1. HFMA Region 5 Dixie Institute February 27, 2014

2. Ron Swanson says…..

3. Manage the business backwards Start with value to the customer and work back through the processes and people to deliver that value

4. Provider First Waiting Happens Errors Are Expected Compulsory Employment OTJ Training Diffuse Accountability Add Resources Reduce Cost Retrospective Quality Review Management Oversight We Have No Time Patient First Waiting is Bad Defect-free Work Empowered Employment Training By Design Rigorous Accountability No New Resources Reduce Waste Real-time Quality Assurance Management “In The Place” We Have Time

5. Lean Strategic Planning and Deployment Standard Work Visual Management People Development The Work of Leadership Accountability Processes Lean Leadership Behaviors PDCA and A3 Methods

6. “Lean Accounting is the general term used for the changes required to a company’s control, measurement, and management processes to support lean manufacturing and lean thinking” Brian Maskell President, BMA, Inc.

8. Predictive Hubris Avoid the belief that you can accurately and consistently predict the future Adaptability Prepare the organization to be adaptable and agile to respond to changing conditions

9. “ If the underlying circumstances that created data have changed, then extrapolating that data gives you stupid answers” Jeff Bauer, PhD Health Leaders Media, January 3, 2014 Budget

10. Eliminated Annual Budget Process Implemented Quarterly Forecasting Designed overall process Operationalized software Initiated Quarterly Senior Leader meeting

12. Agility - Annual Budget process is out of synch Pace of change in the industry Lean management system Lead Time too long – 17 months

13. Noise – budget becomes noise that gets in the way of real-time continuous performance improvement

14. Waste – time and resources

15. Review Progress on Last Quarters Plans and Initiatives (30 minutes) Review Financial Results and Forecast for Next 6 Quarters (60 minutes) Review Quality and Patient Experience Results and Forecast for Next 6 Quarters (45 minutes) Trends, Opportunities, Gaps and Ideas (45 minutes) Actions and Consensus on Plan (60 minutes)

18. Start with Long-Term Financial Forecast to determine targets Use Quarterly Forecasting to evaluate progress on Long-Term targets Close the Loop on gaps between Quarterly Forecast and LT Targets This is primarily a top-down exercise, resist creating a quarterly budget process

19. Quarterly Forecasting meeting created enhanced dialogue across Service Lines/Teams Preparation for the quarterly meeting has triggered a more meaningful interaction between finance and operations Operating leaders are asking more and better questions You have to learn to walk again

20. Quarterly Forecasting: Is about performance improvement Is about probabilities and alternatives Is not about precision or paper clips The point of forecasting is not creating numbers to “hit”. It’s about designing operations to deliver better performance.

21. Michael Allen, CPA, FHFMA CFO Gundersen Health System mmallen@gundersenhealth.org 608-775-1951