Lough Barnes Consulting Group Blog

3 Myths about IntegrationWhy aren’t more Ontario...

Fri, 10 Mar 2017 10:31:59 -0500

3 Myths about Integration

Why aren’t more Ontario community organizations seeking integration of services?

In the face of balancing shrinking budgets and increased service needs, some community and broader public sector organizations have embraced integration and shared services. Hospitals and the soon-to-be-defunct Community Care Access Centers have traditionally gone the furthest by establishing shared services, while some smaller community organizations have sought looser collaboration or some limited integration.

But there are literally hundreds of agencies, boards, committees, and community organizations that have not considered integration, or have not gone far enough (you can only achieve so many gains from collaboration).

But should they? And why should they?

There are absolutely fabulous reasons for attempting integration of systems, services or processes, but there are also some important things to contemplate first.

Based on our own research and experience, here are three myths about shared services for community and public sector organizations.

Myth #1: You Will Definitely Save Money

Although it is possible to reduce budgets and cost of service delivery by integrating services across multiple community organizations, this is not a “done deal”. What often happens is two organizations will combine their services (for instance providing respite care or primary care) as they are without reducing roles, resources or systems.

Often organizations are so concerned about losing staff or negatively impacting services they won’t make the necessary -but hard- decisions that lead to budget savings. Budget reductions can only come from reducing processes, people or technology, and these are not a foregone conclusion with shared services.

In addition, the goal of integration services may be more around increasing and improving services, which may require additional costs through investment in new resources.

Myth #2: You Will Lose Staff

Most organizations I work with list this as one of their top concerns. Certainly in some situations if you merge or integrate two of the same processes there can be some redundant roles. If two organizations with the same size finance function merge them together, there may not be a need after for two CFOs.

But in my experience this doesn’t always have to happen. Often managers in community organizations wear multiple hats - one manger could be part-time FTE on financed, part on IT and part on operations. In which case taking away the finance activities allows that manager to focus more effectively on operations and IT. I have also been involved in mergers or integrations where the resulting organizational model is larger and requires more staff than before.

Myth #3: You Can Avoid Integration By Ignoring It

I have been involved in several community service integration projects involving feasibility assessments with several or a lot (over 40) small and medium sized organizations. Inevitably I encounter a leader who feels their organization can avoid change and remain in their current if they just keep their noses clean, their budgets balanced and their heads low. The problem with this approach is it is akin to sticking your head in the sand and avoiding acknowledging the hard truths about the changing contexts within which your community organization works.

In Ontario, the reality is that there will be flat-line or decreasing funding for many community services for several years. I have heard from several Local Health Integration Network executives who have pointed out they just can’t afford to keep funding the large number of community organizations in their catchment. They clearly support community services, and the type of activities these organizations provide, but the sheer numbers of organizations is unsustainable.

In other sectors - community support services, disability services, child and youth mental health services- the funding ministries are implementing system transformations that are revamping funding and service delivery models that in many cases lean towards service consolidation.

It is About How You Approach It

I would argue that shared services or service integration can be positive to your organization, your clients and your community as long as organization leaders are clear on what they wish to achieve out of the integration effort, and how they will achieve it.

Collaborative Governance: A Model for Service System Integration...

Wed, 08 Mar 2017 14:23:44 -0500

Collaborative Governance: A Model for Service System Integration

On March 8^th , LBCG co-hosted with Children’s Mental Health Ontario (CMHO) a fabulous webinar session on collaborative governance within the child and youth mental health system. The presentation was provided by our own Steve Lough, along with Bob Morton, Chair of the North Simcoe Muskoka LHIN and Glen Newby, Chief Executive Officer, New Path Youth and Family Services.

Although the presentation focused on child and youth mental health organizations, the topic is timely for other parts of the community organization sector. A copy of the slide deck used for the webinar can be found here.

Why is Collaborative Governance Important?

Clients, families and funders want service providers across human services to work as integrated service systems to better meet their needs with:

Coordinated access so that people know where to go
Consistent services regardless of where a client is served
Smooth hand-offs between services and providers
Best practices used wherever a client is served

In addition, the Ontario government has responded in several sectors by establishing:

Local Health Integration Networks in health care
Health Quality Ontario
Lead agencies in child and youth mental health
“Collaboratives” in adult mental health
Networks of Specialized Care in developmental services and mental health
Provincial agencies such as:
Ontario Centre of Excellence in Child and Youth Mental Health

What Is Important To Consider?

On the webinar our team discussed the following important considerations for achieving collaborative governance:

Finding a common agenda across all involved parties;
Creating common progress measures;
Developing mutually reinforcing activities;
Create an environment of open communication and collaboration;
One organization typically needs to become the “backbone organization”, to take on the role of managing collaboration
All players have to realize they will need to adapt/change to achieve the desired outcomes;
Contractual relationships require us to pursue integration;
Boards can’t do a good job of strategic and generative governance without engaging in collaborative governance

Where to Go From Here?

Our webinar slide-deck has some more information with specific examples of how some others have achieved collaborative governance, lessons learned, and things to consider. However, every set of organizations has their own unique situation to consider. We would be happy to hear from you and answer any more questions.

Syrian Refugee Family Sponsorship - Activities

Thu, 09 Feb 2017 09:32:20 -0500

Lough Barnes is honoured to sponsor a Syrian refugee family in partnership with Lifeline Syria. Financial contributions to support the family have been made possible through our firm’s Social Impact Fund, and the entire Lough Barnes team has come together to contribute our time to help and provide support in whatever way we can to ease the family’s transition into their new lives in Canada.

We are excited to share with you notable landmarks of the family’s journey as they boldly begin this new path.

October 9^th, 2016: Susan and Nick join the family’s Canadian relatives to greet them as they arrive late in the night with their three sleepy young children in tow. The family spends the next weeks adjusting under the generous hospitality of their relatives.

October 25^th, 2016: As not everyone could be at the airport, Tony hosted a welcome party where all of the Lough Barnes team and family were able to meet the Syrian family! Sharing a meal together, it was a wonderful evening where we got to know the family better and share more about ourselves. We are so lucky to have Abdel as our trusty Arabic translator.

Nov 5^th, 2016: The family moves into their new home! Tony and Steve moonlight as professional movers ensuring the family’s apartment is fully furnished before the family arrive.

Nov 12^th, 2016: First day of school! The children join their local elementary school. The multicultural mosaic that is Toronto, roughly two-thirds of the childrens’ classes are comprised of children who have English as a second language, placing them in an environment where they should have the expertise and support to excel.

Dec 19^th, 2016: School ain’t just for kids anymore! Working English proficiency will be critical to their ability to navigate their local community, and so the parents too have taken the initiative to enroll in their own studies at the local community centre.

Dec 30^th, 2016: Lough Barnes took the opportunity of our annual office outing to take the family to see the Ripley’s Aquarium. Selected for its visual emphasis without necessary English proficiency for it to be enjoyed, we were excited to be able to take the family on an outing and share some of what Toronto has to see.

Jan 1^st, 2017: A new year, a new adventure! We continue to liaise with the family and are so excited by their daily developments as they grow their Canada roots.

How Lean Can Help Child and Youth Mental Health Organizations

Thu, 27 Oct 2016 15:37:00 -0400

Child and Youth Mental Health organizations are increasing pressures to improve their services while dealing with fiscal pressures. On October 26, 2016, LBCG ran a webinar for Children’s Mental Health Ontario applying Lean Six Sigma concepts towards Child and Youth Mental Health organizational models.

Here is the link to our slide deck that we used in the webinar.

The information in the slide deck is focused on introducing Lean Six Sigma to Child and Youth Mental Health (CYMH) organizations, but really it will be useful to any community organizations

A special thanks to Mark Fraser at Child and Family Centre. Mark provided some fantastic real life examples of how Lean Six Sigma concepts can apply to CYMH organizations.

Here is a high level summary of some of the most important points we included in the presentation.

Drivers to Improve

Like many community organizations, CYMH organizations are under increasing pressures to do more with less. Some current pressures on CYMH organizations include:

Continued drive to push service deliver closer to the community
Desire to see demonstrated value for money
Increasing expectations for access and equity of services
Increasing expectations of service efficiency and effectiveness

CYMH Organizational Challenges

There are some specific challenges in applying Lean Six Sigma principles and approaches towards CYMH organizations:

Value may be different for each client
Client variety and complexity leads to service variety/complexity, which can make process standardization difficult
Sometimes services are delivered in partnership with other organizations
Need to consider social value and the equitable provision of services
Balancing high quality service levels with reducing costs, and wait lists

Ways to Apply Lean to CYMH Organizations

There are many ways to use Lean Six SIgma to help CYMH organizations:

Assessing quality issues;
Assessing areas to seek efficiencies
Value mapping current processes, in order to collaborate more effectively with service partners;
Using Lean tools to better understand client service levels, models and complexities
In support of developing common intake models
Assessing ways to reduce Wait lists

What Else Can Lean Do?

Let us know if you can think of other ways of how Lean can apply to CYMH organizations!

Building Stronger Communities In and Out of the Office

Wed, 27 Jul 2016 14:51:47 -0400

At Lough Barnes Consulting Group (LBCG), our vision is to build stronger communities. We work towards fulfilling this vision through our consulting services for government, not-for-profits and the broader public sector, as well as by volunteering our time to meaningful causes.

Most recently to this end, we took part in Habitat for Humanity GTA’s Adopt-A-Day Program on July 19, 2016. LBCG committed funds to the program and our staff spent a day in Scarborough, Ontario helping to build a block of eight homes.

We were provided with all the necessary equipment from hard hats, to safety boots, vests, and of course, tools! Dedicated Habitat volunteers taught us the basics of building, topped off with carpentry expertise from two of our very own team members, including our Managing Director—who would have thought? In small groups, we hammered, measured, sawed, caulked, fireproofed and most importantly, we learned from one another. It was a great team-building exercise and one that we recommend to other organizations, big and small.

The lessons, however, went beyond new carpentry skills. For each of us, the day’s experiences reinforced how important it was to invest in our communities. We saw first-hand the true value of volunteerism, as low-income families would eventually reside in these homes. At LBCG, we believe in giving back through our professional work and our volunteer efforts, and we will continue to do so both in and out of the office.

Our staff extends our thanks to Habitat for Humanity GTA and to our Managing Director, Steve Lough, who believed in this initiative from the get-go.

For more information on Habitat for Humanity GTA and how you can get involved, click here: www.habitatgta.ca.

Shared Services – A Cautionary Note

Fri, 22 Jul 2016 10:15:26 -0400

“The NSSC is realizing nearly $20 million of savings per year and, by the end of 2015, is projected to have saved NASA over $200 million.” – Kenneth Newton*

Shared services, as the name suggests, is the delivery of one or more services by a single group on behalf of others where those services were otherwise delivered by each individually. Sharing services can be a powerful tool for consolidating resources, functions, processes, and skills from isolated organizational units. Through standardization, economies of scale, and resource pooling from sharing services, organizations are able to experience reduced process costs, improved productivity, and enhanced customer satisfaction levels.

However, the success of a shared services arrangement is contingent on several factors. Organizational maturity, readiness for change and culture, the nature of core unit activities, technology, and existing finances all have an impact on the effectiveness of shared services in realizing cost savings and improved outputs. Implementation itself may be complex given the unique nature of all the players involved.

For example, the UK government’s shared services programme came under scrutiny for failing to achieve cost savings. Amayse Morse, head of the National Audit Office, attributed this to the voluntary participation approach, which allowed for tailored services to meet differing needs of individual departments (Hall 2012)**.

Thus, even though shared services can be a solution in certain cases, it is not necessarily the right path to take for organizations looking to save a buck.

In looking at shared services as a potential solution or way forward for yours and partner organizations, it is important to assess the readiness and “feasibility” of all parties involved, and for you to be open to the idea that, though it has been proven to be effective – shared services may not be the solution for you.

* Hall, Kathleen. Government’s shared services strategy failing, says NAO. Computer Weekly, 2012.

** Newton, Kenneth. Shared Services: Bringing Efficiency from NASA to Higher Education. evolllution, 2016.

3 Times To Consider Using Process ImprovementI have written in...

Fri, 10 Jun 2016 12:39:40 -0400

3 Times To Consider Using Process Improvement

I have written in previous blogs about the apparent benefits of process improvement, and how much improvement you can really achieve.

Now that you know what it can do for you, how do you know when to actually use process improvement?

Here is my list of three good times that an organization could use a process improvement project.

Timing #1: Strategic Relevance

In this Harvard Business Review article, the author recommends linking process improvement to strategy. If your organization has recently revised your strategic focus areas, then it would be a good idea to reflect on which services/processes need a review and revision based on the new directions.

The McKinsey 7-S Model, Balanced Scorecards, and other similar methodologies all include a “process” alignment aspect to strategic planning: your processes should produce the services, outcomes or outputs that align with your strategic goals (which in turn align with your resources, culture, staffing model, etc.).

Timing #2: External Pressures

Sometimes external pressures cause a shift in your environment and impact your organization.

For example, in Ontario, the Ministry of Health has recently announced that it will be focusing more effort on improving community healthcare services (and less focus on hospitals). So, community healthcare organizations will need to understand the policy shifts and then decide if any of their internal/back office or external/program services and processes requires some updating.

Typical sources of external pressure that require potential process changes include regulatory changes, policy changes, funding changes, new environmental factors or even social media/community events.

Timing #3: Faster and Cheaper

This particular one is sometimes a result of the previous two. If your organization needs to do “more with less” (regardless of whether it is internal or external pressures causing this new direction), then a process improvement review is a great place to start.

To continue with my previous example, if you are a community healthcare organization that has not received much or any budget increases from the government but you are now requested to provide a higher level of service, you will be under considerable pressure to become innovative and efficient.

Some other principles to consider when approaching process improvement:

Most services and processes don’t need continual tinkering or fixing – you should be able to do it right the first time;
You should check back though every year or two to make sure it is still producing the outcomes and outputs you need (are your customers still satisfied?)
If your customers change their needs or desires, then your service, approach or process may need to change too!

This may seem like an easy counter argument to make, but here are some occasions when you should not be using process improvement techniques:

To reduce headcount or labour force;
To make yourself strategically more competitive than your competitors;
As a short term fix to balance your budget.

What Now?

So now what?

If you know your organization well, you can apply these and figure out if you need more help.

And if you do, let me know how it goes!

Lough Barnes and Endeavour Partnership

Fri, 03 Jun 2016 14:29:23 -0400

Lough Barnes was pleased to host the members of Endeavour Volunteer Consulting for Non-Profits (Endeavour) on Monday, May 30^th at our offices.

Endeavor provides management consulting to improve organizational capacity and community impact, with a focus on serving non-profit organizations that otherwise cannot afford professional consulting. Since 2007, Endeavour has recruited and managed more than 800 volunteers to provide management advice to over 100 non-profit organizations, helping communities in many areas, such as the arts, children and family services, education, and the environment, just to name a few.

Lough Barnes was first introduced to Endeavour through one of our own, Tony Yu, who has volunteered with Endeavour on past projects. Recognizing the shared values for social change and commitment between the two organizations, Lough Barnes has since been interesting in becoming more involved with Endeavour. Leveraging the added capacity of our new offices, Lough Barnes has decided to extend our resources to collaborate with Endeavour to provide office space and project advisory, to support Endeavour in its engagements. Monday’s event was an opportunity for both teams to get to know one-another, learn more about each organization, as well as the type of work members may be engaging in together in the near future.

LBCG is proud to welcome Endeavour into our offices, and we look forward to a long-lasting, synergistic relationship!

We encourage you to learn more about Endeavour at http://www.endeavourvolunteer.ca/

Does Process Improvement Really Save Money? (Part II)

Thu, 02 Jun 2016 11:23:44 -0400

Lean Six Sigma (LSS) has reportedly generated substantial benefits and savings for public sector organizations. Finding a way to repeatedly achieve process improvements and costs savings would be a large step forward to achieving sustainable, high quality and cost effective public sector services.

In a previous blog, I discussed some of the grandiose claims different organizations have made about how beneficial process improvement has been for them. But what I really want to know is: are these claims true? Can you really save up to 40% or 50% of your process costs, and if so, how? Is it repeatable and consistent?

What I went looking for is the “smoking gun” or causal links using objective results from empirical efficiency research projects.

Note: There are different types of efficiency projects (check out this previous blog post for a good summary), but a lot of research has been done on Lean Six Sigma projects, including within healthcare and the broader public sector. So I have used research on Lean Six Sigma as a proxy for efficiency projects.

I was particularly interested in any research that could be deemed repeatable, or whether there were consistent results across multiple separate studies: are the results repeatable across multiple circumstances? And if so, why and how can others use those results?

Co-relation Not Causal

In one well-researched, extensive study, after a review of hundreds of projects across 128 organizations using Lean Six Sigma, the researchers found that effective implementation of Six Sigma led to an average savings of 1.7 percent of revenues over the period of implementation. Also, it led to an average return of more than $2 in direct savings for every dollar invested.

I have not found a large number of empirical studies that can provide a causal (or even close to causal) link between the use of efficiency projects like Lean Six Sigma and significant savings. In addition, none of the research to date that I could find lead to any repeatable and consistent results.

However, there is a large amount of research showing promising correlation:

A recent study carried out by the American Society for Quality (ASQ) revealed a “correlation” between deployment of Lean and Six Sigma within 77 hospitals and improved clinical outcomes and financial performance appeared equivocal (ASQ, Lean Six Sigma Hospital Study Advisory Committee, 2009). The study has also revealed that a high percentage of hospitals do not track common operational metrics (for example, length of stay and patient complaints) and financial metrics (such as, cost per patient), making it challenging to identify causal relationship.

In a peer reviewed meta-study of 200 studies on Lean and Six Sigma (similar to the one above) found that the positive reported outcomes are largely based on conceptual arguments, and there are very few empirical studies that can tie the benefits of Lean and Six Sigma methodologies to improved clinical outcomes, patient safety, efficiency and financial performance.
A review of the use of process improvement in healthcare in the UK found few examples of empirical studies that could determine a direct causal relationship between the completed project and successful results.

My search wasn’t exhaustive, but I have yet to find a study that conclusively links process improvement techniques to significant cost savings in a repeatable fashion (despite the claims of some rather large organizations that sell these services). Maybe it is out there, but the researchers above couldn’t find it, and neither can I.

Why Not?

A study carried out by the ASQ Lean Six Sigma Hospital Study Advisory Committee found a lack of sustained improvements across over 70 projects. The reasons they found for the lack of sustained, repeatable achievements within the same organization or community included:

Lack of sustained support from leadership;
Competition within the organization from other initiatives;
Inconsistent leadership commitment;
Lack of availability of the appropriate resources;
Lack of employee motivation; and,
Inability to make lasting change on the organization’s culture in a meaningful way.

This well-researched article in the Wall Street Journal underscores many of these same points.

So What Should You Do?

Thankfully, there is some research being completed on success factors in those organizations that do find a way to achieve more sustained success. A recent study of over 200 Lean Six Sigma projects found that the following were the most important factors for achieving sustained success:

Senior management commitment and involvement;
Focusing on critical processes for improvement;
Establishing a culture for continuous improvement;
Focusing on the needs of patients; and,
Establishing measurement and feedback systems.

The same study found the following as the least important factors for achieving success:

Linking Lean/Six Sigma to business strategy, Government targets, etc.;
Training in Lean/Six Sigma;
Including best practice/gold standard achievements in a documented quality management system;
Organizational infrastructure for Lean/Six Sigma program (e.g. project champions); and,
Understanding methods, tools, techniques, etc. within Lean/Six Sigma.

Several research studies and books (This book covers it in detail, and it is referenced in this study too, for instance) point out that just using one method alone does not achieve the full efficiency or cost reduction.

The Wall Street Journal article cited previously also mentions the following lessons learned to consider to successfully implement and sustain process improvement:

Extended involvement of a Six Sigma or other improvement expert is required if teams are to remain motivated, continue learning and maintain gains;
Performance appraisals need to be tied to successful implementation of improvement projects. They highlight based on studies that raises, even in small amounts, can motivate team members to embrace new, better work practices;
Make your teams small and dedicated. The bigger the team, the greater the chance members will have competing interests and the harder it will be for them to agree on goals, especially after the improvement expert has moved on to a new project; and,
Executives need to directly participate in improvement projects, not just “support” them.

Summary: Sometimes, and Use Common Sense

In summary, it seems that a public sector or community organization can achieve a small amount of efficiency and cost savings but only if they are focused, really behind it from top to bottom, and apply principles that seem in retrospect to be obvious project management lessons learned.

I would be interested to hear from you: does this mirror your experience? Or can you realistically achieve 40% savings each time?

Canada is now responsible for all indigenous people. Here are 3 areas to think about.

Tue, 10 May 2016 16:23:50 -0400

[Image from Wikipedia: The centre block of the Parliament of Canada Building in Ottawa.]

With the recent Supreme Court ruling, Ottawa is now responsible for all indigenous people, extending the federal government’s responsibilities to approximately 200,000 Métis and 400,000 non-status aboriginal people who are not affiliated with specific reserves.[1] This is a landmark ruling that will have broad consequences and impacts within the field of aboriginal affairs going forward. Lough Barnes has worked on a range of projects touching on Aboriginal communities, agencies and issues. We thought we would share with you what we’ve been learning.

Recent developments at the federal and provincial level will have a significant impact on almost every aspect of government and public services. The following are three areas that need to be factored into everyone’s thinking.

Duty to Consult
Free, Prior, Informed Consent
The Political Accord

Duty to Consent:

The duty to consult First Nations when it is identified that they may be impacted by an initiated project and to try to accommodate their aboriginal and treaty rights are choices made every day by government leaders and officials. The legal obligation to provide consultation and a decision-making process is embedded in Section Thirty-five of the Constitution Act, 1982. To provide more clarity of when the duty to consult is “triggered”, the Supreme Court in the Haida Nation v. British Columbia (2004)[2] ruling created a three-part test that, if met, gives rise to the duty to consult and accommodate on the part of the Crown;

The government has a real or constructive knowledge of a right [inherent in a treaty].
A government action or decision relating to land and/or natural resource management within the Indigenous group’s traditional territory is contemplated.
The government’s decision has the potential to adversely impact the continued existence of a Treaty or Constitutional right.

Courts are very clear that when reviewing evidence, they must take a “generous, purposive approach to [determine whether there is a potential adverse impact].”[3] However, speculation is not enough to constitute “potential” adverse impact. A court may consider adverse impacts as speculative if there is a lack of evidence or evidence does not clearly demonstrate an adverse impact.

Once a duty to consult has been triggered, the Crown has a number of minimum obligations including but not limited to;
Consult with the Aboriginal rights holders regarding what studies need to be done to assess adverse impacts.
Inform itself of the impact of the proposed project on the Aboriginal rights holders in question, and communicate its findings.
Solicit, listen to and attempt to respond to the concerns of the Aboriginal rights holders.
Demonstrate a willingness to make changes based on information that emerges during the consultation and accommodation process.
Attempt to minimize or mitigate adverse impacts on the Aboriginal rights holders.

Ultimately, however, the First Nations people do not have a clear veto power against projects that infringe on their title lands. [4]

Free, Prior, Informed Consent:

Free, prior, and informed consent (FPIC) refers to the right of local communities, particularly indigenous peoples, to participate in decision-making about issues affecting them. Examples include natural resource management, economic development, uses of traditional knowledge, genetic resources, health care, and education. While similar to the duty to consult, FPIC could be interpreted as providing a veto to Aboriginal groups and in that regard, cannot be reconciled with Canadian law, as it exists.

The principle of FPIC is explicitly mentioned in the UN’s Declaration of Rights of Indigenous Peoples[5] and while many countries do not formally recognize the principle, Canada’s unique constitutional framework recognizes and affirms Aboriginal and Treaty rights. Thus, in Canada, governments have a legal duty to consult Aboriginal Peoples and, where appropriate, accommodate Aboriginal peoples, when the Crown contemplates conduct that might adversely impact potential or established Aboriginal or Treaty rights.

The Supreme Court’s Tsilhqot’in Nation v. British Colombia (2014)[6] decision was a leading ruling in favour of First Nations, which established a precedent that without obtaining consent prior, it might become necessary to cancel a project if continuation of the project would unjustifiably infringe these rights. Various initiatives since this decision have aimed to achieve certainty and transparency in the language surrounding FPIC, in an attempt to reduce future conflicts and increase the number of successful agreements.

Political Accord:

The Political Accord[7] was signed between the Ontario Government and the Chiefs of Ontario in August of 2015. The Accord reaffirms that First Nations have an inherent right to self-government and focuses on moving forward to build the relationship between the two parties. It commits the government and First Nations to work together on a range of issues, including resource benefits sharing and jurisdictional matters. In efforts to realize advancement, it is required within the Accord that two meetings a year between the premier and the Chiefs of Ontario take place, which will include the joint assessment of the progress on the identified priorities and issues.[8]

All of these agreements and court decisions speak to the need (and desire) for a new relationship with First Nations and a new collaborative and respectful way of working.

[2] Find the original ruling at https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/2189/index.do

[3] Rio Tinto Alcan Inc. v. Carrier Sekani Tribal Council https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/7885/index.do

[4] Read more about the Crown’s Constitutional Duty to Consult at http://fngovernance.org/publications/research_article/the_crowns_constitutional_duty_to_consult_and_accommodate_aboriginal_and_tr

[5] Read the whole report at http://www.un.org/esa/socdev/unpfii/documents/DRIPS_en.pdf

[6] Find the original ruling at https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/14246/index.do

[7] See the Political Accord at http://www.chiefs-of-ontario.org/node/1168

Does Process Improvement Really Save Money? (Part I)

Thu, 10 Mar 2016 10:43:14 -0500

How much can your organization really save by using process improvement? Can you really achieve cost savings, reduce timelines and still achieve high quality services?

Can you still achieve savings or improvement if you are a big bank or a small community organization?

It turns out maybe, but it depends.

As an efficiency consultant, I work with public sector organizations every day that are trying to figure out how they can find cost savings or improve performance, or ideally, both at the same time (and without causing any operational impacts while doing so).

But I get frustrated when organizations tell me they have read that they can reduce costs by 40% to 50%. From my own experience implementing Lean Six Sigma and other process improvement and efficiency projects over the last 17 years, I have rarely found a case where these idealized pie-in-the sky numbers have been achieved.

I started to wonder: have there been any studies that can empirically confirm the benefits? How much can I really save by pursuing a process improvement project?

Why Is Process Improvement Important Anyway?

In an earlier blog, I wrote that there are three main ways an organization can improve efficiency or effectiveness:

Improve your people – Education, training and improved hiring leads to improved qualifications and skills at key resource positions. In the end, this can improve the quality of your services, reduce costs (due to increase efficacy) and reduce time to deliver services.
Improve your technology – By investing in new technology, an organization can (over the long term) reduce system costs, improve service quality, reduce resource impacts, reduce service variability, and improve service efficiency.
Improve your processes – Improvements in process activities can lead to the same improvements mentioned in the technology point above, as well as achieve the same benefits mentioned.

Most organizations seek to start with process improvement projects over technology improvement projects, since there is a significantly less upfront cost, the benefits are generally achieved earlier, and the projects can be less complex.

A Dichotomy of Benefits

It doesn’t take long to find blogs and sales pitches that claim huge benefits:

Significant costs savings - This pamphlet from a large firm claims operating cost savings of 40% to 50%
Increased Service Levels – The same mentioned pamphlet above claims you can improve performance between 30% and 50%, while also reducing costs
All of the Above – And this white paper claims public sector organizations can boost effectiveness while cutting IT costs by up to 20% without reducing head count.

On the other hand, you can find cases where the opposite is true:

A 2011 study commissioned by a group of Canadian non-profit organizations to assess the potential for achieving savings through back office shared services found that after considerable research and analysis, such efforts had typically achieved many benefits – but almost no cost savings.
A 2012 review by the UK government of the performance of five back office shared services centers built between 2004 and 2011 found that they cost significantly more than anticipated, still had reported no savings, were overly complex, and provided less flexible services.
Closer to home, the Globe and Mail reported recently that the federal government’s efforts to introduce IT shared services was “unable to accurately demonstrate cost savings achieved through the transformation of government IT services”.

But It Is Possible

In pursuit of an answer to find out why, I have reviewed numerous empirical studies of process efficiency processes to assess whether savings can be found. I looked mostly for studies published in peer-reviewed journals but really, I was looking for some scientific rigor.

We will publish the findings in our next blog.

In the meantime, I would love to hear from any of you on what you have found? Can you really achieve savings from shared services? And if so, how?

Three Ways to Transform your Community Organization if you Aren’t an Efficiency Expert

Mon, 01 Feb 2016 15:14:43 -0500

Public sector organizations are under continuing pressure to become more efficient, or at least to remain effective with decreasing resources. But if you are a small organization with already limited resources, how do you know if you are efficient? How do you figure out where to focus on for improvements?

The framework below is very useful for people who aren’t public sector efficiency experts, to think about where and how to make their organizations more efficient and effective.

The framework is useful for a variety of efficiency and effectiveness work. It is useful for helping you figure out where to focus within you organization to assess opportunities for efficiency, assess how your organization aligns within your community needs, and aligning your organization’s outputs to both internal activities and system requirements.

Inputs

The Inputs are system inputs, requirements, or factors that an organization (children’s mental health, community healthcare, community support services, really any community or larger public sector organization) faces.

We often use the Client - Services - Capacity - Funding model as it works well for thinking about things in a variety of situations. It isn’t always necessary for thinking about efficiency, but it can help.

In terms of Clients and Services, at a strategic level some of the questions you can ask to figure out where to focus include:

Who are the clients you are serving?
What is the acuity of their needs? Is it changing?
What are your changing client demographic changes for the next 5 or 10 years? How will your services align with those changing needs?

Some other useful questions to ask yourself, to help figure out whether and where you may focus some transformation activities:

Do you have a solid sense of how your services align with the funding parameters and requirements from your funder?
Have you done a review recently of how your client-services-capacity-funding parameters align?
Are you able to continue to provide the same quality level of service to the same number of clients?
Have you compared against other similar service providers in your area - do you have a sense of how your organization compares in terms of quality levels and number of clients? Are there differences in terms of your service delivery models?

Organization/Operations

The Operational factors in the middle of the model are those aspects of your organization that together combine to allow you to provide your services. I often use a variation of the classic 7S model here, but customized for community organizations.

The point is to consider an integrative model that is holistic - each factor needs to be considered in its relation or impact on the other factors. Looking at the model below, consider that you can’t make an impact on strategy without considering its impact on structure, style, staff or the other areas.

One way to do an operational review is to look at each of these components, and ask yourself for each one: What is our model for this? What are the underlying costs? Is there any waste or barriers to providing this parameter?

Outputs

The bottom of the framework represents the outputs or outcomes of your operation. There are a variety of components or areas that could be included here such as service levels or performance metrics. This is useful to consider in operational review or program reviews in terms of the connections between Inputs, Operations, and resulting Outcome metrics. For instance, what are the direct connections between funding requirements, how you perform services and service levels or outcomes?

This way of thinking is also useful for assessing whether and how to maintain service levels or quality, while you are also seeking to achieve operational efficiency.

Devil is in the Details

Like any other framework, the devil is in the details of how you use it to plan and implement your projects. Depending on the focus of your review, you can use the model to focus on understanding the impacts of funding or acuity level changes, determining how to achieve operational efficiency and effectiveness, or to assess quality levels given all of the above.

In future blog spots we will discuss different ways of using the model. In the meantime I would love to hear how you would use the framework? What is more pressing for your organization: service improvement, cost reduction, or a focus on performance measures? Or (as is so often the case) all of the above?

7 Keys to Successful Shared Services

Wed, 20 Jan 2016 21:54:26 -0500

I recently read new blog titled “ 7 Keys to Realizing the Savings of Shared Services”,and it got me thinking.

I am working on a large government shared services feasibility study right now, and know from many projects that Shared Services are a powerful way to achieve cost savings, improve processes and find efficiency. We will probably see more of them in Ontario, as the 2015 Annual Report of the Auditor General of Canada mentioned that back office integration is a “good practice” that has not been explored enough in Ontario healthcare settings.

The 7 Keys the blog mentions are:

Smart Selection of Locations - Finding a good offshore location to save on labour costs
Focus on service strategy - To seize the opportunities, your shared services strategy must focus on delivering value by using advanced data analytics
The Magic Triangle of Talent, IT, and Process - Finding a combination of the three
Get governance right
Knowing what to measure- You can find success if you complete redesign in the end-to-end services and processes and clarity on what will be measure to define success
Lifecycle management - Lifecycle management in shared services is not only about opening new locations and shutting down old ones. It is about understanding evolution based on shared services organizations’ overall financial performance, workforce longevity, and process/IT maturity
Talent for the Future - The article points out that no strategy can be successfully deployed without the right leadership

Some of these 7 keys don’t really fit for public (or some private) sector environments. For instance, in terms of selecting a location, the article sites AT Kearney’s services location index, that states there are more than 51 countries suitable for setting up a new delivery center. I suppose that works if you want to move your service offshore, but what if you don’t? Or what if your currency value changes drastically (like the recent drastic slide of the Canadian dollar) making that “cheap” offshore location suddenly expensive?

Or key #3 doesn’t work if you are a public sector organization that can’t invest in new technology right away.

Based on our research on key factors for success for public sector shared services, we found 6 other characteristics that were more predictive of success:

Strong project management
Strong, proactive change management
Solid, vocal senior management responsibility
The ability to align SSO objectives with the political, social economic realities of the government
Effective communication
Flexible, phased approach to implementation

These factors came up in surveys and research on best practices for shared services, but we also have seen these in our work with shared services in community organizations, hospitals, and larger government ones too.

I would be interested in hearing from others who have experience shared services on whether they have worked, why, and what benefits their shared services have achieve.

Emperor’s Clothes: Transparent Pricing a Way to Reduce Costs

Wed, 20 Jan 2016 16:12:02 -0500

The Tulsa World recently reported on the largest nonprofit health system in America has introduced fully transparent procedure pricing.

This got me thinking: is there any evidence on whether transparent pricing helps reduce costs?

First, What is Transparent Pricing?

Transparent pricing refers to all agents in a transaction knowing the price of the good. This is true at a system level, or at an organizational level.

How can the Ministry set a price level for quality based procedures if prices or costs aren’t accurate and consistent and predictable?

Why is Non-Transparency Bad?

In the healthcare system, lack of pricing transparency leads to pricing failure, which is when there is no correlation between price and quality.

A disconnect between the linear relationship of price and quality, while rampant in healthcare, also makes it hard for hospital administrators or Ministry of Health policy wonks to find effective ways to improve health while reducing cost of care in a consistent manner.

Does it Work?

In an eleven-point plan released in 2012, a group of America’s top healthcare experts listed “full transparency of prices” as one potential solution to reduce healthcare costs. argued that price transparency would allow consumers to compare prices before choosing a provider or hospital and, consequently, better anticipate their overall costs. In turn, they argued that making price information publicly accessible would also reduce excess healthcare spending by encouraging providers to offer more competitive pricing.

One hospital in the US found they could reduce costs by 30% through the use of transparent pricing.

Another study I read found that Transparency—of the costs, prices, quality, and effectiveness of medical services and products—has been identified as a key tool to lower costs and improve outcomes.

An exhaustive legal review i found had a good summary: The most important aspect of any price transparency initiative will be the education provided to employers and consumers about the newly available price and quality information. Without an understanding of how this information can help each group make more informed healthcare decisions and save on healthcare costs, simply making prices and quality scores available to the public will not have the desired effect of lowering the cost of healthcare.

So in a way it all comes back to an engaged user!

Hospitals Get Creative to Deal with Frozen Budgets

Wed, 20 Jan 2016 15:14:09 -0500

A recent article (click here) has highlighted how Health Sciences North has encouraged staff to find creative cost-saving solutions as the hospital faces years of consecutive budget freezes.

What they found was that the small things matter: double bagging urine samples can save thousands.

Frozen Budgets

Hospital budget cuts aren’t new, and they aren’t just in Canada. In America, Congress approved a two-year Federal budget package that raises funding levels and suspends debt limits until 2017. The result there has been a decrease in new programs, decrease in hospitals’ ability to borrow and impacts hiring. One blog points out the recent 2% medicare cuts will ultimately mean the average major teaching hospitals in America will have almost $14 million dollars less to support critical patient care services often unavailable in most communities―most impacted are trauma centers, poison centers, psychiatric units, burn units, and others.

Here in Ontario, most hospital budgets will remain frozen at current levels, generally speaking. Earlier this year, a small number of smaller hospitals received small increases. And while some hospitals are seeing some short-term gains from HBAM and QBPs, there are many more who are being impacted.

Last year, Health Sciences North had to cut its budget by 1.2 per cent – or roughly $5.2 million – as it faced the third consecutive year of a provincial budget freeze. The budget reduction came with 35 job cuts, and also required the hospital to find ways to do more with less.

Getting Creative

Hospitals across North America have gotten creative in the past few years to deal with budget crunches. Here are some great examples:

Change the Type of Medicine - HSN’s pharmacy found a way to deliver some antibiotics in pill form, reducing costs from $12/day per patient to 36 cents.
Cut food waste in half by weighing it - Six Iowa Health System hospitals identified cost-saving opportunities in their kitchens. The hospitals adopted a program to reduce the amount of unused food thrown away, an effort that has sparked lively staff collaboration
Properly sort hazardous from non-hazardous waste - Approximately 70 percent of hospital waste stems from operating rooms and labor-delivery suites, according to Johns Hopkins researchers.
Make smart switches - Sacred Heart Hospital in Eau Claire, Wis., made a series of small swaps to save big bucks. By switching from bottled soda to fountain drinks in the physicians’ lounge, the 344-bed hospital saved $24,000 in one year. The hospital saved $50,000 more by switching its subscriptions to medical and education journals from print to online.
Replace inefficient sinks, toilets and urinals - One US hospital has saved about $257,000 annually in water costs by converting their inefficient sinks, toilets and urinals to low-flow models. For hospitals willing to take the extra step, there are also waterless urinals available.

Lessons Learned

Some of the main themes I seem to pick up in reading some of the articles behind this blog:

Savings aren’t just driven by big projects:
Don’t just focus on the usual suspects (supply chain, etc.)
Allow all staff to have a hand in getting creative

Good luck to all hospitals out there. Given that it doesn’t look like hospital budgets will increase any time soon, I am sure we will have many more interesting creative ideas in the years to come.

The beautiful infographic above and content for this blog are brought to you by our wonderful...

Fri, 11 Dec 2015 13:05:09 -0500

The beautiful infographic above and content for this blog are brought to you by our wonderful friends at Garrison Health. Garrison provides strategy, operations improvement and advanced analytics for healthcare and community organizations. We team up often, and I can’t say enough good stuff about them.

The growing seniors cohort continues to place strain on the health care and social service sectors. From 2011 to 2021 there will be an additional 1.2 million seniors in the province of Ontario alone.

Putting some numbers to size of the seniors cohort and the resource requirements to support them (see the infographic above) helps policy makers and providers better plan for an integrated view on care. Care integration is something we are hearing more about through Health System Funding Reform where payments following the patient, Quality Based Pathways where best practice is being defined across provider groups, bundled payments, and Health Links for high-needs users of the health system to name a few of Ontario’s prominent initiatives.

Appropriate investment to support and enable a sustainable system will need to be considered, appreciating the balance that needs to be struck along the care continuum from primary care, home and community-based care through to acute care service delivery and long term care placements. In an industry that has traditionally been silo based, are we organized in a way that will allow us to implement a holistic view on seniors care? Are the current and planned investments in health care sufficient to support patients at home and in institutional settings? Will the skills of our workforce be ready to support seniors in 5-10 years? We believe the data helps to set the stage for this important planning.

4 Ways Lean Can Improve Children’s Mental Health

Tue, 24 Nov 2015 11:31:12 -0500

Instead of listing out system challenges, in this article I want to focus on some potential solutions. To cut to the chase: can Lean really help improve Children’s Mental Health in Ontario?

You bet it can. In a previous blog post (click here), we talked about Ontario’s ambitious and important plan to overhaul the delivery of Children’s Mental Health services in Ontario. We talked about three major issues:

Implementation Uncertainty – The Ministry of Child and Youth Services (MCYS) has taken a little longer than originally planned to share the details and implement some of the earlier stages. This has created uncertainty for some care providers and other stakeholders as to how to plan for the change. At the recent Children’s Mental Health Ontario 2015 (CMHO 2015) Conference (click here for some details), MCYS did provide some more details, but there is still much to figure out;
Impact on Relationships – What impact will the new system have on existing relationships between funder and care provider, lead organizations and other care providers, or clients and families with the system?
System Complexity – There is an inherent complexity in developing and implementing the lead agency model, new funding models and developing new care pathways

Change Management and intensive project management at a system and local level will help tremendously with the roll-out. No doubt governance, operational improvement and capacity building are part of it too.

But one really important way to address the challenges can be to use Lean. Lean is a quality improvement technique that uses tools and approaches that focuses on value added worksteps and gets rid of waste in any process (you can check out a detailed definition at Wikipedia). As a certified Lean Six Sigma practitioner, and as someone who focuses on improving organizational capacity and results in community organizations, I can personally attest that it is a fabulous tool that can be used effectively in ensuring that Moving on Mental Health develops an improved system.

Here are the four main ways Lean Six Sigma can aid in rolling out Moving on Mental Health:

#1: Better Incorporating the Client’s Point of View

One of MCYS’s goals in MMH is to achieve a system that is more representative of client needs (for more on the official goals and approach, click here). Much like the “patient-centered” approach being taken in healthcare these days (for more on this, see our blogspot here), it has long been felt that the system needs to better reflect user needs in the way clients access services, the way services are funded, and the way clients and their families are supported throughout their journey.

One of the main principles in Lean is taking a customer or client centric point of view (click here to learn more on customer point of view). In Lean, processes are to be developed with the customer, client, and/or end user in mind. All process steps are reviewed for whether they represent “value” to the client. For a step to be considered valuable, a client must be willing to pay for that step, it must effectively transform the service and it must be done right the first time. The Lean Value Mapping process helps the practitioner to ask these questions all the way through an existing or new process. The end result is a process (or set of processes or system) that is considerably more reflective of user needs, while also being faster and typically more cost effective. I would imagine if we applied these three criteria to most of the current processes we would be able to find a lot of non-value steps currently in use.

#2: Creating Standardized Care Pathways

One of the main goals of Moving on Mental Health is to create standardized, clear pathways for clients and families to access care, and for care providers to collaborate. Lean value mapping is a way to create standard processes that are based on client needs. Lean value maps (click here for more information on Value Stream Mapping) are typically created with input from all major process or system users. Sometimes the end client is involved too. Lean value maps can help MCYS and care providers to figure out consistent and efficient processes. And by using the Lean approach of inclusivity and applying the concept of client value discussed above, the Ministry can also achieve important change management objectives at the same time.

#3: Improving System Collaboration

This is really linked to #1 and #2 above. Through our change management work with MCYS and our participation and sponsorship of the CMHO 2015 conference, we have heard from care providers about concerns about how to better work together in the new system. How will lead agencies and other regional care providers better collaborate to develop care solutions in the new model? How will they collaborate with MCYS and families to ensure the system meets client needs?

The Lean approach is based on an inclusive, collaborative process to develop a future state model. In reviewing current state Lean value maps and creating future state ones, you bring together all of the people who work in a particular process. All stakeholders have an equal voice. I have even brought in end users, and given them an equal voice to the system provider or the governance role in creating a final solution. I could see a Lead Agency using Lean approaches to bring together other care/service providers in their area, along with MCYS and child/youth/family representatives to plan out how the system can work in an improved way in the future. And along the way, integrate a more collaborative approach.

#4 Reducing Waste and Costs

Another goal of Moving on Mental Health is to reduce costs and achieve a more sustainable funding approach. By using process value mapping, the Ministry (and Lead Agencies) could find the most efficient way to provide services. Often one can include cost analysis of processes at the same time, so it is possible to assess approximately how much they have reduced the cost of services.

Lean Isn’t a Magic Bullet, but it Helps!

There is a lot that Lean cannot do. And sustaining it takes concerted effort, senior sponsorship and political will within the organizations involved. But it can help tremendously with several of the main goals of MCYS as they try to transform the system.

I leave you with this thought: For one community organization I recently used Lean to reduce the cost of their end-to-end processes (which was used in over 300 locations across the province) by over 50% and reduced the time to complete the activities by 60%. Imagine those results applied to the Children’s Mental Health system.

Why Project Management is Important for Non For Profits

Fri, 20 Nov 2015 10:09:21 -0500

At a conference a few years ago, a former client who works in the not-for-profit sector was teasing me about trying to project manage my own wedding by using Gantt charts. He pointed out that after my wife erased the Gantt charts two or three times, we got down to planning the wedding the old fashioned way: by talking and just doing things.

He told me this as a response to a question I asked him about the lack of project managers in not for profit projects. He was underlining a point: there are a number of reasons when many public sector managers don’t consider using project managers. At the top of his list was: uncertainty as to whether you really need a project manager, not enough time to find a good project manager, and insufficient funds to hire a project manager. But his main point was that he didn’t think they ever really needed a project manager for the type of work they did.

I have thought about this a few times since then. Here are some reasons why I think this point of view is completely wrong, and why I think it is vitally important for Not-for-Profit, Professional association and other public sector organizations to consider hiring project managers:

Help achieve your goals - Many goals that NFPs and like minded organizations aim to achieve, are accomplished by small in-year or sometimes multi-year projects. A project manager would provide for better success and completion rates.

Assist Your Staff – Many NFPs have small staff. Project management isn’t considered a core competency, and from my experience most NFP staff do not have these skills. Hiring a project manager in a strategic way to teach your staff or set up a project management approach would be beneficial, without needing to hire a PM on fulltime.

Reduce Project Costs – Project managers are trained to find ways to complete projects on time and on budget. They will have a better chance at doing this than someone who does not have the experience and toolsets.

Focus on Your Core Competencies – By hiring a contract or part-time project manager to help you set up, run, or revise how your projects are managed, you can save your valuable time to focus on your core competencies of running your organization.

Help You Deal with Change - Most NFPs are dealing with considerable change on a regular basis. A good project manager can help you assess the projects required to manage the change factors that are impacting your organization, and plan how to implement those projects given your resource constraints.

Strategic Leadership in Long-Term Care Homes, Now More Than Ever

Thu, 12 Nov 2015 10:06:31 -0500

Hardly a day passes that we aren’t reminded of the challenge of responding to a growing population of elderly Ontarians with increasingly complex needs. Elder care providers, including long-term care homes, are challenged to find innovative ways to serve these complex needs in more sensitive, integrated and person-centred ways, with little or no additional resources, and closer to home at that!

The attention to and investment in alternatives to admission to long-term care (LTC) may be starting to pay off. As noted in “Bringing Care Home” the placement rate of Ontarians 75 and older declined 26% between 2009 and 2012. In many communities waiting lists numbers and waiting times are also beginning to shrink after years of growth. Yet the data is also showing that the average age on admission—a proxy for frailty and complexity – is now over 83 years, and continues to rise while the length of stay continues to shorten. This could leave an optimist to hope that both sides of the equation are making a contribution. More effective community supports are enabling the elderly to remain safely in the community consistent with their preferences, and relatively scarce and more costly long-term care beds are increasingly being filled by those with the most complex needs.

Even as they are doing their part to support this shift, long-term care homes are being expected to meet more and more stringent public accountability expectations. For example, as of April 2015, Ontario’s Long-Term Care Homes are required to submit formal Quality Improvement Plans to Health Quality Ontario (HQO). The Ministry of Health and Long-Term Care has further increased its workforce to a ratio of about one full-time inspector for every four homes. This means homes are subject to what is easily the most comprehensive regulation and inspection scheme in the Ontario health care system. Long-term care providers have learned to live with close scrutiny.

Where does all of this leave the boards and leadership of homes? Homes will continue to operate at full capacity due to population growth and limitations on supply. Highly capable long-term care organizations that are well grounded in their communities are playing an incredibly valuable role in local service ecosystems. But it is getting harder and harder to play this role without an explicit strategy.

As HQO notes in its current business plan, the shift from institutional to a community focus requires more effective partnerships between providers and across sectors. How individual patients interact with the system is seen as a gauge of how well the system serves the public as whole. But how do individual long-term care homes learn to interact with this system while they are also held so closely to account on their internal processes of care?

Integration and Quality Improvement Planning are but two examples of externally driven factors that can only be made meaningful, and beneficial, in the local context if there is a clear strategy. In both cases the behavioural common denominators include leadership, trust, communication and partnerships that build capability. Whatever else an organization does, it pays now more than ever to have a well-articulated strategy. How else are long-term care providers going to adapt to simultaneous demographic, clinical, integration and fiscal demands?

High performing organizations will always be those that have learned to conform to external demands in ways that are meaningful in their local context. They will resist the temptation to go through the motions on compliance and improvement plan submission processes and find ways to make these drivers work for their residents and local communities. This is what strategy is all about and why it is so critically important for mission-driven organizations such as long-term care homes.

7 Questions Hospitals Need to Ask About HBAM

Wed, 11 Nov 2015 14:58:28 -0500

Your hospital just received the news you have a large Health Based Allocation Model (HBAM) variance. Now what?

Hospitals have two big reasons to pay attention to HBAM results: understanding that Local Health Integration Networks (LHINs) may redistribute funds based on variances, but just as importantly to dig internally and understand why they had a variance in the first place.

So what do you do? How do you handle this situation? Where do you look within your organization to improve your HBAM results?

As a starting point, here are 7 questions hospital organizations can ask themselves to figure out the impact of their HBAM variation, and where to start looking for some answers.

Question #1: Was it me or was it you?
HBAM is a fairly sophisticated “pie sharing” model, where the total pie ($5.15 billion in 2015/2016) is distributed based on each Health Service Provider’s (HSP) share. Each HSP’s share of the pie is determined and therefore impacted by their own expected results and the expected results of all other HSP’s within each of the HBAM care types. Although you may have an HBAM variance, in part because of this relative/competitive pie sharing model, there is not a 1:1 co-relation between expected results and changes in funding.

Even if you become more efficient, if others do a better job, then relatively speaking your piece of the pie won’t be as big. So the first question you have to ask yourself is: Did my HBAM variance occur because of something our organization did (or didn’t) do, or did others get that much more efficient relative to my organization?

Question #2: When did I do that?
There is a two year time lag in the data used by the Ministry to develop the HBAM results. The 2015/2016 HBAM allocation is based on data from 2013/2014. That means any improvements you make this year won’t necessarily impact your HBAM results for another couple of years at best (although of course there are other internal operational benefits for making some of the necessary clinical or process improvements). So, another question you can ask is: have we done anything recently to improve our operations that will change these results going forward? Can I expect next year’s results to be better?

Question #3: What is the source of my variance?
Variance in HBAM helps an organization understand its efficiency by providing a look at the gap between expected and actual results. If you have a variance, you need to figure out the source of your variance and address it.
Looking at your results, which cohort was the largest source of variance for your organization? Was it the same for the other organizations in your LHIN (which could lead you to consider system or geographic wide issues) or was it unique to your organization?

Question #4: What is causing the variance?
The service component part of the HBAM results can help a hospital understand cost variance, particularly when comparing your organization to others. How did the same patient cohort fare with similar hospitals (both within your LHIN and outside)? How did this cohort fare in other communities? If a similar hospital in a similar community fared better with this cohort, can you work with that organization to understand how and why?

Question #5: What is my actual expense distribution?
Did your actual expense distribution turn out the way you thought it would? Did it align with your anticipated service model for the region? Do you have a system in place to allow you to better understand your actuals (like case costing for instance)?

Question #6: Did the service component inputs change?
There are three main parts to the service component in HBAM - demographic changes, clinical and demographic characteristics, and rurality and age adjustments. None of these are a one-to-one relationship to HBAM adjustments, but they all can have an impact. I worked with one hospital that received a significant positive bump due to HBAM, and they attributed it to significant population growth.

While you cannot control demographics or rurality/urbanity of your patients/clients, you can at least understand them and how they impact your funding. More importantly, you can look to how efficiently you provide services to those individuals: What are the patient types we serve? What is the total cost to provide services to each type? Do I expect to serve more or less of these patient types in the future, and how does that impact my future cost model?

Question #7: What are my actual and expected unit costs?
HBAM also tracks your unit costs, along with the service component. The goal is to account for sources of unit cost variation and to establish incentives to improve efficiencies. The main sources for unit cost in the model are your measured case mix, unmeasured case mix (including standby capacity, economies of scale, or clinical training) and geographic or rural context.
You can ask some of the same questions of expected versus actual unit cost adjustments - why did it happen? What can I do about it?

Generally speaking, HBAM forces hospitals to do what needs to be done anyways: to assess operational costs, understand where your organization is doing well and where it is not, and to figure out ways to improve your organization’s future service delivery model. But that doesn’t mean it isn’t complex in the meantime figuring these aspects out.