“Somethings --
like Value Analysis -- Takes Time, Effort, Persistence, Discipline
And A Proven Repeatable Process To Be Productive Vs ”Winging It.”
Recently a
new CFO at a 250-Bed Hospital told me that he decided to sit in on
his hospital’s value team meeting to see if he could feel
comfortable about how his hospital was managing and controlling
their non-salary expenses. What he observed was that each team
member had his or her own way of investigating and analyzing
the products, services and technologies that the hospital was
purchasing and that team members couldn’t describe the process they
used for their evaluations/selections. He also read the minutes
of the last 12 months of the value team and found that it was taking
the value team an average of nine months to finalize any
value studies. After adding up the savings for the prior twelve
months, to his dismay he found that the value team only saved
$100,000, most of the savings coming from new GPO contract
offerings.
The value
team had spent 726 hours over the last 12 months (or $25,100 dollars
in resources or a 4:1 ROI) debating the decisions that they were
making. After calling CFOs at other 250-bed hospitals in the region
he found that these hospitals’ ROIs were as high as 25:1 and their
value teams were only spending a quarter of the time to
achieve their results. He wasn’t happy with his findings and was
looking for answers to his dilemma when he called me looking for
some help in turning around his situation.
Everyone
Is Looking For Short Cuts With Value Analysis
Our modern
world loves short cuts, quick fixes and instant results in all of
our endeavors, especially in our business results. We see this
phenomena in all facets of our personal and business lives --
fast food, day traders, instant pudding, instant winners, quick
weight loss, fast internet broadband -- yet, meaningful and
sustainable results in all areas of our lives including value
analysis won’t be found in short cuts. In value analysis there
are no short cuts!
If you are
looking for the path to a meaningful productive life, and business
success as well, then you must follow the age old axiom, “We do
it the old fashion way – we work hard for it”. It’s the same
with value analysis, since the important things in this world take
time, effort, persistence, discipline and a proven repeatable
process to be productive vs. “Winging it.” For you to do
less than your best can be destructive to your healthcare
organization.
“Winging It”
Can Be Destructive To Your Organization
You might
ask, “what harm is done to our healthcare organization if we
experiment or test new ideas (or “Winging It” as you call it)
regarding value analysis until we get it right?” The harm that is
done is three-fold:
1.
Waste of
time, peoplepower and resources
As our case study above describes,
it takes two-thirds more time to conduct value studies if you
are “Winging It” than if you are utilizing a proven repeatable value
analysis process.
2.
Loss of
opportunity to make real savings happen
While your value team is
experimenting and testing new ideas, millions of dollars in value
analysis savings opportunities are being lost, as opposed to
getting it right the first time with a defined, proven value
analysis process.
3.
Skepticism
of management for the benefits of value analysis
When your management sees
little or no results from your value analysis initiative --
considering the time, peoplepower and resources that they have
committed to this activity -- they will quickly become frustrated
and skeptical that value analysis really works as
advertised. In so doing, they will trim down or worse do away with
their commitment of resources to this activity that is critical
for you to make savings and quality improvement happen for your
healthcare organization.
The bottom
line being, if you don’t perform value analysis the old fashion way
– work harder and smarter, without short cuts -- your
healthcare organization’s management will soon loose interest in
this “mission critical” activity and will soon disband it,
thus lose a bona fide opportunity to scientifically manage
and control your non-salary expenses evermore.
by
Robert T. Yokl, President