Best Practices for Implementing a Sustainable Decision-Making Process in Value Analysis and Contracting

By Kristi Biltz
Senior Consulting Director, Vizient,

Camber Hayman
Associate Principal, Vizient,

Cheryl Poplaski
Vice President, Supply Chain Operations, Vizient

(This is the second blog of a four-part series about best practices in value analysis and contracting. Read part one here.)

You’ve made the effort to align your strategic sourcing and value analysis teams — but are you able to ensure continued success through the sustainability of these changes? 

First, let’s define sustainability as being able to uphold continued alignment, governance and processes.  The goal of having multiple layers of engagement and alignment is to form a culture around your program so that if the value analysis and/or contracting leadership changes, your program can continue to be sustainable. At its core, a sustainable program should be repeatable, actionable and produce results.  Sustainment is all about ensuring you are dependent on solid processes and decision-making instead of being “people dependent.”

Essential components of a sustainable program are strong value analysis and contracting programs that can support a clinically integrated strategic sourcing program. The mindset of value analysis and contracting as a strategic imperative should be supported at all levels of the organization. There are numerous things that value analysis and contracting can do to support a sustainable program and culture, including:

• Executive leadership support and oversight to ensure active stakeholder engagement, communication of administrative support, and conformity to the value analysis and contracting process.
• To have a sustainable program, fully engaged physician leadership on the value analysis executive committee is critical. Physician leadership ensures that the clinical decision-making component is fully understood and considered. A strong physician leader also can influence and educate his peers. For instance, a charter will allow the guidelines and rules of engagement for the executive steering committee to be captured. Ensuring they follow this and support the culture will be a critical part of the value analysis leadership role. Strong value analysis and contracting policies also are critical to help educate others and reinforce the program. A best practice is for value analysis and contracting team members to include adherence to policy as part of their annual review goals.
• Contracting and value analysis presence on all levels of committees involved in product and practice decision-making. Both teams should be engaged, aligned and serve in advisory capacities throughout the decision-making process.
• Communication of decisions prior to and beyond implementation, along with specific contract and clinical requirements. This includes solid implementation plans, follow-up, contract and price uploads/updates to appropriate systems, as well as monitoring and reporting of spend and usage to address non-compliance. That means key performance indicators should be reviewed and updated at each meeting by value analysis. It also is imperative that these KPIs be inclusive of both spend and quality measurements with contracting terms and conditions tied to supplier performance. Goals should also be incorporated at all levels of the organization that tie back to this work. A culture where everyone is held accountable for the changes is ultimately the best practice. 
• Flexibility to pivot and adapt to when necessary. Opportunities to refine processes will no doubt present themselves, so it’s important that these changes can be made quickly and efficiently.  

Key factors in assessing the state of your current contracting and value analysis processes

For contracting, you should perform an assessment of your portfolio (local or GPO contracts); your contract lifecycle management platform (do you have a robust lifecycle management platform or merely a repository?); your resources responsible for managing the portfolios; and what reporting capability you have in each of these areas.

• Do your contracting personnel see strategic value in supplier relationships and use those and the contract lifecycle timing on the GPO workplan as leverage in negotiations?
• Are your contracting processes integrated into your value analysis process?
• Does the contracting team provide benchmarking data to the value analysis team to support the value analysis process?
• Are the interests and incentives for both teams aligned?

What is the strategic difference in having a contract repository and a lifecycle management platform? A repository typically has little or no reporting functionality. At best, you may be able to get an expiring contracts report. What it has is dependent on the human data inputs at contract loading. If more than one person is responsible for contract loading and inputs, data variation is almost certain. A lifecycle management platform, on the other hand, is typically more robust. Upon contract loading, it is populated with key contract data fields that are predetermined to be important to the provider, and they are usually customizable to provider needs. Reporting capabilities can include expiring contracts, number of agreements with termination for convenience, number of agreements with atypical insurance requirements, key performance indicators, service level requirements for routine monitoring and other key contract data points.

Do you have the right people in the right roles?

You must determine if your staff has the skillsets required to sustain your long-term contracting and value analysis strategies. If the primary function of the role is contracting, the people in those roles need experience negotiating with suppliers, interacting with their GPO counterparts, managing contract portfolios and experience with the contracting tools you have available. If you are promoting someone into a role, have you prepared them and provided training on the new skillsets that they need to be successful? If the primary focus of the role is supply chain value analysis, the people in those roles need experience interacting with clinicians, physicians and administrators. They need to know the products, the variables and risks associated with the products, and be comfortable engaging with and presenting to clinical committees.

Contracting and value analysis are key foundational functions of a strong health system supply chain. Investing in the right people and the right technologies, along with development of processes and workflows to ensure that the system is acquiring the right quality products and services at the right price, is critical. Regular assessments in both areas are an important exercise for every healthcare supply chain.