What is the Future of Value Analysis? Hint: Not New Product Approvals

As we make the shift from fee-for-service to value-based payment, providers have an increasing need for expertise, benchmarking and support to reduce acquisition costs, assess the overall effectiveness of products, services and resources in care delivery, and simultaneously improve quality and outcomes. This is a crucial change in how to approach total cost management, and one area that is essential to this work is defining and executing an effective value analysis strategy.

There are key challenges to aligning value analysis programs with the move toward value-based care. These chiefly include time, interest and change barriers when looking to enlist and sustain consistent participation from clinicians and physicians in the process; the overrepresentation of vendors in the value analysis process, driving unnecessary volume of new product requests; and the lack of actionable data to drive effective decision support that incorporates cost, quality, outcomes and revenue information at the service line, procedure or DRG level.

For example, today’s value analysis processes often focus on acquisition price. As it stands, value analysis leaders are trapped by the hundreds of vendor-produced requests on their desk. Because of this, they are unable to focus on more a strategic and proactive review of products and services that strongly weighs cost and quality factors. This disengages physicians and clinicians from their own choices and sacrifices long-term strategy over short-term tactics. For value analysis to reach full maturity, providers need the ability to proactively monitor the total value delivered in any given DRG or procedure across a spectrum of cost, quality and reimbursement outcomes to find solutions beyond pricing.

To help providers manage these challenges as they evolve their value analysis process toward one that is focused on the demands of value-based care, below are five keys to success.

1. Create a foundation of holistic and robust data to rely on: Inventory current data sources, including internal, external and GPO-based solutions that can provide decision support around cost, quality, outcomes and reimbursement. If a capability does not exist, work with your IT department to make a business case for acquiring or building access to these information sources – without data, evidence-based decision-making can’t take place.
2. Develop a core team dedicated to the effort: Provide your human resources department with a list of value analysis meeting attendees and ask them to do a meeting cost assessment by plugging in salary data. This data would highlight all the wasted time for rubber stamp meetings. Because of the lack of focus, preparation and data, coupled with the relentless pursuit of consensus, value analysis committees have a negative ROI to the organization in spite of heavy workload. This information can be surprising and assist in prioritization. Having a core group of regular attendees and inviting other attendees selectively on an ad-hoc basis to provide targeted expertise can streamline workflow and lead to more efficient decision-making.
3. Streamline new product approval: Right now, value analysis processes largely are all documented by pen and paper – making it easy for vendors to draft paperwork and have a physician sign off on a new product without any evidence that it provides value. I advise leaders to create an electronic system for new product requests that product vendors cannot access to automate workflows and require the requesting physician or clinician to prove the value of the new product to your particular system. The physicians themselves have to fill out the necessary paperwork documenting value statements and analysis. I have seen health systems experience a 30-40% reduction in new product requests with this extra monitoring layer added. Increased oversight over vendor management helps limit or eliminate vendor participation in clinical decisions, beyond the initial provision of information and marketing materials.
4. Transition from reactive to proactive processes: Dedicate a steadily increasing portion of the value analysis agenda for proactive assessment of critical procedures or DRGs, with a call to examine what is used within a procedure when issues with cost, quality or outcomes are identified.
5. Leverage data to create backend links for clinical documentation improvement functions within the organization: The majority of procedures falling within a given DRG often have negative margin. This can be caused by a number of issues – unnecessary products being used without validation in terms of value or procedures being improperly coded, and there is no communication to correct for the future. This can result in significant financial losses. Conversely, within the same process there are some devices that are not covered at all, but that was not being communicated back to the value analysis team for consideration.

Challenges in value analysis processes won’t disappear overnight, and these steps will lead toward a more effective value analysis strategy that addresses total cost management in your organization. Interested in learning more? Download our Value Analysis guidebook.