of a Successful Value Analysis Program

Page 1: The Benefits of a Successful Value Analysis Program

The Benefits of a Successful Value Analysis Program

WellStar Health System

Tony Trupiano, VP Supply ChainMichael O’Toole, Director Value Analysis

Carla Stephens, Value Analysis FacilitatorBindi Shah, Value Analysis Facilitator

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Agenda

• About WellStar Health System• What is Value Analysis?• The Burning Platform:

– Why is Value Analysis a Strategic Imperative?

• WellStar’s Value Analysis Program– Our Structure and Process– Value Analysis Case Studies– Sample Value Analysis Tools/Documents

• Tips for Success• Feedback and Questions

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• Not-for-profit health system• 5 Acute-Care Hospitals, 15 Imaging Centers,

5 Urgent Care Centers, 1,311 Beds• WellStar Physicians Group (300 providers,

77 locations)• ~11,000 Employees

• Service Lines

• $249 Million Annual Supply & Pharmacy Expense

– Cardiovascular– Surgical

– Pulmonary

– Women’s Services– Musculoskeletal

– Oncology

WellStar Health System

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FINANCE(Cost-benefit knowledge)

PRODUCTUSERS

(Clinical Product knowledge & evaluation)

PURCHASING(Vendor management

& contracting knowledge)

Value Analysis brings together users who have clini cal product knowledge, financial analysts, & those with purchasing expertise in order to make best-valued product and service acquisition decisions.

Value Analysis(Review & Evaluation)

What is Value Analysis in Healthcare?

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What is Value Analysis for WellStar?

Value Analysis IS…..• A collaborative team approach• An organizational culture• Focused quality, safety, cost,

process, and performance improvement

• Standardization of products that are clinically efficacious and provide the highest quality care and safety to our patients in the most cost-effective manner

• A process to effectively evaluate new and emerging technology using an evidence based approach

Value Analysis IS NOT…..• Obtaining the lowest price

possible without regard to quality

• Just a committee or department• Only focused on new products

and technology• The budgetary arm for capital

purchases

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The Burning PlatformWhy is Value Analysis a Strategic Imperative?

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Supply & equipment costs are the 2nd largest expense for a hospital or health system

Supply & equipment costs are the 2nd largest expense for a hospital or health system

Supplies19%

Other Operating18%

Capital & Leases15%

Salaries & Benefits

48%

• Labor is largest expense (48%)

• Supplies & equipment are second largest expense (19%)

Typical Hospital Expenses by Categories

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Six Departments Account for 86% of Medical Supply Expense*

Supply Cost Economics: WellStar Health System

Develop Value Analysis teams focused in High Supply Cost

Areas

WellStar Health SystemSupply Expense

SURGICAL SVCS35%

PHARMACY17%

CARDIAC SERVICES

13%

EMERGENCY SVCS

2%

HOME CARE1%

RESPIRATORY THERAPY

1% OTHER6%

NURSING6%

FOOD/NUTRITIONAL SVCS

4%MEDICAL IMAGING

7%

LABORATORY8%

*Data includes WellStar Health System, Kennestone, Cobb, Douglas, Paulding, Windy Hill

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WellStar Health SystemFiscal Year 2009

SUPPLIES,ETC 49%

PHARMACEUTICAL SUPPLIES 15%

PURCHASED SERVICES 26%

PROFESSIONAL FEES 1%

OTHER EXPENSES 9%

Purchased Service Expenses Make up 26% of all Non-L abor Expenses*

Non-Labor Expense Economics: WellStar Health System

*Data includes WellStar Health System,Kennestone, Cobb, Douglas, Paulding, Windy Hill, Physicians Group

Develop ad-hoc Value Analysis team(s) focused on Purchased Services

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source: 2008 http://www.fda.gov/cdrh/present/MDMA052301.ppt

Annual Medical Device Submissions for FDA Approval by Category

• The Health Care Advisory Board estimates that 20% of current procedures use an implantable device

• Project that by 2011, 35-45% of all procedures will utilize an implantable device

Supply Cost Economics: Constant New Technology

Need a formal process to

determine the VALUE new

technology provides in terms of cost and

quality

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Value Analysis Structure and ProcessWellStar Health System

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WellStar Value Analysis Goals

• Focus on safety and quality• Increase physician and clinician input on supply and

equipment decisions• Integrate with New Service Line structure• Well understood and streamlined process• Implement organization-wide culture of Value Analysis• Avoid “Death by Meetings” by adding Value Analysis

agenda items to existing Service Line Committee structures as needed

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Supply Chain Management: The fulfillment of customer needs and delivery of economic value through integrated

management of the flow of goods and associated information from sourcing to payment

Value Analysis is an integral part of Supply Chain Management

Procurement

•Product Efficacy/Qual-ity

•Standardizat-ion

•Product evaluation

•Product Conversion

•Reimbursem-ent Analysis

•Product Review Committees

•Training/Cr-edentialing Requirements

Value Analysis

•Item file Management

•Materials Systems Management

•RFP

•Legal review

•Tier analysis

•Contract Management

•Price analysis

Contract

•Placement of orders

•Review of orders

•Lead Times

•Issue PO

•Expediting

•Consignment

•Capital

•Construction

Purchase

•Product Quarantine (receiving to inventory)

•Verification to PO and Item Master

•Discrepancy processing

Receive

•How much Inventory

•Perpetual

•Just in Time (JIT)

•Economic Order Points

•Carrying

•Cost

•Turnover rate

•Inactive/ Obsolete

Inventory

•Stores strategy (location and size)

•Time

•Cost

•Service

•Accuracy

Distribute

•Hospitals

•Physicians Group

•Charge Master

•Ease

•Disruption

•Patient Satisfaction

•Product Recalls

•Charge Accuracy

Use

Accounting

• Time

• Invoice discrepancies

• Suspended invoices

• Discounts

• Correct Price

• Consignment

Pay

Logistics

Group Purchasing Relationship Management

Value Analysis

New product interest

Partners Initiatives

Contract Expiration

Staff identified

savings/standardization

opportunity

Idea Express

Opportunities 2010

Triggers

Physician Request

Product utilization-practice change

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What is Value Analysis for WellStar?

Mission Statement

While maintaining or improving the safety and quality of patient care , reduce cost and improve performance through the cost-effective utilization

and standardization of efficacious products, services, and processes .

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Value Analysis Team Structure

Service Lines

Health System Technology Advisory Committee (Physicians Leadership Council)

Clinical Support Services

Pat

ient

Car

e S

ervi

ces

(Nur

sing

)V

alue

Ana

lysi

s C

omm

ittee

Lab

Cou

ncil

Val

ue A

naly

sis

Com

mitt

ee

Pha

rmac

y C

ounc

ilP

&T

Com

mitt

ee

Phy

sici

ans

Gro

up (

futu

re)

Val

ue A

naly

sis

Com

mitt

ee

Pur

chas

ed S

ervi

ces

(Ad-

hoc)

Val

ue A

naly

sis

Com

mitt

ee

Car

diov

ascu

lar

Sur

gica

l

Pul

mon

ary

(fut

ure)

Wom

en’s

Ser

vice

s (f

utur

e)

Mus

culo

skel

etal

(fu

ture

)

Onc

olog

y (f

utur

e)

Innovation Steering Committee(2010 Top Opportunity Group)Opportunities & Innovation Committee

(OIC)

Value Analysis Teams

Serves as Value Analysis Steering Committee

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Cardiovascular Cabinet

Cath Lab, Cardiac Svcs, CVOR, Bio-Med, procurement, Partners Champion, Finance

Cardiac Value Analysis

Jerry TilleryCarla Stephens

Operating Room, PACU, Central Processing, Bio-Med, PeriOp, Anesthesiology, procurement, Partners Champion, Finance

Peri-Op

Sherron KurtzCarla Stephens

Clinical Integration

Quality/Safety

Marketing

IT

Finance

Customer Service

Cardiovascular Service LineSurgical Service Line

Sub CommitteeSub Committee

Clinical Integration

SETS

Marketing

IT

Finance

Practice Operations

Surgical Cabinet

Charged with new technology assessment & supply utilization review

Sample Service Line Structure for 2 of our 6 Service Lines

Aligning Physicians with Hospital Administration: Cost and Quality

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Value Analysis Decision Map

Impact to System Is: Final Approval:

Value Analysis Committee

Service Line Cabinet

Opportunities & Innovation Steering

Committee with Service Line

Cabinet Recommendation

Low ImpactNew Costs < $100,000

Moderate Impact*New Costs >=$100,000

and < $500,000

High Impact*New Costs >= $500,000

Product Review

*Note: In the rare cases that the costs are greater than $100,000 and the product is not specific to a service line, then the Innovation Steering Committee will make final approval/denial of request.

Physicians Leadership Council must review

Safety/QualityRamification?

Crosses MultipleService Lines?

Safety Officer must review

Clinical and Financial Data used to develop Business Case

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Sample Product Request Form

Find this form on eSource at

http://esource.wellstar.org/valueanalysis

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Incorporating Clinical Efficacy, Safety, and Quality Data

• WellStar has contracted with a company that will dramatically improve the ability of Value Analysis and our clinicians to assess new product requests and their clinical efficacy: – Hayes performs evidence-based healthcare technology assessments of

the safety and efficacy of new and emerging health technologies and evaluates the impact of these technologies on healthcare quality, utilization, and cost.

– Hayes’ worldwide clients include hospitals, healthcare systems, government agencies, employers, and managed care organizations.

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Value Analysis Metrics: Turn Around Times

New Product Request

Expedited Request

All Other Requests

5 Days

5 Weeks

Product Request Decision Turn Around TimesTurn around times monitored and reported on VA Dashboard

Criteria for Expedite Request1. Requested PRODUCT is offered for free or at least cost

neutral2. Requested PRODUCT does not affect existing contracts

with other vendors3. Requested PRODUCT is FDA approved for its intended

use and Vendor is an approved WellStar vendor4. Requested PRODUCT does not require capital investment

(for equipment)5. Requested PRODUCT does not require a certification by

physician or clinician

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$8,239,506 in Implemented Savings for FY 2010

$8,239,506 in Implemented Savings for FY 2010

Value Analysis Metrics: Savings

Savings by VA Committee

$0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000

Pharmacy

Peri-Op

Cardiac

VI/Rad

Nursing

Ad-Hoc / Purchased Svcs

Lab

Completed

On Track

Warning

Off Track

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

$5,000,000

$5,500,000

$6,000,000

$6,500,000

$7,000,000

$7,500,000

$8,000,000

$8,500,000

$9,000,000

$9,500,000

$10,000,000

2010 GOAL

//////// - Savings In Process

LEGEND

- Savings Implemented

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WellStar Safety Winks:Safety First!

Safety Wink Process Ensures Clinicians are Notified and Trained on Process/Product Changes Effecting Patient Safety

Safety Wink Process Ensures Clinicians are Notified and Trained on Process/Product Changes Effecting Patient Safety

Value Analysis: Communicating Product Changes

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Value Analysis: Communication is Key

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Product Evaluations – Involve front-line clinicians

• Clinical Advancement Program (CAP) Nurses can earn CAP points by leading system-wide product evaluations

• CAP Nurses lead and facilitate product evaluation and are required to present clinical results to Value Analysis Committee

• CAP Nurses earn CAP points for leading evaluations, points are part of a CAP bonus structure paid at the end of the year

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Value Analysis: Continuous Improvement

• Annual Value Analysis Program Survey– Physicians: 3.89 overall Value Analysis program satisfaction score

(rating 1-5, 5=Highly Satisfied)

– All Respondents: 4.26 overall Value Analysis satisfaction score(rating 1-5, 5=Highly Satisfied)

– Sample Questions (Rating,1-5, 5= Strongly Agree, 1=Strongly Disagree):

• I am knowledgeable about my organization's current Value Analysis program.

• I have a role in supporting my organization's Value Analysis goals and objectives.

• Overall, I am satisfied with the process for requesting and evaluating new supplies or technology

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Value Analysis Case Study: Exam Gloves

• Savings opportunity identified by converting a new exam glove vendor

• Opportunity presented to all Value Analysis Committees for review

• CAP Nurse selected to lead system-wide product evaluation

• Over 400+ evaluations conducted and tallied

• 84% favored the new exam gloves

• Total Savings Implemented: $130,000

YES84%

NO16%

DO YOU RECOMMEND THAT THIS PRODUCT BE INTRODUCED?

YES

NO

Taken from CAP Nurse Product Evaluation Presentation:

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• Profitability analysis completed to understand current financials with these product categories

• Thorough data gathering and price benchmark analysis completed

• Haye’s Clinical Study Reviewed with Physicians

• Presented to Spine Physicians to collaborate on contracting strategy

•Total Savings Implemented: $1,000,000

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

Annual Spend

20082009

Cobb, $(4,991)

Kennestone, $(3,995)

Windy Hill, $(6,483)

WHS, $(4,521)

$(7,000)

$(6,000)

$(5,000)

$(4,000)

$(3,000)

$(2,000)

$(1,000)

$-

$1,000

Tota

l Mar

gin

/ Cas

e

Total Margin / Case

112Cases

21Cases

25Cases

158Cases

*Financial numbers are fictitious and for presentat ion purposes only

Value Analysis Case Study: Neuro Stimulators

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• Profitability analysis completed to understand current financials with these product categories

• Thorough data gathering and price benchmark analysis completed

• Presented to cardiovascular service line cabinet to collaborate with physicians on contracting strategy

• Total Savings Implemented: $3,004,115

Cooperation & teamwork with physicians like Dr. Reitman, Cardiology, created the framework for successfully savings millions & continuing to provide the highest quality care.

Value Analysis Case Study: CRM and DES

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Tips for Success!

• Don’t make the process too difficult or users will find a way aroundthe process….

• Develop and implement a Value Analysis Communication Plan– Newsletters– Road show– Communication through shared governance structures– Safety Winks

• Must have Executive Oversight and Support• Utilize financial and clinical data to make decisions• Establish annual Value Analysis Committee goals that are financially

and clinically focused:– Examples of Clinically focused goals:

• Research and develop product bundles to help reduce SSI’s• Research and develop product bundles to reduced Falls• Research and develop product bundles to reduced BSI’s

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Questions and Feedback