How to focus on Value rather than Cost, leading to service improvement and cost reduction

1. How to focus on Value rather than Cost, leading to service improvement and cost reduction VANGUARD CONSULTING

2. What matters to you? 5 mins with the person next to you, find out what matters to the person next to you. 10 min Feedback

3. Hierarchy of what matters • Physiological • Safety • Love/Belonging • Esteem – confidence, achievement

4. How do we improve? Capacity (COST) = VALUE work + Waste Value work is defined by the customer/citizen i.e. “what matters”…..

5. The place to start is ‘check’ • Get knowledge: Understand the what + why of current performance in systems terms. • How does our thinking affect performance? Check • Experiment with method using ST principles. • Does different thinking lead to improved performance? How do we make this normal and sustainable? Do Plan Change must be based on knowledge, not opinion

6. Thinking What is the purpose (in customer terms)? C U S T O M E R S System Conditions Flow : Value work + Waste 1 4 3 2 6 5 Capability of response Demand : T + F, V + F What matters? The Vanguard model for ‘check’

7. Purpose is to move the organisation from this…. to this…. Changing management thinking Command and ControlThinking The Vanguard Method Top-down, hierarchy Perspective Outside-in, system Demand, value and flow Functional specialisation Design Separated from work Decision-making Integrated with work Targets, standards, service levels; Relate to budget Designed against purpose; demonstrate variation Measures Attitude to customers What matters…..? Contractual Contractual Attitude to suppliers Co-operation, mutuality Make #s + manage people Role of management Act on the system Extrinsic (carrot & stick) Motivation Intrinsic Reactive, projects, by plan Approach to change Adaptive, integral, emergent Control Ethos Learning

8. The Systems Thinking solution to the problem of providing a sound indication of financial benefits

9. Looking at cost in a different way • Understand the purpose of the system from the customers perspective and by so doing understand the VALUE work. Turn off FAILURE demand. • Understand the system end to end. • Identify the things that create waste and thus cost in the system and remove them • Do only the VALUE work.

10. Non ValueWork – the big cost • Failure demand • Re-work • Duplication • Doing things that have no value to the customer • Time • Inventory

11. CAPACITY = VALUE WORK + WASTE & FAILURE = OPERATING EXPENSE • We know Operating Expense from the traditional accounting measures • We can extrapolate the percentage of Waste & Failure via Check • We know we can switch off, design out and understand the causes Waste & Failure • Therefore, we can attribute the amount of expenditure (£) which is having a positive effect and the amount (£) which can be saved

12. A HIGHWAYS SERVICE If the purpose from the customers perspective is “ Provide a safe and reliable highway for all” what do you think as customers we would pay for in terms of work?

13. By studying Demand, Understanding what matters and spending time in the work we learnt that what the customers would actually pay for and thus what we should be doing was (in Green) Everything else is waste Capacity = Value work + Waste work

14. CASE STUDY 2 Mrs McKenzie (not untypical) • “Can Mum go to a lunch club?” (100 spare places) • Assessment  Delay  Depression • GP  medication • Diet affected • Hospital  infection • Care Home N.B. £1,000 to assess each £100 of care (SCC)

15. CASE STUDY 2 • What matters to Mrs McKenzie • How much of the work is VALUE work versus “what mattered?’ • What were the missed opportunities? • What could costs have looked like?

16. Purpose Measures Method To improve performance, change thinking Thinking How would you redesign this system to do ONLY the VALUE work? What things would you need to tackle? What would be the benefit of redesigning the work differently? How can you demonstrate it? System Performance Don’t forget the power of what matters………

17. Types of Waste • TYPE 1 – Easy to remove immediately • TYPE 2 – Designed in so we need to design it out so as to enable more Value work to be done • TYPE 3 – harder to design out may be something like legal requirements but we need to understand its application and either challenge or design around it to enable value work to be done.

18. WHAT WE ARE LEARNING ABOUT SYSTEM ECONOMICS IN PEOPLE CENTRED SERVICES FROM A VANGUARD METHOD PERSPECTIVE

19. Family with Complex Needs • Older person with increasing dependency • Individual who has a “wobble” and falls over Cost & Capacity £ 1. What were the missed opportunities? 2. If we designed the work differently what would the impact be on the family’s journey? X ? X X ? ? Time 1995 2016

20. Finance in a typical PCS • Operational Costs • Cost of providing Value work in response to value demand • Cost of providing Waste work in response to value demand • Cost of providing Waste work in response to Failure demand • Impact Costs • Cost of impact of poor service on customer – especially relevant in support process like IT • Cost of impact on wider system – e.g. ASC, Benefits, Policing etc • Support Costs • Cost of management • Cost of IT • Cost of financial/HR etc support • Cost of Audits • Cost of project management • Cost of policy etc • Opportunity & Risk • Savings from changing current thinking (see capital IT projects) • Risk of new approach to thinking (new/different demand, HR etc) Etc.

21. HOW TO BUILD AN ECONOMIC PICTURE AS PART OF CHECK Core /Value work Enable/ add value work Variable Costs Fixed costs

23. DISABLED FACILITIES GRANTS

24. Adult Social Care • Underspent community care budget (cost avoidance of £1.5m in 2013/14) for 3 consecutive years • Referrals resulting in statutory funded packages of care reduced to 10.9% - down from 24.1% • 28% reduction in residential and nursing care placements • Average domiciliary care packages reduced from 12 hours to 9.7 hours per week • 46% reduction in contacts into Social Services • Re –referrals reduced by 46% to 10% • 30% reduction in assessments

25. ‘Roll-In’ (Sample Size: Entire Stroke Pathway)

26. Purpose Measures Method To improve performance, change thinking Thinking System Performance

27. New Measures Case Study ‘A’ • … • Circumstances Prior to intervention • 2 children, 1 bed, 2nd floor flat. Separated. Partner in prison for 10 yrs (attempted murder). • Pregnant with 3rd child and birth imminent • High-rent arrears. Evicted from previous property due to rent arrears. • No motivation, confidence. On anti-depressants. • Children’s school attendance very poor. Not attending their health appointments e.g. dentist. • Not able to manage her home at all. Lack of hygiene for her and children. • 6+ agencies engaged prior to involvement but no support as tenant not engaging. • Costs from Start of intervention • Additional activities include: • Help preparing to move. • Removing unwanted belongings • Multiple agency time at Core Group and Child in Need Meetings. • EST. COST OF ALL ACTIVITIES: £ 2,210 • Potential Outcome under ‘old way’ • Now has 3 children. • All 3 would have been taken into care.

28. Are we delivering what matters?