Becoming the Change: Leadership Behavior Strategies for Continuous Improvement in Healthcare by John Toussaint & Kim Barnas

Author:John Toussaint & Kim Barnas [John Toussaint]
Language: eng
Format: epub
Publisher: McGraw-Hill
Published: 2020-08-24T16:00:00+00:00

BEYOND BUDGETING

Alex’s goal was to replace the annual budget with a system of rolling forecasts and to transition every unit and department over with a program he called Beyond Budgeting. What is really noteworthy here is how he opted to begin this process.

Looking out over an annual budget report, it is easy to see that there are almost always units that struggle to manage their resources year over year. Frontline managers often take the blame, or extenuating circumstances are cited. But Alex decided to look at these units through A3 thinking. How could he and his team use root-cause analysis to better understand the issues at play?

“Our idea was to embed one of our finance managers in a unit to understand what was truly driving performance,” Alex says. “So, for instance, Nikola spent six weeks working with an inpatient learning disabilities unit that had gone over budget by about half a million pounds every year. But we weren’t there to understand why they couldn’t stick to their budget. We were there to understand their needs.”

Working with staff on the unit, Nikola helped them build a model of capacity and demand, which begins by determining the two or three key operational drivers of demand (patients) and capacity (staffing) and forecasting the impact of those drivers on required resources. Once the operational drivers were understood, they could create financial projections on a rolling basis.3

Using the capacity-and-demand model, it was soon clear that the unit had been choking on scarcity. Without enough full-time staff members on board, leaders were consistently forced to fill in the schedule with more expensive temporary caregivers from an agency. If the unit was allowed to hire two new staff members, they found, they could almost entirely stop using the agency and save at least 20 percent of labor costs.

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