1. Building a Business Case for Quality Improvement Glen Copping CFO and Vice-President, Systems Development & Performance Session: BC PSQC D2 Thursday, February 19, 2015 Location: Georgia B Hyatt Regency Vancouver

2. Agenda 1.Introduction 2.What is a Business Case? 3.Why build a Business Case for Quality Improvement? 4.When is a Business Case required? 5.What are the key elements of a Business Case? 6.Why would a Business Case not be Approved? 7.What are the characteristics of a good Business Case? Q & A

3. Introduction >25 years and $billions in Business Case experiences: – Hi tech – new product research and development, pricing, wireless and data network builds – Manufacturing – supply chain, factories, equipment – Healthcare – facilities, imaging equipment, staffing, quality, IMIT, screening, prevention, quality and safety – Services – Sales Proposals, Outsourcing, Contracting – Alliances, Mergers, Acquisitions and Divestitures

5. 2. What is a Business Case? An effective business case is a multi-purpose document that generates the support and participation needed to turn an idea into reality. It explains what the idea, problem, or opportunity is about, how and who it will impact, what others are doing, each of the alternatives, the associated impacts, risks and cost/benefit of each alternative, and makes recommendations. The complexity of a business case and time taken to prepare it depends on the nature of the business initiative: – multi-functional/departmental or affects many stakeholders (internal or external); – involves substantial changes to service delivery processes, involves high risk or possible impacts; – highly visible to senior management, legislature; – significant in terms of funding, resources, stakeholders or contingent on timeframe; – multi-year costs and multi-year return on investment and/or realization of benefits;

6. Business Cases are Dynamic

8. 3. Why build a Business Case for Quality Improvement? To provide better care for patients in a way that is sustainable and which promotes effective resource utilization across the health system. To make better decisions by thinking through initiatives and alternatives so that they deliver the desired quality improvement benefits. Identify the impact on other stakeholders? Alternatives and substitutes? What happens if we do nothing? Who is critical to support the projects? Can we redeploy resources as a result? What are the labor considerations? Benefits are not just costs, and not just bottom line savings; they include access, timeliness, health outcomes and productivity increases. You can learn a lot from a great model – impacts of price, costs, timing and to develop contingency plans, if needed. State key assumptions, socialize with stakeholders and adjust. They engage, inform and engender support from key leaders in the organization to smooth the way for implementation.

10. Thoughts on Quality What is Quality?: Clayton Christensen wrote that Quality is defined by the customer’s needs for a given “job” with every “job” defined by functional, emotional and social dimensions. Measure quality the way customers measure in our Business Cases.

11. Quality can be Cost Effective Tips to Improve Quality and Lower Costs Workforce Optimization Operational Excellence Contract Management Opportunities Standardization of Best Practices Consolidation Efficiencies

12. 4. When is a Business Case Required? When a business decision is being made To demonstrate that the “thinking” was carried out Typically required to gain funding In general, any initiative that will have a significant impact on either internal processes or the delivery of services to clients, particularly if it requires significant allocation or reallocation of resources, should be justified by a business case.

14. 5. What are the key elements of a Business Case?

15. Pop Quiz The amount of money that is brought into an organization by its activities. Costs and expenses made to deliver business activities or services. Clearly defined financial plans that are based on approved revenues and expenditures. Positive or negative difference between a budgeted amount and an actual amount. Quantity of product(s) or service(s) available to be provided to the end user. Quantity of product(s) or service(s) desired by the end user.

16. Pop Quiz RevenueExpenditureBudget VarianceSupplyDemand

18. Labour Costs

19. 6. Why would a Business Case not be approved? The final decision requires judgment and consideration of issues perhaps not contemplated in the business case. It is quite possible that the business case is well written and compelling, but other priorities will take precedence. It may also be that the decision making body is well informed by the business case but does not agree with the conclusions. Common reasons a business case is not followed up on: – An unconvincing argument – limited benefits – Gaps in the evidence supporting the argument – The methodology to assess the options is not understood or accepted – The costing lacks rigor – Other business priorities take precedence

20. 7. What are the characteristics of a good Business Case? The aim in writing as business case is to: – Outline all the relevant information and the argument for the recommended course of action – Be clear, logical and comprehensive – Be convincing with arguments supported by hard data: Provide evidence of stakeholder views and consultations For community or other benefits, provide evidence of the research conducted into the existing situation and expected improvements Provide the experience gained by other organizations in implementing the same kind of initiative – this provides a good reality check Accurate costing of alternatives and expected benefits, based on a thorough approach and using relevant assessment tools Reference material (articles, websites, libraries, etc.) on alternatives

21. Q & A

22. Disclosure The Business Case Guidelines were adopted from the Government of Alberta, with their permission, and slightly altered to meet VCH’s need. This guideline also closely matches the Ministry of Health BC guidelines.