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
In People centered services this is then the VALUE work the work we should be doing

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

7. Changing management thinking
Purpose is to move the organisation
from this….
to this….
Changing management thinking
Command and Control Thinking
The Vanguard Method
Top-down, hierarchy
Perspective
Outside-in, system
Functional specialisation
Design
Demand, value and flow
Separated from work
Decision-making
Integrated with work
Targets, standards, service levels; Relate to budget
Designed against purpose; demonstrate variation
Measures
Contractual
Attitude to customers
What matters…..?
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 Value Work – 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. Mrs McKenzie (not untypical)
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)
What mattered to Mrs. McKenzie?
What would meeting Mrs. McKenzies need have cost?

15. What matters to Mrs McKenzie
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. To improve performance, change 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?
Purpose
Measures
Method
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. ? X ? X X ? Time 1995 2016 1. What were the missed opportunities?
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? X
2. If we designed the work differently what would the impact be on the family’s journey? ? 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. Core /Value work Enable/ add value work
HOW TO BUILD AN ECONOMIC PICTURE AS PART OF CHECK
Core /Value work
Enable/ add value work
Role
Value % V = W%
F=W %
Cost 1
Type 1
Type 2
Type 3 2 3 4
Role
Value % V = W%
F=W %
Cost 1
Type 1
Type 2
Type 3 2 3 4
Variable Costs
Fixed costs
ITEM
Cost 1
As waste and failure are removed from the flow what happens to variable costs 2 3
ITEM
Cost 1
As waste and failure are removed from the flow what happens to fixed costs 2 3

22. Homecare
2015
2014
2013
Average Hours/week
6.31
7.05
7.31
Average cost/week
£102.40
£105.97
£116.04
Enablement
2015
2014
2013
Average hours/week
7.13
13.56
7.29
Average cost/week
£130.60
£159.53
£130.51

23. DISABLED FACILITIES GRANTS
Old System
Redesigned System
Saving (grants)
End to end time
675 Days
64 Days
611 Days
Flow steps
291 Steps
34 Steps
257 Steps
Preventable demand
71% Preventable
40% Preventable
31%
Average cost of physical works
£7,000
£6,509
£491
Average cost of delivery
£499.76
£319.98
£179.78
Capability to complete DFG’s at current spend levels
10 Months
7 Months
3 Months
Mileage
£10,633
based on 07/08
52% reduction
£5,516
Dropout
N/A
Nil

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)
Domain
Before
Now
% stroke patients treated in ASU
60%
100%
Time to transfer to ASU
1.6 days
2 hours
% patients spending at least 90% of their time on ASU
30%
80%
Average LOS
16 days
6 days
Bed base
56 beds
39 beds
Cost per patient
£6k
£3k
Profit per patient
(£2k)
£1k
ASU – Acute Stroke Unit
LOS – Length of stay
Domain
Cost Benefit
Net cost benefit released in Acute
23% Neurology Budget, 14% All Hospital Budget
Cost reduction in externally commissioned rehab beds
17%

26. To improve performance, change thinking
Purpose
Measures
Method
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 …
What they said they wanted:
Being listened to/heard.
Financial problems to be sorted.
More confidence.
Being able to manage the property.
My own space.
More space for the children to play.
Children to sleep in their own bedroom.
Sleeping arrangements do not affect children's sleep.
What was delivered:
Frequent ‘understand me’ visits.
Changed property whilst in arrears, helped her to understand finances, change to benefits.
Frequent visits from Home Support.
Move to 3 bed house
Potential Outcome under ‘old way’
Now has 3 children.
All 3 would have been taken into care.

28. Are we delivering what matters?