Don’t
Offer Too Many Choices in Value Analysis
Greetings,
Factoid!
There have been a number of studies conducted on giving customers
too many choices that result in customers either picking the highest
cost product out of confusion or becoming frustrated to the point
where they select the wrong product just to make some kind of
decision.
What
does this have to do with value analysis?
In my opinion, giving your customers too many choices is at the
epicenter of most value analysis misadventures and contributes
greatly to the unnecessary escalation of healthcare supply expenses!
Here’s
why!
It is the common practice in value analysis circles to send numerous
products (i.e. IV sets, trays, kits, dressings or what have you) to
our customers for what we call in our industry “trials”. Then we ask
our customers to pick from a wide-assortment of similar products and
then rate the ones they like the best to the least favorite. As I
just stated, studies have shown (the most recent study was conducted
by researchers and authors Noah J. Goldstein, Steve J. Martin and
Robert B. Cialdini) that this is a recipe for abject failure and
ever increasing supply expenses.
What
should you do?
In the classic value analysis model, developed by G.E. in the 1940s,
there is no such thing as “TRIALS” to determine your best value
products, services or technologies and for good reason. The goal of
VA is to select the lowest cost functional equivalent match to your
customer’s agreed upon functional requirements, not have them
comparison shop to select them. In classic VA, we then have our
customers perform a “pilot” study (an in-depth evaluation of only
ONE product, service or technology that has been selected by a VA
project manager as an exact match of our customer’s functional
requirements) to determine if the new product, service or technology
indeed hits the target dead center. Based on our customer’s rating
of the product, service or technology we either buy it or start our
VA study over until we get it right, based on specific measured
feedback from our customer.
See the
difference?
Can you now see the differentiation between a “trial” and a “Pilot”
study and how it works with the classic value analysis model? It’s a
whole NEW MINDSET about how and why we evaluate and select our new
products, services and technologies based on the concept of value.
Remember, value analysis isn’t just a term that has high name
recognition in healthcare. It’s a proven, repeatable and scientific
process to determine the right functions for the hundreds of
products, service and technologies you buy annually. IT’S ALL ABOUT
FUNCTION!
The
question I have for you is this, “Are you really practicing value
analysis or doing something else and just calling it value
analysis?” If you’re not really practicing value analysis based
on my brief description above, to avoid the one or more of these
pitfalls I just talked about (e.g. too many customer choices) you
might want to consider some
advanced value analysis training to
get you and your VA team(s) on track, on target and on the money in
2010!
Your Partner In Savings Beyond Price™,

Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
Bobpres@strategicva.com
1-800-220-4274
P.S.
If you would like to learn more about the classic value analysis
model, you might want to download my white paper
“Strategic Value Analysis®: Savings Beyond Price”. Find out
what I believe is the #1 strategy for taking cost out of a
healthcare organizations supply chain.
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March 4, 2010
Healthcare Expense Reduction: A Systematic Approach
The phrase “Healthcare Expense Reduction” can have many
different interpretations. It could mean getting the best
price, benchmarking to find the best practice, searching for
the best value products, services or technologies or
reducing your inventory levels to near zero. However, I
would suggest that “Healthcare Expense Reduction” if done
correctly needs to be all of these things and much more.
In point of fact, from our empirical experience it requires
a systematic approach to reducing your healthcare
organization’s supply chain expenses to get it right. This
concept is analogous to what the insurance industry calls
BLANKET COVERAGE, a single unifying policy that covers any
and all of your risk or exposure to unforeseen calamities.
This BLANKET COVERAGE idea holds true with “Healthcare
Expense Reduction”; To get it right you need to cover all of
your supply expense categories of purchase – all at one
time.
To get you started on this journey, we have listed seven
core elements of a successful “Healthcare Expense Reduction”
unifying system. We advocate these core elements for you to
obtain the highest return-on-your-investment of time, effort
and resources in order to attack ALL of your supply expense
savings simultaneously.
You will notice that these seven core elements described
herein are actually interconnecting programs which you
should have in place which cover the total spectrum of your
“Healthcare Expense Reduction” efforts as follows:
1.
Utilization Management Program
2.
Value Analysis Program
3.
Contracts Administration Program
4.
PriceCheck™ Program
5.
Inventory Management Program
6.
Linen Management Program
7.
Forms Management Program
As this list suggests for your “Healthcare Expense
Reduction” to be effective you need to have complementary
and synergistic expense reduction programs in each of your
supply chain disciplines, not one-time events. This way you
can be assured that you have “Plugged all of the leaks”
in your supply expenses before they become mile-high
gushers or raging rivers.
This isn’t just a theory, but the actual system that we have
employed ourselves over the last 23 years to assist hundreds
of healthcare organizations in reducing their supply
expenses to absolute minimums, and then to keep their
expenses under control -- going foreword.