Cost-Saving Improvements

The general principles of ‘Business Process Re-engineering’ can be applied in a logical and systematic way to achieve cost saving and service improvements. It is possible to design a simple single improvement process that makes service innovation transparent. Evidence shows that substantial non-pay cost savings can be delivered using a safe and reliable methodology that is implemented in line with best practice.

Management literature indicates there can be high-risks associated with encouraging organisational change in a service environment without a clear strategic goal and management processes to monitor and communicate the change. When staff feel that they have a conduit for revealing their ‘change proposals’, they then deliver innovation and cost saving. These individuals understand how to make the changes and want to ‘Just do it’. Some organisations encourage this ‘Just do it’ approach without using a standardised documentary management process to review the quality and delivery. The organisation needs to understand what is really happening over a given time period.

This leads to questions of:
How can you prove it is an improvement?
What was the baseline you moved from?
What measures should be adopted?
How do you control change once the culture has changed to ‘Just do it’?
We may find that where public sector employees were averse to change because they were being told what to change and how to change it – giving them the choice of what to change and the ability to make those changes (without a requirement for systematic checking and approval) could lead to an initial feeling of euphoria amongst the senior management team (because the improvements appear to happening much faster) where in fact it may well be change is happening at an accelerated pace but the drivers are inexperienced in these areas and the organisation is at risk.
This high-risk approach has the potential to deliver quick wins on more obvious improvement cases, but could also have the potential to create chaotic uncontrollable change, (once this culture spreads) leading to senior management putting a halt to individual stakeholder empowerment and stakeholders saying “Here we go again!”. Many senior managers accept that ‘the latest initiative’ is applicable to all change without studying and understanding risks involved. Allowing individual stakeholders the ability to be involved gets ‘Buy in’ from that stakeholder but we need to recognise the importance of managing change – especially in the public sector where accountability and documentary evidence of progress is expected (due to the ‘command and control’ nature of the NHS). We cannot say a change has occurred unless the baseline data is gathered and in sufficient detail that it can be justified when interrogated. Once we have an understanding of – ‘how do we do it now?’ we are then able to measure any future change and what the impact might be. This then requires further data to be gathered to ensure the future state can be compared with the current state.

Many stakeholders will feel that this data gathering is a complete waste of their time. On some occasions the improvement may be obvious and the stakeholders comments are valid, but change is not just about encouraging staff to deliver improvements, it is also about encouraging staff to understand the need for good management and control at the local levels. Senior management cannot be expected improve the organisation and reduce costs unless individual stakeholders are being assistive, open and transparent (due to the complex processes involved). Stakeholders at all levels not only need to feel empowered to deliver change, they also need to understand their individual management responsibility towards longer term cultural goals and need to think about the whole organisations objectives whilst making that change.

External ‘command and control’ type pressures coming from the Strategic Health Authority and Government Offices also affect the ways change happens. Individual stakeholders may agree a successful local process for change that can deliver improvements but it subsequently has to be dropped because resources are needed to adopt the next Government led initiatives. From speaking to stakeholders who have been in the NHS for many years there seems to be a cyclical nature to the management of improvements.

Before my literature research I believed that the NHS was struggling because of bad governance caused by Department of Health initiatives constantly changing (normally due to a new government coming in after a general election). I also believed that a command and control structure was the answer with everyone doing things in the same standardised way with the same resources. I now realise that this is a very naïve approach and does not encourage innovation. After reading numerous approaches to business change in the public sector and reviewing change within various organisations I am now of the opinion that there is no ‘Holy Grail’ of organisation change. Current NHS thinking is pointing towards using ‘Lean’ and ‘6 Sigma’ management tools and applying them to the NHS. These tools are very ‘manufacturing’ biased and do not easily apply to the public service sector. These management tools were designed with products and a factory layout in mind as below:

What is the product line we wish to improve?
What is the current process and what is the new improved process?
How do we organise the factory to allow the products to be pulled through the process?
Implement the new line.
An NHS Hospital is different to Toyota. We don’t manufacture a ‘make’ of patient – We repair and maintain every ‘make and model’ of patient. Operationally, this is a different function. We do not have products, we have services. The ‘customer is told’ which service they require depending on their need. This differs from buying a manufactured product in that ‘the customer chooses’ their car. Trying to run an NHS service using manufacturing management tools to deliver cost savings is a high risk strategy that needs careful management.
What is our process? In most basic terms it is:

Hospital Function:
Patient comes in – Patient fixed – Patient goes home;
Toyota function:
Parts in – assemble car – car out.
The Lean tools are useful in examining service processes, but can it truly deliver the benefits to the NHS that it does to a manufacturing organisation? In reality, I believe it does not.
What is common across all management thinking is the need to involve the stakeholders responsible for making the changes, and delivering the service. They need to be involved from the start. The chairman of IBM recently was reported as saying that the best ideas for innovation and improvement come from the people involved in the process. I agree that the people involved need to feel part of the ‘change decision’.

Ideas come from individuals.
Capturing and developing innovative ideas is a big challenge. Fitting them into a framework that can deliver the innovation will encourage others to bring ideas forward. Vice-versa – ignoring individual ideas can be the demise of an organisation. How do we deliver change that comes from internal innovation whilst also implementing change that comes through the command and control structure of the Department of Health?

Some of the common themes that come from academic literature and interviews with NHS stakeholders are:
Requirement / opportunity for change identified (An idea project that may create changes enabling improvements and/or cost saving)
Internal
External
Stakeholder involvement
Someone needs to agree the change
Someone needs make the change
Someone needs to review the change
Documentation – Change needs to be documented as part of a management system and measures agreed to ensure appropriate reporting capability internally and externally.
After gaining an understanding of the complexity involved with managing change all the information was reviewed with and looked at the feasibility of all improvements and cost innovation being delivered through a common process.
A simple process was designed to deliver change (and the key measure was financial) The process had to help deliver substantial non-pay cost savings. Key areas such as above were covered in the process to enable it to deliver change which safely improved services delivered by the organisation (whilst reducing cost). The improvements process was adopted by the organisation and implemented. It was also decided to have the management process externally audited by the BSI and the process was designed using the EN ISO 9000/2000 quality standard.
The process involves a combination of factors thought to be important in ensuring successful change:
Consultation with originator(s);
Bringing in interested stakeholders to give them a say;
Documenting development enabling review;
Presenting to Lead Stakeholders at a monthly forum [communication];
Presenting to Senior Management at a monthly meeting[Decision];
Once approved, agreeing implementation plan;
Monitoring and delivering to agreed time scales;
Feedback to senior management.
The impact on procurement and innovation at the Trusts who have adopted this process has been beneficial in:
Reducing non-pay costs
Improving product and service standardisation
Reducing Risks
Improving morale
Improving communication
Breaking up ‘Silo mentality’

biomed-management

Was there much resistance to doing this?

Yes – Staff were suspicious that their budgets would be cut without the delivering any improvements. It took approximately 6 months before the system matured and the stakeholders trusted in it.

How were the problems overcome?

Through good communication. It was important to meet staff in all departments and set up multi-disciplinary teams to ensure multi-departmental involvement. The methods involved in setting up an innovative communication structure requires looking at the current methods for communication and changing them. This is different for every organisation and would require a review.

This process was developed by John Sandham and implemented at Princess Alexandra NHS Trust delivering service improvements and cost savings in excess of £1.3Million within 18 months.

* Cost savings were not related to pay or redundancies.

John Sandham IEng MIET MIHEEM