Productivity and Process Improvement

How Innovation Can Start with Value Analysis … But Often Doesn’t

April 11, 2018 1:49 pm

Evolving your supply chain analysis protocols can transform upstream purchasing decisions into downstream drivers of value and even population health. 

Consider a phone app that does more than any stethoscope, biosynthetic material the body can absorb, or implants that treat opioid dependence. Innovations can enable treatment of larger populations, obviate expensive protocols, shift care to lower-cost settings, and help hospitals build a leading-edge reputation. Unfortunately, rigid value analysis committee (VAC) processes can unintentionally eliminate promising new medical devices from consideration. Even as hospitals are pushed to think bigger, instituting new integrated models of care intended to improve overall healthcare quality and reduce costs, for many facilities, VACs that are still in the early structural stages have not yet evolved their medical device goals and processes from “control costs” to “drive value.”

Many VAC processes lack provisions to deviate from set frameworks. Matrices designed to compare “like to like” provide a way to evaluate incremental technology shifts, but limit VAC abilities to analyze and measure the potential of true innovations that move toward population health while reducing costs. That’s fixable—today.

Trouble Spots

VAC committees can eliminate unintentional innovation roadblocks by addressing the following common problems that hinder effective evaluations:

  • Cost-benefit analyses are based on limited time horizons.
  • Evaluation processes fail to consider broader repercussions of clinical findings on outcomes 
  • Rigid evaluation questions pre-emptively dismiss new innovations

These areas can be addressed to ensure that each medical device considered, whether to replace items already on shelves or to complement them, receives proper consideration in the context of broader cost reductions and population health improvement goals.

Solution #1: Consider the Long View

Value, we’re reminded daily in the healthcare world, is an equation. But in the absence of clear data—or clear understanding of available data—it’s easy to default to price tags as the most influential variables in those equations. While some new products may cost more up front, they may generate better returns over time for certain patients through reduced needs for additional interventions, fewer complications or readmissions, enhanced patient experience and/or improved quality of life. 

See related sidebar: Overcoming Missed Opportunities with Forward-Thinking VACs

Limiting ROI assessment to episode-of-care length, as some VACs do, makes it nearly impossible to account for these longer-term impacts. As hospitals shift greater focus to long-term

outcomes for patients, VACs must adjust their focus accordingly. ROI calculations must look beyond the immediate economic costs of payment, cost-per-procedure, and cost of labor to consider overall value to hospitals. How does a new product help to reduce the overall cost of care? Are there complications and readmissions that typically arise beyond 30 days that the new product aims to minimize?

Organizational goals need to be woven into the fabric of VAC decision-making processes to help committee members think beyond the typical 30-day post-procedure results. VACs should challenge manufacturers to provide data that demonstrates outcomes as far out as 90 days, 6 months, one year, or beyond.

Solution #2: Review Processes to Remove Innovation Blockades

Innovation can get lost in the typical VAC decision-making process. Checklists and matrices, intended to improve the efficiency of decision-making, can unintentionally quash innovation. Consider products that define new categories or change procedures. These products may not fit neatly into any one category. 

So how do VAC decision-making processes allow room for such products to be considered? For example, requesting a “Yes” answer to the question, “Is this product biologically derived?” to consider anew offering comparable to biologically derived products already on the shelf could preclude evaluation of new types of biosynthetic devices. While rigid categories can be useful filters to reduce noise in VAC evaluation processes, they can also prevent potentially critical advancements from being heard. Apples to apples comparisons can be limiting. Today’s era of value-based care requires deeper evaluations that consider big picture impacts.

Solution #3: Ask the Right Questions

Recharge the new product information gathering phase with pointed questions that provide meaningful insights and deeper understandings of products’ true value. Consider asking these questions about every new product:

  • What is the cost benefit analysis beyond 30 days, 90 days, one year?
  • Is there data that demonstrates both short-term and long-term outcomes?
  • How well does data track complications after immediate episodes of care?
  • Can the device play a role in reducing the overall cost of care, such as pushing treatment to a lower cost setting or reducing inventory shelf space?
  • How would inclusion of this device affect our ability to treat more complex cases or a different population in our market area?
  • How would it affect our reputation for innovation? 
  • What value do physicians or surgeons believe the new product will offer?

Push product manufacturers for better information, ask challenging questions and consider inviting clinical or product specialists to present on complicated or disruptive technologies to ensure the VAC is fully informed about the benefits and risks. When presented with a promising cutting-edge product that lacks sufficient clinical data, weigh risk sharing options with manufacturers. For example, obtain products at reduced prices until certain outcomes are proven or request buy-back options for products that fail to deliver promised results after certain periods of time.

The drive for population health can be operationalized immediately into VAC decision-making by making straightforward changes to the processes used to determine product value.



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