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Meet the Future of Value Analysis in Healthcare


Key takeaways:

  • Value analysis enables decision making on high-quality supplies, services and equipment by considering care delivery, safety and outcomes as well as total cost.
  • Ongoing supply chain disruptions, environmental sustainability efforts and value-based reimbursement are impacting providers’ purchasing decisions and value analysis approaches.
  • Premier’s 2022 Value Analysis Guide includes new learnings, trends and insights to help providers drive success at every stage of the value analysis journey.

As healthcare providers continue to face challenges, including ongoing supply chain disruptions, rising costs and an evolving reimbursement environment, more organizations are turning to process improvement and lean strategies for ways to find savings, and simultaneously drive strong clinical outcomes.

Enter value analysis, which in a post-pandemic world, has found renewed purpose.

A clinically integrated supply chain presents a significant opportunity amid this backdrop, and with value analysis as a core operational mindset for providers. Innovative supply chain teams are thinking beyond cost ─ purchasing products and services at the right time and the right price, based on the total value of care delivery.

Is the Future of Value Analysis Here?

Today’s value analysis is a transforming methodology in healthcare that helps providers select products and services based not on personal preference, but on the best value they bring to the organization and its patients.

The evidence-based process can balance issues related to quality, patient and staff safety, revenue enhancement, and reimbursement optimization across the care continuum via:

  • Appropriate utilization and standardization;
  • Pricing optimization;
  • Implementation of cost-savings and cost-avoidance initiatives; and
  • Identification and elimination of waste, redundancy and inefficiency.

In short, it enables standardization and reduced supply chain costs without sacrificing quality.

For example, a Premier member six-hospital academic medical center in California used value analysis to standardize purchases of peripherally inserted central catheters (PICCs) to one item and reduced 30 process policies down to a single policy ultimately driving a 50 percent reduction in central line-associated bloodstream infections (CLABSI) rates and a 100 percent reduction in PICC infections.

Key Trends Guiding Value Analysis Today

Progressive value analysis teams are looking at product evaluation and selection in the context of core issues impacting healthcare today, including supply chain resiliency and disruptions, environmental sustainability and the continuing shift to value-based care, among others.

Supply Disruptions

Product shortages and backorders have become more pervasive, which can undermine value analysis and standardization efforts as providers scramble to identify acceptable alternatives.

Provider supply chain teams are rethinking inventory management strategies as many crises can be minimized or potentially avoided altogether with an appropriate inventory cushion available at some point in the supply continuum. “Lean” and “Just in Time” methodologies often exacerbate the urgency to identify substitute product options with supply interruptions quickly becoming more problematic due to lack of inventory on hand at manufacturing and distribution sites and ultimately in hospital storerooms.

Armed with pandemic-driven lessons learned, healthcare organizations are leveraging value analysis to reevaluate their supplier and distributor partners choosing to contract with those that provide transparency on product and raw materials sourcing locations, safety stock, safety records and rapid replenishment capabilities.


Today, healthcare organizations are advancing sustainable operations and environmentally preferred purchasing (EPP) leveraging value analysis to identify sustainable suppliers and products designed to reduce environmental impact, pinpoint gaps and opportunities, and benchmark against goals.

Value analysis is supporting supplier Requests for Information (RFIs) and Requests for Proposals (RFPs) that contain detailed product-level questions on a swathe of environmental traits, including the presence of chemicals of concern, product reuse and recyclability and packaging.

Premier also offers reprocessing under contract for many items so that they may be used again safely and with environmental stewardship in mind. As an example, one Premier-contracted supplier offers a fluid cart with proprietary cleaners and a closed-system process that reduces operating room (OR) red bag waste by up to 70 percent with its reusable reservoirs ─ eliminating the OR’s need for plastic containers.

Reimbursement and Payment Reform

The continuing shift to value-based payments has healthcare organizations doubling down on efforts to maximize cost and quality improvements. In addition, the advent of bundled payments, accountable care organizations (ACOs) and other alternative payment models (APMs) are incenting providers to take financial risk for a defined population of patients over an extended period and encouraging healthcare supply chain leaders to look beyond the four walls of the hospital.

Health system Reimbursement Specialists and Revenue Compliance Auditors can contribute to the value analysis process by proactively reviewing and discussing economic information related to the total cost of various payers and geographic payment methods. This includes discussing with providers existing treatments and reimbursement opportunities to help improve hospital reimbursement and increase efficiencies in processing for patient charging accuracy, all while improving quality of care across the continuum.

Including a reimbursement questionnaire template in value analysis assessments not only addresses reimbursement information, but it also integrates the clinical and financial aspects for total cost transparency within hospital payments. Questions can include:

  • Who are the commercial payers?
  • What is the anticipated range of payments?
  • What is the regional payer mix?
  • Will hospital costs be covered?
  • What are the average Medicare and Medical Assistance payments for the procedure?
  • How does this new product, service or equipment compare in reimbursement terms to the current procedure?
  • Are there benefits or implications associated with the payment options?

7 Key Value Analysis Practices for Healthcare Organizations

1. Establish a team.

Create a multidisciplinary team of key stakeholders, including supply chain, clinical, finance and other individuals. Today, clinicians and supply chain leaders are working more closely across departmental lines to understand the broader impact and reduce siloed decision making.

2. Create a foundation of holistic and robust data on which to rely.

Evidence-based decision making starts with a foundation of holistic and robust data on which to rely.

Assess current data sources including internal, external and GPO-based solutions that can provide decision support around cost, quality, safety, outcomes and reimbursement. If capabilities do not exist, work with leadership to make a business case for acquiring or building access to information sources. While there is no substitute for the culture or staff needed to conduct value analysis, an all-in-one research, workflow and communications platform can aid in the evaluation of products and services and enable purchasing decisions that are both fiscally responsible and aligned with quality improvement.

3. Take control of new product requests.

Develop and implement a standard process for new product requests supported by a request form and clear submission path. Limit requests that do not have an internal sponsor.

4. Transition from a reactive to a proactive process.

Dedicate a steadily increasing portion of the value analysis agenda for proactive assessment of critical procedures or Diagnosis-related groups (DRGs), examining what is used within a procedure when issues with cost, quality, safety or outcomes are identified.

5. Leverage findings within the organization.

Communicate organizational improvement opportunities (e.g., unjustified variation, improper coding, etc.) that are identified throughout the value analysis process so improvements can be made within applicable areas.

6. Monitor alignment with broader organizational goals.

Ensure that the work is aligned with goals and extends beyond decision and implementation. Track ongoing progress against goals until optimization of the opportunity and ensure that any process changes are holding strong.

7. Partner with suppliers.

Hospitals are looking for strong supplier partners that understand and support purchasing decisions, from acquisition through distribution, to contain costs while improving quality.

Today, it’s imperative that value analysis professionals collaborate with suppliers to incorporate total cost of ownership and outcomes, including elements such as reimbursements, patient experience, outcomes-driven data, safety and infrastructure to manage risk, patient outcomes, and disposable and capital equipment costs.

Value analysis is a catalyst and powerful tool providers can use to recoup savings, partner with suppliers and obtain the high-quality products and supplies necessary for outstanding patient care delivery. The future of value analysis is here.

For more on this topic:

  • See how Kaleida Health built a clinically integrated supply chain for strong patient outcomes – and millions in savings.
  • Learn how Texas UHS Texoma Medical Center implemented a Venous Thromboembolism (VTE) program to drive strong clinical outcomes and enhanced operations.
  • Learn more about the unique combo of clinical, financial, operational and supply chain data via PINC AI™.
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