Your First Priority

Focus on creating value and eliminating waste

By Robert T. Yokl, Chief Value Strategist, Strategic Value Analysis in Healthcare

A new way of doing business is becoming the norm in healthcare organizations: Value-Based Purchasing. Value-Based Purchasing’s goal is to focus on the overall cost and quality of care, not the negotiated price for healthcare services. Obtaining a better price on a widget used for a procedure or a case isn’t as important as determining and then buying the best value products, services and technology for a patient’s entire episode.

We have all seen electrodes, with a great price, that only last a few days and electrodes that cost a few cents more, but really stick, lasting for the whole patient stay. This is the value analysis that must be performed, with internal and external data, to determine what best value is for your patients. No longer can we as an industry buy a product, service or technology on price, since it is now counterproductive.

We also need to eliminate all waste and ineffiiency in our supply streams which is increasing our hospital’s cost or creating quality issues for our patients or customers. An example of this would be buying a feature-rich I.V. catheter kit at twice what it costs your peers, when a standard I.V. catheter kit would get the job done at half the cost. Another example would be only recycling 64 percent of your total single-use products because customers aren’t being compliant with your hospital’s recycling protocols.

The whole notion of Value-Based Purchasing is to create a performancebased healthcare culture vs. fee-for-service culture where outcomes don’t matter. We see this concept in action today where Medicare is now taking money away from hospitals with high readmissions, low patient satisfaction scores, high hospital acquired infections, etc., and is monetarily rewarding those hospitals who meet or exceed seven performance measures monitored by the Center for Medicare and Medicaid Services.

Dr. Patrick Torcson, chair of The Society of Hospital Medicine’s Performance and Standards Committee, says every hospitalist (and department head) should be aware of the core-measures concept, which has been around since 2003 in what’s now called the Hospital Inpatient Quality Reporting (IQR) Program. “We’re not reinventing the wheel; we’re just transforming the program from pay-for-reporting to actual payfor-performance,” he says. ValueBased Purchasing, though, is raising the stakes considerably. “It’s really signifiant because it marks the beginning of an era of accountability and true pay-for-performance at the hospital level.1

Supply chain fis into this ValueBase Purchasing model easily when it takes a long-view of its mission: getting the right product, at the right time, to the right place without any defects. This is how your supply chain department can contribute to your hospital’s team effort to improve their cost and quality outcomes one patient at a time. JHC