Quick Guide to Understanding the Hospital Value Analysis Committee

Over the past decade, the medical device sales industry has changed drastically, and one of the biggest advancements was the proliferation of hospital value analysis committees (VACs)—sometimes referred to as technology assessment committees.

According to GreenLight Medical, now a part of symplr, VACs came into existence as cost-cutting pressures increased and hospitals focused on identifying excess expenditures that occurred during supply chain processes.

Why do hospitals need a value analysis committee?

To begin, for a medical product to be successful, it must be approved (i.e., by the Food & Drug Administration), physicians must want to use it, payers must reimburse for its use, and hospitals must purchase it. While historically physician preference primarily drove purchasing decisions, pressure to contain costs and optimize patient outcomes have prompted health systems to create new decision-making processes. VACs were a result of the shift.

The VAC’s primary focus is to ensure that every product or service purchased provides a unique value proposition. The VAC receives product input from many hospital departments and considers a variety of factors. These factors include:

  • Clinical outcome
  • Product quality and comparison
  • Financial analysis
  • Education

By including different perspectives in decision making, the VAC creates a more inclusive and comprehensive evaluation process, reducing supply chain silos. According to Definitive Healthcare, “physician-preferred” items (PPIs) make up 40-60% of a hospital’s supply costs. However, through standardization and cross-collaboration, hospital VACs have the potential to mitigate the excessive costs that stem from PPIs. In addition to the hospital benefits, VACs ensure optimal patient care, as products are more carefully considered and analyzed. 

Physician-preferred items compose
40-60% of a hospital’s supply costs.

How does a VAC function?

In many hospitals, the medical sales representatives bring the product information to the VAC before the hospital is permitted to use the product. The VAC then deliberates over the data provided to assess the item or service. During this process, committee members analyze the clinical and cost benefits, as well as compare products. If the committee decides that the product provides a unique value to the hospital and its patients, it will continue negotiations with the representative regarding pricing, frequency of purchase, and other contractual matters.

Who is included in a VAC?

Because a major role is to determine a hospital’s need for a particular product, the VAC must collaborate cross-functionally with other departments to perform an audit. The committee usually includes physicians, nurses, administrators, supply chain specialists, risk mitigation specialists, and purchasing agents. For an approval to be granted, the medical representatives must demonstrate to all involved that implementation makes sense financially and clinically.

How does a VAC affect the medical sales rep’s role?

As VACs integrate into hospital ecosystems, the role of the medical sales representatives changes. Rather than forming relationships with the physicians who use the products, the primary goal of the representatives becomes one where they must demonstrate the superiority of the product to the VAC.

Related resources

  • For a downloadable value analysis toolkit, “45 Days to Build a Better Value Analysis Infrastructure,” click here.
  • For a white paper on making defensible new product decisions that align with value-based care and engage physicians, click here.

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