Value analysis teams are playing a greater role in

							          Value analysis teams are playing a greater role in healthcare facilities, looking for optimization and
          providing momentum for change. A best-practice hospital in this arena, Cape Fear Valley Health System
          (CFVHS) in Fayetteville, NC, has proven once again that when organized appropriately, value analysis
          teams can expeditiously implement efficiencies across traditional boundaries without sacrificing quality.



When CFVHS started using value analysis teams in 2003,           Value analysis team members come from different
it was probably one of the smartest moves ever made for          disciplines and levels throughout CFVHS’s organizational
the system’s financial and clinical well-being, helping the      structure and serve to generate initiative buy-in, foster
organization execute millions of dollars in savings while        communication enterprise-wide, and reduce
maintaining quality.                                             unnecessary expenses. Physicians are included on
                                                                 teams as projects demand.
Jeannie Vaughn, value analysis director for CFVHS since
2004, leads the teams through quality care, patient safety       Even with the extraordinary efforts of Vaughn and the
and cost savings initiatives – the latter never at the expense   value analysis teams, healthcare can be an economic
of the former two. A nurse by trade who lives in the world       struggle. According to the American Hospital Association
of materials management, Vaughn brings together the two          2007 Trendwatch, approximately 25 percent of hospitals
sides of healthcare that are typically polar opposites: money    operate in a negative profit margin. In addition to the
and care.                                                        financial demands of its everyday healthcare operations,
CFVHS had a huge capital initiative to meet, with growing        Kevin Jackson, vice president of Support Services at
community needs for enhanced emergency, imaging and              CFVHS. “We set out to identify $5 million in savings and
cardiac services.                                                were able to implement $5.34 million.”

CFVHS’s experience and success as a Premier member               Premier uncovered savings through additional contract
had proven that greater supply chain efficiency is the most      opportunities and discrepancies between existing supply
sustainable avenue of savings that does not sacrifice quality.   contract prices and higher invoice prices. “This approach
Premier region director Tom Kisling, having identified           can be a big area of savings for pharmacy,” said Berkey.
the primary areas of CVFHS expense spend (orthopedics,           Significant savings were achieved by shifting percentage
pharmacy, cardiology and surgical services), suggested there     distribution of clinically alternative medications, giving
were ways to tap further into the reduction of supply chain      greater weight to lower cost options while keeping flexibility
costs with the aid of Premier Consulting Solutions (PCS).        to meet patient requirements and prescriber preferences.

“Cape Fear’s value analysis process is an industry               PCS introduced CFVHS to orthopedic construct pricing,
benchmark process,” said Kisling. “I knew that whatever          which breaks down the components required for a specific
savings our consulting services could identify, Cape Fear        therapeutic model. A construct on cemented hips, for
would really run with it and make it work.”                      example, listed and described all the components necessary
                                                                 to make up the hip. It took time to determine what really
Tim Berkey, managing principal, surgical services, for           goes into a given therapeutic model, as input had to be
Premier Consulting Solutions, armed with his own                 garnered from orthopedic surgeons, senior leadership, and
integrated value delivery team of clinically trained             Premier consultants.
consultants from pharmacy, orthopedics, and medical
services, provided insight into a variety of supply chain        Desired pricing for each construct was based on current
opportunity areas within CFVHS, including physician              reimbursement structures. Premier compared CFVHS’s
preference categories. “We were quite impressed,” said           data on 13 implant constructs with blinded data from
hospitals within the region as found in its pricing database.   primary care physician offices serving Cumberland County
“Doctors will act on what they consider relevant data,” said    and surrounding areas in Southeastern North Carolina. The
Jackson. “They were able to show much better the pricing        flagship, Cape Fear Valley Medical Center, offers open-
at neighboring hospitals.” These actual supply expense          heart surgery in affiliation with the Cleveland Clinic. Other
benchmarks gave CFVHS an objective truth that could be          services include home health, hospice, cancer treatment,
used to leverage vendor discussions. Negotiations based         maternity services, emergency medicine, and pediatric
on this data yielded significant savings without orthopedic     intensive care. Highsmith-Rainey Specialty Hospital
vendor change.                                                  provides long-term acute care and urgent care. Cape Fear
Because of the efforts of the value analysis teams and its      Valley Rehabilitation Center offers physical rehabilitation,
steering committee, CFVHS began to recognize savings            and Behavioral Health Care is a psychiatric hospital.
on 60 percent of project-identified savings even before the     HealthPlex is an award-winning fitness and wellness facility.
14-month engagement was completed. “There’s no doubt            CFVHS is a member of the Western North Carolina Health
in my mind that the value analysis teams were one of the        Network (WNCHN), an independent regional network
reasons that Cape Fear was able to move these savings into      affiliated with Premier for group purchasing.
action so quickly,” said Berkey. “They had a foundation of
a value analysis process on which we could build with our       About the Western North Carolina Health Network
consulting processes.”                                          (WNCHN)
                                                                Based in Asheville, NC, WNCHN is an independent
“You have to have a strong value analysis process in place to   regional network affiliated with Premier for group
make changes like this work,” said Jackson. “Strong teams       purchasing. WNCHN leverages the purchasing volume of
and a strong partner like Premier.”                             52 Premier members for increased supply chain savings.
                                                                Since the program began in 2001, it has saved participants
About Cape Fear Valley Health System                            more than $31 million on top of Premier contract savings.
Cape Fear Valley Health System (CFVHS) in Fayetteville,
NC, is a 619-bed regional health system of four hospitals and
Serving more than 2,000 U.S. hospitals and 51,000-plus other
healthcare sites, the Premier healthcare alliance and its members
are transforming healthcare together. Owned by not-for-profit
hospitals, Premier operates one of the leading healthcare
purchasing networks and the nation’s most comprehensive
repository of hospital clinical and financial information. A
subsidiary operates one of the nation’s largest policy-holder
owned, hospital professional liability risk-retention groups. A
world leader in helping healthcare providers deliver dramatic
improvements in care, Premier is working with the United
Kingdom’s National Health Service North West and the
Centers for Medicare & Medicaid Services to improve hospital
performance. Headquartered in San Diego, Premier has offices in
Charlotte, N.C., Philadelphia and Washington.