Analyzing the State of Value Analysis

The value analysis profession continues it’s fast-paced evolution, bending and twisting to serve and compliment the new ways of healthcare. The constant changes in value analysis brought on by this evolution challenges innovative device makers as they try to introduce their products to the health market.  In this article, James Russell urges that the value analysis profession continue the focus on medical device products while expanding their scope into practice variation, quality, and utilization. See the full Original Article

I frequently have the privilege of speaking to audiences about my chosen profession. I usually start out by saying something like, “My job annoys people.” You can see it every time, audience members start glancing at each other a bit uncomfortably, wondering what the heck I’m talking about, unless there are value analysis professionals in attendance … they just smile. “You all know what the words value and analysis mean,” I continue. “That does not mean you understand what the profession of value analysis is. That’s like thinking you understand meteorology because you saw a meteor once.”

I find myself at a crossroads. The title of my profession is Value Analysis. I like both words, for different reasons. However, I’ve been noticing others in my vocation are making changes to both the title and definition of what we do. I love this. As our very careers are about change management (hence, annoying people), it is incumbent upon us to be open to change ourselves. Here’s my attempt at nudging the bar of both title and practice.

Defining value

How many of us have seen this equation: Value = Quality (Outcomes) / Cost? Surely we can all agree that this equation sounds like a good concept? Even our managed care colleagues define value-based care as Quality / Cost. The overall goal of all parties involved is to improve value by increasing the numerator, decreasing the denominator, or both. Although our aims may sometimes seem to be in conflict (e.g., should we push for efficiency when inefficiency is profitable?), we should all agree on a common vision when beginning our value journey.

In the New England Journal of Medicine, Michael M. Porter, PhD, stated nearly a decade ago that “In any field, improving performance and accountability depends on having a shared goal that unites the interests and activities of all stakeholders.” I think that we can all come together on the idea of improving performance. Better performance translates to better outcomes.

Our professional association, Association of Value Analysis Professionals (AHVAP), when defining what value analysis is, has a great explanation: “Healthcare value analysis contributes to optimal patient outcomes through an evidenced-based systematic approach to review healthcare products, equipment, technology and services. Using recognized best practices, and in collaboration with organizational resources, value analysis evaluates appropriate utilization, clinical efficacy, and safety issues for the greatest financial value.”

My purpose here is not to quibble with my mentors (most of which have much more experience at this than I do), but the definition seems to take great pains to avoid talking about money, leaving it to almost the very last word before even coming close to mentioning it. If my colleagues are evaluated at their institutions in any way close to the way I have been for the last 10 years, improving “financial value” is certainly not last on that list. It may be couched in terms of Return on Investment (ROI), but the message is clear: How much money are you saving the health system?

I am often speaking with healthcare professionals such as doctors, nurses, technologists, etc., and am usually asking them to alter something about the way they practice their profession clinically (remember, annoying). I give them my own definition of what I do, and why I want their help. Here’s what I say:

“Healthcare Value Analysis (HVA) is the practice of creating a measureable and sustainable impact upon a health system’s fiscal and quality outcomes. This is accomplished by using data-based decision making techniques to influence unwanted variation. This undesirable variation is identified by suboptimal financial performance, unfavorable clinical outcomes, or both. This variation is recognized by thorough 1) Examination of evidenced-based clinical data; 2) analysis of product, equipment, and technology utilization data; and 3) scrutiny of objective financial data. A robust value analysis process combines specifics from all three entities to deliver a total package of value; resulting in deliverables that encourage objective decision making that is transparent and actionable, and ROI calculating that is impartial and reproducible.”

We are not just the new products! Of course we are involved in the introduction of new products, equipment, and technology but that’s not all we do! In fact, it’s only a portion of our role. The best part, at least to me, is utilization. That’s where the real meat of value analysis exists, not in new widgets. The Association for Healthcare Resource & Materials Management (AHRMM) has a triple aim they call: “Cost, Quality, and Outcomes” (CQO). I believe Quality and Outcomes can be combined, and I do so in the “clinical data bucket.” Examination of this data before, during, and after a project is essential to improving performance.

Defining analysis

In my definition of value analysis the term analysis is all about identifying unwanted variation using data-based decision-making techniques. Our clinical colleagues engage in evidence-based practice. That’s their mantra for describing why they do what they do the way the do it. For my value analysis colleagues, our evidence is data. And nowhere does the power of data shine brighter than in analyzing utilization patterns.

Here’s a simple example: Imagine your health system spent $3 million on iNO (inhaled Nitric Oxide) two years ago. Last year, you spent $2.75 million. This year, you’ll spend $2.5 million. This is a wonderful trend and you should be proud of whatever efforts your system has made to bring these costs down. However, what if you learned that other health systems, twice your size, averaged $1.5 million in their iNO expense? Would that be valuable information? My new motto: It’s not just about how much you pay for the things you use — it’s about how you use the things you pay for.

A plug for being a clinician: Being adept at analyzing the data from my three buckets (Clinical, Financial, and Utilization) requires a certain set of skills that can be difficult to learn for someone without a clinical background. It can be done, as many of my colleagues exemplify, but it’s tough for them. Learning about Financial data can be done in almost any master’s degree program involving the business of healthcare. Understanding clinical data, without a clinical background, however, can be daunting. It can also leave one vulnerable to half-truths by those resistant to change. Calling clinicians (and vendors) on their medical jargon excuses is often the role of the value analysis professional.

However, the place that’s often the most telling about identifying opportunities to influence unwanted variation is in utilization. That’s the sweet spot. As demonstrated in the iNO example, benchmarking outside your own health system is incredibly helpful. This is where you find out how you compare to other “like” health systems. All are not alike, and a certain amount of variation is expected. But what if you found out, as I did in one of my health systems, that you were the number two user of a technology in the country — and your utilization was five times higher than the number two player? You were off chart, literally, in terms of utilization. Should that concern you? It certainly did me. We were not the biggest health system in the country. We didn’t have the sickest patients in the country. Our staff weren’t any different than the staff in other places. We just used more of this technology than everybody else … by a lot!

When discovering these nuggets, we always ask the same question: What are we getting for this variation? If the goal, as in this case, is to decrease injuries to our staff, are we achieving it? Better yet, are we achieving it five times better than everyone else in the country? The answer was no. Influencing this unwanted variation resulted in a seven-figure decrease in supply cost expenses, with no changes in clinical outcomes. That’s the power of utilization. When you analyze your current data, you fill in the blanks of a project and create a picture of where you are. This analysis will extend to the impact of changing things, whatever those things are, creating an image of where you intend to be.

Branding & marketing

How many times have you put together a PowerPoint presentation and gotten hung up on the details of charts and graphs? What color should this section be? Should my chart have bars or lines? Did I put in too much animation? If you ever doubt the importance of this phase of product management, I’ll give you two easy to understand examples. Tylenol and Advil. How many of you have these items in your house? I’d bet a majority of the country has at least one. Here’s the importance of presentation: Do you have brand-name or generic versions? Many, but not all, of you have brand-names. The makers of both products spend multiple millions of dollars annually to advertise their products to the public. Why do they do this? Wherever each product is sold, there’s a generic equivalent sitting right next to it on the shelf. That generic equivalent is required by law to be exactly the same thing as the brand name and is almost always less expensive! Why would anyone ever buy the brand name? Presentation. Marketing works.

I’ve learned to play to my audience. I once had a boss that I’d show volumes of data to and she’d say, “I need you to make me a picture.” That’s how she learned, by charts and graphs. I had another boss who’d say, “Quit making the data pretty, show me the ugly numbers!” That’s how he learned, studying tables. Sigh. This is a dance, but an important one. The goal is not to give information; the goal is for that information to be received.

How hard is it to answer, when someone asks, “What do you do for a living?” If I’m really not interested in a long conversation, I just say, “I’m a nurse.” Everyone knows what that is and we move on. What a disservice I’m doing to our profession. I should be lauding it and extolling the virtues and explaining the impact of what we do. But it’s complicated. Most people don’t want to hear about complicated. I have colleagues who’ve changed their titles to Value Management. Somehow, changing the second word has emphasized the first. I like that. Others have the terms Clinical Resource in their titles. I like that too. When our clinical experts have an idea about changing something they do, I want to be the resource they call upon to help gauge the impact of that change — before they buy something. But I like the word analysis, too. It feeds the data-geek in me. Perhaps changing the name isn’t the answer, changing the connotation is.

Where do we go next?

I think our profession suffers from a lack of visibility and credit. Credit is like respect, and you get more of it by giving it to others. Whenever possible, I think it’s important to draw attention to the people making the changes in the projects we do. In changing surgical products from one company to another, the announcement of the impact should be full of compliments for the surgeons, techs and nurses who are actually making the change. If changing protocols regarding how MRI’s are performed, attention should go to those radiology techs that are actually performing the procedures. The more we shine the spotlight on the ones who are changing, the more goodwill we generate for ourselves and future endeavors.and nurses who are actually making the change. If changing protocols regarding how MRI’s are performed, attention should go to those radiology techs that are actually performing the procedures. The more we shine the spotlight on the ones who are changing, the more goodwill we generate for ourselves and future endeavors.

But that only helps inside our own health systems. What about outside? Speak at conferences and workshops. Publish in the many respected periodicals that exist, like this one. Better yet, branch out to the periphery. Present at a conference that’s not devoted to supply chain, write articles for publications that cater to a different audience than procurement. Can you believe there are still health systems in this country that don’t have dedicated value analysis programs? The beauty of what we do is that it can often be duplicated. If my health system can learn from your health system, doesn’t that make us all better off? Transparency should be our code.

Perhaps we need a Chief Value Officer. I often find myself explaining a project to the Chief Nursing Officer, and then using different language to explain it to the Chief Financial Officer. Wouldn’t it be great if we had an executive, outside of supply chain, who understood the power of what we do? Some health systems seem to have this. At some point, I think they all will. Until then we’ll just have to keep explaining our value. hpn