Value and quality are currently interdependent concepts in healthcare. Patients are now considered as the most important stakeholders and are the main focus in quality management and value delivery. Value chain analysis enables organizational review of resource application and assist in identifying alternative structures and methods for meeting set out goals (Pokisnska 2010) . There are various major components which healthcare organizations use to determine the cost of their value chain. These efficacy value adding opportunities consist of primary activities and support activities. Primary activities represent those that involve getting customers and other resources into the healthcare organization, converting those resources into products and providing services. Support activities aid the organization in achieving its goals and objectives. In health care, the value chain has five components consisting of payers, fiscal intermediaries, providers, providers, purchasers, and producers (Burns et al. 2010). The overall cost of value chains in health care can be reduced while maintaining optimum quality care through organizing care around the patient as opposed to tools, measuring outcome and cost for every patient, paying for care differently, integration of care delivery, and enhancing an enabling information technology platform ( Watts et al. 2009) .
Primary and support activities are designed to optimize the overall activities of a health care organization to create bundles of products and services. The value chain is concerned with coordinating and organizing the entire chain from raw material suppliers to final consumers. This is unlike an approach targeting on maximizing the interests of one stakeholder (Pokisnska 2010) . The cost should be designed in a manner that aims at developing a highly competitive chain and positive results for all stakeholders. The costs should enable a collaborative partnership with a working relationship between suppliers and customers. A robust information technology infrastructure is vital to support these relationships. Such partnership includes well coordinated production and delivery to meet the customer’s requirements in a timely manner. It also enables a lowest total cost solution for both the manufacturer and the customer.
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Demand planning, which involves relying on information gathered directly from the customer allows lowest total cost. It works in a backward manner from the customer to the manufacturer (Burns et al. 2010). This is unlike traditional value chain management that starts with the manufacturer and sells the product through marketing and advertisement to the customer. In the traditional setting, the manufacturers’ main aim is to increase the product sales, gain greatest product differentiation rather than achieve lowest total cost (Burns et al. 2010).
The walking map allows a healthcare organization to come up with an extensive level of comprehension of the customer as the key stakeholder within the company. The customer serves as the most vital link within the value chain. The walking map therefore enables the organization to walk through the customer’s positions figuratively from the vantage point of a potential consumer, client or partner. Value chain mapping is used to figure out how to advance quality or lower cost through giving patients the right services so that they can take advantage of an entire set of activities needed for proper health care. In the value chain and strategy, the walking map’s focus is the patient rather than the creation and delivery of the service or the product (DiGioia et al. 2010) .
Healthcare managers are continuously striving to improve operational efficiency to align the cost structure and improve the quality of care and customer satisfaction. Streamlining and optimizing the value chain is essential to this endeavor. Value chain management plays an essential role for healthcare organizations to enable saving and improving the bottom line figure through improvement of the value chain process strategically.
References
Burns, L., DeGraaf, R., Danzon P., Kimberly, J., Kissick, W., & Pauly, M. (2010). The Wharton School study of the health care value chain. Retrieved from https://catalogimages.wiley.com/images/db/pdf/B0787960217.01.pdf
DiGioia, Anthony III MD; Lorenz, Holly MSN, RN; Greenhouse, Pamela K. MBA; Bertoty,
David A. MSN, RN; Rocks, Suzanne D. BSN, RN. (2010). A Patient-Centered Model to Improve Metrics Without Cost Increase: Viewing All Care Through the Eyes of Patients and Families. Journal of Nursing Administration.
Pokisnska, Bozenza. (2010). The current state of lean implementation in health care. Quality Management in Health Care. 19(4):319-3
Watts, Brook MD, MS; Augustine, Sarah MD; Lawrence, Renee H. PhD. (2009) Teaching quality improvement inthe midst of perfomance measurement pressures. Quality Management in Health Care.
