1. Community Health Network
Enhancing the Value of Value Analysis Using the
VHA Total Spend Analysis
Sheryl D. Joyner, M.S.W., M.B.A.
Network Director, Purchasing

2. COMMUNITY HEALTH NETWORK
• Five acute care hospitals.
• Seven surgery centers.
• Five urgent care centers.
• 165 family practice providers.
• 50 ancillaries.
• Largest expansion in the Network’s history.

3. • Bring enhanced value to value analysis.
• Attain a reduction in supply expense by $3 million for FY
2006.
GOALS

4. CHALLENGES
• Single value analysis team creating a long cumbersome
review process that was often undocumented.
• Lack of formalized contracts management and administration
to ensure contract compliance and best pricing for the same
product throughout the Network.
• Manage our vendors instead of having our vendors manage
us - too many “doors” for vendors to access our Network and
circumvent Network Purchasing and value analysis.
• Physicians utilized technology that was unfamiliar to nursing
staff thus affecting the quality of patient care.

5. CHALLENGES cont’d
Old process:
Vendor with new product/technology→Physician→Patient→
Clinical Staff→Value Analysis→ Buyer/Contracts

6. IMPROVEMENT PROCESS
• Network Purchasing reorganized to support Network’s
service line strategic approach.
• Contracts Manager was hired to oversee all contracts
negotiations, contract language review and Vendor
Certification program.
• Vendor Certification was initiated to include vendor education
that focused on how to conduct business within the Network.

7. IMPROVEMENT PROCESS
• Policies were revised to include:
“All vendors bringing in supplies or equipment in the
Community Health Network without the proper authorization
from the Network Purchasing Department should consider
such items as a CONTRIBUTION to the Network, and will not
be reimbursed.”

8. VALUE ANALYSIS
• New Technology Analyst was hired to serve as the primary
point of contact for all new products and new technology.
• Established value analysis as the deciding body for the
introduction of new products and technology into the
Network.
• Teams identify product substitutions and deletions that would
result in bottom line savings.

9. VALUE ANALYSIS
• 16 value analysis teams were established to support our
service lines.
• Service line value analysis teams were identified to include:
• Behavioral Care Orthopaedics
• Interventional Radiology Cardiovascular/Pulmonary
• Rehabilitation/Wound Ostomy Family Practice Physician Groups
• Respiratory Medical-Surgical/ICU
• Surgery Bariatrics
• Women and Children
• Emergency Departments/Urgent Care
• Neurology
• Oncology

10. RESULTS
• Over 1,600 vendors have participated in Vendor Certification
education sessions.
• Our New Technology Analyst screens products before
introduction to our clinical staff.
• Initiated strategic pricing in major procurement initiatives.
• Increased the involvement of physicians in the procurement
of products and services.
• Enhanced data capture and measurements from our value
analysis teams.

11. RESULTS cont’d
• Network Purchasing is now on the front-end of new product
and technology introductions.
New process:
Vendor with new product/technology→Vendor Certification→
New Technology Analyst→Buyer→ Clinical Staff→
Physician→Patient
• More effective utilization of VHA tools such as the Total
Spend Analysis, Contracts Manager and LOP Manager.

12. TOTAL SPEND ANALYSIS
• Analytical tool to analyze our organization’s spend against
Novation contracts.
• Identifies where we have maximized our spend and as well as
the areas for improvement.
• Provides an immediate visual breakdown of our data that is
easy to comprehend.
• Aids in establishing a roadmap or action plan to attain
financial goals.

16. GROUP 4: UNMATCHED ITEMS
• Items include products and services that could not be
matched to a Novation contract.
• Examples include local janitorial or cleaning services.
• We are doing nothing with these items at present.

17. GROUP 3: PACKAGING/PRICING
• Products may be a match but could not be compared due to
differences in Units of Measure.
• Pulled these items and have corrected UOM in our Item
Master.

18. GROUP 2: REALIZED SAVINGS
• Represents those products or services where we have either
maximized Novation pricing or negotiated better than
Novation.
• We are hoping to increase this group.

19. GROUP 1: POTENTIAL SAVINGS
• Two categories within Group 1: Matched Items and
Substitutions
• Matched items are those products that we purchased through
Novation but did not receive the best price.
• Substitutions are those items that we purchased but did not
utilize Novation contracts.

20. Substitutions
• Substitutions have been pulled and categorized by the
different Value Analysis Committees.
• Committees will review and determine whether or not we
should switch to a similar product through Novation or keep
our current product.

21. Matched Items
• There are usually two reasons why we are not receiving best
pricing:
1) We have not signed the Letter of Participation.
2) We have not met the requirements for penetration.
We are only taking minimal action if #2 is the reason.

22. Letters of Participation
• Visit Novation Contracts Manager to determine whether or not
we need to have an LOP.
• Utilized the online LOP feature and downloaded missing
LOPs.
• Working with our VHA Account Manager to get these
completed.

23. FY 2006 ANTICIPATED SAVINGS
• Annual savings of $840,000 in Total Joint Implants.
• Total Spend Analysis identified approximately $650,000 in
immediate savings that we are attempting to realize.

24. FUTURE ACTIVITIES
• Awaiting our next spend analysis report. We will run the
report every 6 months.
• Meet bi-weekly with our VHA Account Manager to ensure that
we are current with LOPs and contracts.
• Implemented GHX to facilitate EDI transactions. Continue to
add vendors for increased transactions.
• We are in the initial stages of a pilot project to link our Item
Master to our Charge Master.