STRATEGIC SOURCING AND VALUE ANALYSIS DECISION-...
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STRATEGIC SOURCING AND
VALUE ANALYSIS DECISION-
MAKING PROCESS AND TOOLS
TYLER LOEB
STRATEGIC SOURCING MANAGER
JEFFERSON HEALTH
*Any opinions contained herein are my own and not
endorsed by Jefferson or any of its employees
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The Triple Aim of AHRMM
• Triple aim of cost, quality, and
outcomes from the Association for
Healthcare Resource & Materials
Management
• Provides a framework for the
decision-making process
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“So there I was”…
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How this got started
Compression Sleeves
Value Analysis-lead committee of
Nursing
Nurse Education
Performance Improvement
Supply Chain Logistics
Strategic Sourcing
Update clinical practice with new technology option(s)
Address clinical needs
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Supplier Score = σ𝑖=110 ൫
൯
𝑅𝑀𝐻 ∗ 7 + 𝑅𝐼 ∗ 4 +
𝑅𝑁𝐻 ∗ 1 ∗σ 𝑥
𝑠
RMH=count of “Must Have” responses
RI= count of “Important” responses
RNH=count of “Nice to Have” responses
X=value of respondent score
S=number of respondent scores
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Individual Decision-Making Biases
Overconfidence
Hindsight
Anchoring
Framing
Availability bias
And others…
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Challenges of working in a group
Coordination
Social-Loafing
Time
Groupthink
Self-Censorship
Direct pressure
Illusions of unanimity
“Mind-guards”
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Benefits of working in a group
Information sharing
Creativity
Motivation and support
Easier implementation
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How we addressed the problem
Supplier Score = σ𝑖=110 ൫
൯
𝑅𝑀𝐻 ∗ 7 + 𝑅𝐼 ∗ 4 +
𝑅𝑁𝐻 ∗ 1 ∗σ 𝑥
𝑠
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Supplier Score = σ𝑖=110 ൫
൯
𝑹𝑴𝑯 ∗ 𝟕 +
𝑹𝑰 ∗ 𝟒 + 𝑹𝑵𝑯 ∗ 𝟏 ∗σ 𝑥
𝑠
Importance Level
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First…
Survey team members
List all relevant
considerations
Create Request For
Information questions based
on considerations
Score each question
whether it is a “Must Have”
feature or “Important”, or
“Nice to Have”
Non-financial factors used to determine selected supplier of DVT
compression therapy sleeves and pumps Importance LevelSupply Chain/ Biomed considerations
Describe your options of placement or purchase of pumps
Describe your options for repair of pumps. Is our biomed department able to
repair pumps in-house?
Product Features
What tubing length is available?
- Pump to Sleeve
- Extension tubing (if any)
What is the weight of the pump (in pounds)?
What is the battery life of the pump (in hours)?
What is the inflation pressure of the sleeves (in mm of mercury)?
What is the inflation/deflation cycle of the sleeves (in seconds)?
Does your pump feature hours worn traceability?
Does your hours worn traceability communicate directly to EMR/EPIC systems?
Value- Add considerationsIs your company willing to enter into a risk-share agreement that guarantees a
reduction in DVT rates?
Does your company offer any "green"/environmental initiatives?
Additional Company features
Please list and provide references for the largest 5 hospital systems that use your
product( especially any academic medical centers).
Does your company offer any home-care products?
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Then…
Clinical factors used to determine selected supplier of
DVT compression therapy sleeves and pumps Must Have Important Nice to Have
Number of
Responses
Importance
Level
Supply Chain/ Biomed considerations
Describe your options for repair of pumps. Is our biomed
department able to repair pumps in-house?5 3 8 47
What is the turn-around time to repair pumps that have been
sent back (in days)?5 2 1 8 44
Product Features Must Have Important Nice to Have
What tubing length is available?
- Pump to Sleeve 3 5 8 41
- Extension tubing (if any) 7 1 8 29
What is the weight of the pump (in pounds)? 5 3 8 47
What is the decibel noise level of the pump? 7 1 8 53
Do you offer sequential and uniform therapy sleeves? 2 6 8 14
What is the battery life of the pump (in hours)? 2 6 8 38
What is the inflation pressure of the sleeves (in mm of
mercury)?2 5 1 8 35
What is the inflation/deflation cycle of the sleeves (in
seconds)?1 4 3 8 26
Value- Add considerations
Is your company willing to enter into a risk-share agreement
that guarantees a reduction in DVT rates?4 4 8 20
Does your company offer any "green"/environmental
initiatives?2 6 8 14
Additional Company features
Please list and provide references for the largest 5 hospital
systems that use your product( especially any academic
medical centers).
4 4 8 44
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Supplier Score = σ𝑖=110 ൫
൯
𝑹𝑴𝑯 ∗ 𝟕 +
𝑹𝑰 ∗ 𝟒 + 𝑹𝑵𝑯 ∗ 𝟏 ∗σ 𝑥
𝑠
Top 10 Factors
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And then…
Clinical factors used to determine selected supplier of
DVT compression therapy sleeves and pumps Must Have Important Nice to Have
Number of
Responses
Importance
Level
Top 10 Factors-
Rank
Supply Chain/ Biomed considerations
Describe your options for repair of pumps. Is our biomed
department able to repair pumps in-house?5 3 8 47 5
What is the turn-around time to repair pumps that have been
sent back (in days)?5 2 1 8 44 9
Product Features Must Have Important Nice to Have
What is the weight of the pump (in pounds)? 5 3 8 47 5
What is the decibel noise level of the pump? 7 1 8 53 2
List the sleeve product material. 6 2 8 50 3
Does your pump feature hours worn traceability? 8 8 56 1
Describe and list the alarms that your pump will initiate. How
do the alarms display/how can clinicians determine there is a
problem? Are there any visual displays of the alarm?
6 1 1 8 47 5
How can clinicians determine what is wrong and trouble-shoot
issues when alarms go off?7 1 8 50 3
What is the decibel noise level of the alarm(s)? 6 1 1 8 47 5
Additional Company features
Please list and provide references for the largest 5 hospital
systems that use your product( especially any academic
medical centers).
4 4 8 44 9
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Supplier Score = σ𝑖=110 ൫
൯
𝑹𝑴𝑯 ∗ 𝟕 +
𝑹𝑰 ∗ 𝟒 + 𝑹𝑵𝑯 ∗ 𝟏 ∗σ 𝑥
𝑠
Average Score
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Next…
Clinical factors used to determine selected supplier of
DVT compression therapy sleeves and pumps Supplier #1
Supply Chain/ Biomed considerations Score 1 Score 2 Score 3 Score 4 Score 5 Score 6 Score 7 Score 8 Average Score
Describe your options for repair of pumps. Is our biomed
department able to repair pumps in-house?1 3 2 1 2 3 3 0 1.875
What is the turn-around time to repair pumps that have been
sent back (in days)?-1 -2 -2 -3 -3 -2 0 0 -1.625
Product Features
What tubing length is available?
- Pump to Sleeve 1 -1 -1 1 0 1 1 2 0.5
- Extension tubing (if any) 0 3 3 2 0 0 3 3 1.75
What is the weight of the pump (in pounds)? 0 -2 -2 -2 -3 -3 -3 0 -1.875
What is the decibel noise level of the pump? 0 0 1 2 1 1 1 1 0.875
Do you offer sequential and uniform therapy sleeves? 0 0 0 1 0 0 1 0 0.25
What is the battery life of the pump (in hours)? 2 3 3 3 3 1 2 3 2.5
What is the inflation pressure of the sleeves (in mm of
mercury)?2 2 0 3 3 1 2 3 2
What is the inflation/deflation cycle of the sleeves (in
seconds)?2 3 3 3 3 0 2 3 2.375
Value- Add considerations
Is your company willing to enter into a risk-share agreement
that guarantees a reduction in DVT rates?3 2 1 3 3 0 3 3 2.25
Does your company offer any "green"/environmental
initiatives?2 1 1 0 2 0 1 1 1
Additional Company features
Please list and provide references for the largest 5 hospital
systems that use your product( especially any academic
medical centers).
0 3 2 0 1 2 2 2 1.5
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Supplier Score = σ𝑖=110 ൫
൯
𝑹𝑴𝑯 ∗ 𝟕 +
𝑹𝑰 ∗ 𝟒 + 𝑹𝑵𝑯 ∗ 𝟏 ∗σ 𝑥
𝑠
Multiply Importance Level by Average Score
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Finally…
Financial Clinical (Top 10) Total
Supplier 1 1 4 5
Supplier 2 2 2 4
Supplier 3 3 1 4
Supplier 4 4 3 7
Supplier Ranks
*These Savings figures and Clinical Features scores are made up
Supplier
Like-to-Like Option
Savings
Clinical Features
Score
Top 10 Clinical
Features Score
Supplier 1 $200 1405 496
Supplier 2 $135 1900 705
Supplier 3 $110 1850 872
Supplier 4 $75 1600 655
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Considerations and Limitations
Asking the right questions
You don’t know what you don’t know – what is important that we don’t know about?
Do we have all of the right people in the room?
Type of decision being made
Are there “must-have’s” or minimum thresholds?
Do respondents understand the questions and responses?
Do they care?
Interpretation of questions and supplier responses
Too much information?
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Benefits
Flexibility
Fully understand why a decision was made
Rational decision-making
Understand what is important to the health system
and why
Feedback to suppliers and other end-users
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Resources
Stanford University, Lindred Greer-http://worldview.stanford.edu/blog/challenges-group-decision-making-worldview-interviews-lindred-greer
“Principles of Management” University of Minnesota-Creative Commons license-http://open.lib.umn.edu/principlesmanagement/
Forsyth, D. R. (2006). Decision making. In Forsyth, D. R. , Group Dynamics (5th Ed.) (P. 317-349) Belmont: CA, Wadsworth, Cengage Learning.
“Thinking, Fast and Slow” Daniel Kahneman. Farrar, Straus and Giroux. 2011
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Resources
Patterson, Kerry, Joseph Grenny, Ron McMillan, Al Switzler, Laura Roppe. “Crucial Conversations: Tools for Talking When Stakes Are High” 2nd Edition, 2012. McGraw-Hill.
Dan Gilbert. “Why we make bad decisions.” TED talk. July 2005 at TEDGlobal 2005. Viewed on 9/2/2017. https://www.ted.com/talks/dan_gilbert_researches_happiness
Bart de Langhe, Stefano Puntoni, Richard Larrick. “Linear Thinking In a Non-Linear World” Harvard Business Review. May-June 2017 Issue. https://hbr.org/2017/05/linear-thinking-in-a-nonlinear-world