Value analysis teams are playing a greater role in
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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.