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Evolving Supplier Relationships: The Path to Partnership

A Conversation with AHVAP and UK HealthCare

enlightened healthcare.

January 21, 2020


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Housekeeping: Q&A

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Agenda

1. About the presenters

2. The need for supplier education

3. The AHVAP initiative

4. Building blocks for successful relationships

5. Q&A


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Today’s panel

Moderator

Suzanne Smith, RNSolutions Advisor, Value Analysis, Lumere

Gloria Graham, DNP, RN, CVAHPFormer President, AHVAP; Clinical Value Analyst,Cincinnati Children's Medical Center

Sherry Rankin, RNClinical Cost Management Director, Value Analysis/Supply Chain, UK HealthCare

Panelists


Introducing AHVAP

Mission To provide and promote processes and information to assist Value Analysis Professionals in evaluating healthcare services for clinical quality and cost effectiveness.

VisionValue Analysis is recognized as an essential component of the delivery of healthcare. The Association of Healthcare Value Analysis Professionals is nationally recognized as the preeminent clinical resource in providing education and resources and networking to its membership and promoting Value Analysis in the healthcare community.

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Introducing UK HealthCare


Agenda





5. Q&A


Medical device spending continues to escalate

$155B+ Device spend U.S. in 2017

40% Global medical device spend

2nd Highest expense for most systems

$208B+ Expected growth by 2023

7% Revenue goes to R&D

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Audience poll: Vendor policies & relationships

How would you rank the strength of your relationship with your top 5 spend suppliers? A. It’s predominantly transactional.

B. It’s OK, but there’s room for improvement.

C. It’s strong, but there’s still room for greater partnership.

D. We have a long-standing, mutually beneficial partnership.

Does your hospital/health system currently have a vendor policy in place?

Poll Question 1 Poll Question 2


The need for supplier education

Suppliers must define and communicate the value and advantages of their products.

Must align with health system focus on measuring cost, quality, and outcomes.

Requires profound understanding of the value analysis process.

Selling products into health systems is more complex than ever.

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VA Apex: Dee Donatelli Consulting & AHVAP


The value analysis maturity curve

Price &Standardization

Quality & WasteReduction Standardization

No formal process

Purchases driven bydemand

Minimalcriteria

Many brands or duplication for sameuse

Often singlesite

Process begins with review of new products

V.A. Committee created

Cost reduction primary driver of decisions

Reliance on supplier-provideddata

Data driven decisions based on usage across allsites

Strives for system wide involvement

Clinicianengagement with supply chain limited

V.A. Committee makes final decisions

Limited development of objective non-financial criteria

Focus movesbeyond cost reduction

Clinical and supply chain integration

Reduce or eliminate waste and variety

Objectivenon-financial criteria strives to use evidence

System device formularyestablished

Incorporates forumfor new technology assessment

Clinically driven teams target utilization and variation optimization

Data driven decisions utilize information from multiple sources:

-EMR-MMIS-National metrics-Outcome protocols

Meaningful policyrequires that all decisions are backed by clinical evidence

Created by AHVAP & SMI task force, 2015.

Utilization, Reduced Variation &Population Management

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No Strategy

Price Strategy

VALUEANALYSIS NOVICE

NO PROCESS

VALUEANALYSIS

INTERMEDIATE

VALUE ANALYSIS

VALUE ANALYSIS FUTURE


What role do suppliers play in value analysis?

• Deliver a value proposition vs. a sales/marketing pitch

• Present evidence and data for decision making

• Prepare data to help make decisions

• Define a value guarantee or creative shared risk approach

• Collaborate to shape and affect outcomes

• Develop a framework to measure or audit results

• Establish a partnership vs. a relationship

Understanding the process is key to success!

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Case example: Supplier misalignment on skin care products

• Supplier rep left with long list of follow-up items

• For the next meeting, he brought in overwhelming number of clinical experts

Results ChallengeSituation

• Group of nurses assembled to review current product line, assess other suppliers

• Supplier rep invited to met with group, couldn’t adequately answer clinical nurse specialist questions

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Current spend: $425K

Potential savings: $115K

Savings achieved:$99K


Agenda





5. Q&A


Value Analysis Apex, March 2019

What it is: 1.5-day curriculum designed to build a profound understanding of the hospital value analysis process, in turn providing healthcare suppliers with effective ways to introduce products to hospital value analysis committees.

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Topics included:

• A real-world VA meeting, facilitated by AHVAP experts

• Keys to the VA decision-making process

• Moving from basic selling to a value-based discussion

SimVAC:

• Real-world environment designed to help overcome the barriers of selling to VACs



What is a VACPack ?

• Born out of the first VAApex was the concept of a standardized Value Analysis Committee Packet (VACPack) for suppliers & providers.

• New Product Request form developed to simplify the VA process endorsed by AHVAP to the industry and prepared with Strategic Marketplace Initiative (SMI in 2015).

Tab Name Description

1 Contact Information Point of contact information for the Requesting and Supplier Organizations.

2 Product Information Regulatory, safety, manufacturing, training, and other related product information.

3 Clinical Information Clinical application and supporting evidence-based information.

4 Logistics Information Packaging, distribution and contracting related information, if needed.

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Agenda





5. Q&A


Building blocks for successful relationships

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Educate Inform Engage


Building block 1

Educate suppliers about the “why” and “how” of value analysis committees

• What strategies and reasons lead VACs to make evidence-based, clinically driven decisions?

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Building block 2

Help suppliers understand how to expedite value analysis decision making

• What specific information and evidence should the supplier provide?

• When and why do VA teams need a hands-on product trial?

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Building block 3

Keep suppliers engaged throughout the entire process

• Why does circumventing the standard process extend timelines?

• What are competing priorities that may slow the process?

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Case example: Better pricing on Cochlear implant devices yield $240K+ savings

Solution ResultsCauseSituation

• Current spend: $2.8 million with three main vendors

• High cost, poor reimbursement -> negative cost margin

• Uncoordinated purchasing patterns

• Need to negotiate costs down

• Cross-functional committee formed

• Reviewed industry benchmarks, determined breakeven price

• Gave all 3 vendors opportunity to meet price point

• Physician can utilize best product to meet patient needs

• Profit margins nearing breakeven point

• $240K+ in annual savings


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Audience poll: Physician involvement

Does your organization ever involve physicians in supplier presentations?

• Never

• Some of the time

• Always

Does your value analysis program currently have a

physician working directly for it either part- or full-time?

Poll Question 1 Poll Question 2


Gaining Physician Support

PREPARE PHYSICIANS TO COME TO THE TABLE FOR THE MUTUAL BENEFIT OF THE RELATIONSHIP

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Invite suppliers to

present

Meet with physicians

first

Share objective pricing

information

Obtain their feedback &

buy-in

Ask relevant, clinical

questions


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Questionsfrom the Audience ?


Thank you for joining!Questions? Feel free to reach out to us.

Suzanne Smith

[email protected]

Gloria Graham

[email protected]

Sherry Rankin

[email protected]

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