Supply Value Analysis – Drive Out Waste without Sacrificing Quality or Safety

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By Mary Hibdon and Don Fox

The reduction of supply costs is a critical factor in any facility, but one of the best ways to create a reduction remains largely untapped by smaller healthcare facilities. Supply value analysis, which identifies unwanted and unnecessary expenditures, is frequently implemented in larger health systems as a way to eliminate redundant or exorbitant costs; however, it’s also an excellent way for ambulatory surgery centers (ASCs) to make a positive impact on the bottom line.

The push for electronic medical records – coupled with decreasing reimbursements and a necessity for advanced information and medical equipment technology systems – increases the cost of doing business for all, so it’s critical to identify other ways to drive down facility costs. The creation of a formalized supply value analysis committee and process is an effective way for an ASC to document methods that can reduce overall facility supply expenses without compromising quality, surgical outcomes, or patient and employee safety. Consider that supply cost savings flow directly to the bottom line and will improve overall financial performance.

These benefits can be a powerful cost-reduction solution, even for physicians who associate the formal committee process with a larger healthcare system. While some ASC administrators and physician investors may initially shy away because of prior hospital associations that perhaps prompted them to start their own ASC, the implementation of a supply value analysis committee at their ASC can create significant gains.

The formation of a formal committee begins with identifying staff members who possess a natural passion for increased efficiency and cost savings. Perhaps this is an individual who embraces the principles of the “green" movement or just someone who hates to see waste. Ultimately that person will become a champion of the cause and help the ASC drive cost-saving results; however, no committee can successfully exist without the all-important buy-in from physicians and clinical staff members.

Clinical focus and involvement in the committee is critical because nurses influence many of the purchasing decisions and utilization of product through communication with the doctors they work with on a daily basis. Clinicians have influence with physicians regarding the trial of new products, and they can also help support conversations regarding how the product is used and how to objectively evaluate it.

A supply value analysis committee typically includes five to six committee members, including a physician, and is ideally chaired by a clinician. Choose committee members for their objective eye toward current practices and then ask if they already have ideas where improvements could be implemented. Many times, staff members observe things that can and should be changed, but they do not know the best way to communicate this without the structure of a formalized process such as a value analysis committee.

Members of the committee should meet once a month for one hour with a focused agenda and meeting minutes recorded. The minutes of these meetings should be posted and shared during staff meetings. During this time, the committee will evaluate all supply items on a priority basis, from the highest- to the lowest-cost items. Often, it is worthwhile to jumpstart the process with a smaller-cost initiative that everyone can agree upon such as bulk commodity items (cotton balls or sponges). More personal items – such as gowns, gloves or other physician-preference items – can spark emotion-based reactions from physicians who fear that such a change could affect their practice, so resolve to build on early “wins" before proceeding on to larger-cost and more-sensitive items. The discussion of these seemingly small items can set the stage for success by empowering members of the committee to implement positive change in the workplace.

The charter for this committee should also include an evaluation of requested additions to the ASC’s inventory. Requests should use a standardized approach to avoid duplication and/or increased per-case costs to the ASC. To ensure success, early in the implementation of the supply value analysis process and committee, plan to educate physicians, staff and vendors on the process of requesting new and additional items at the facility.

In addition to general supply costs, evaluations should include as cost-saving opportunities: generic versus brand-name products; custom pack content; reprocessing or recycling programs; and product standardization, utilization and practice patterns. Use this time to show how these methods will be applied by the ASC, along with the anticipated cost savings. Develop a set of questions and a checklist for the committee to use during the review of each item.

Once savings are identified, document and report the cost savings by conducting surgical specialty meetings to share case costing with the physicians. Then educate and engage other staff members and

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