Value Management in Action
With my IHI colleagues, I’ve helped a hospital to test ‘value management’ in one intensive-care unit. Value management is a system that adds financial performance to a traditional focus on quality measures. You can read an introduction to value management applied to health care in a 2017 article in Harvard Business Review.
Value management includes a ‘Box Score’ table first developed by Brian Maskell. Brian developed the Box Score as he adapted accounting practices and measurement in his work with Lean manufacturing companies.
Our hospital client is now spreading value management practice to a telemetry unit and another ICU.
As shown in the Unit Box Score Example, the Box Score has three types of measures: performance measures like harm-free days, bed transfer times and joy in work; capacity, which shows the fraction of a shift that RNs spend in direct, hands-on patient care; and financial measures.
The numbers shown here are illustrative of the kinds of numbers seen in our first year of work.
Finance, informatics, and nursing update the performance and financial measures each week so unit leaders can present to the staff in a stand-up value management huddle.
The capacity measures are updated every eight to 10 weeks, with a few nurses sampling their work on both a day and night shift. The nurses note whether activities are direct or indirect care, with particular attention to the waste associated with waiting.
As shown in the example, the financial measures focus on direct costs: summary nurse and nursing assistant salary and overtime costs; pharmacy costs; and supply costs.
Why Report Pay Costs Every Week?
Last week, the telemetry unit held its first weekly value management huddle.
The assistant nurse manager reviewed the Box Score numbers and then invited questions.
One nurse asked, ‘Why are we tracking nurse and assistant pay costs?’
Of course, the unit manager traditionally has gotten reports about salary and overtime, with comparisons between actual expenses and budget. Nurse managers and the financial department have regular meetings and schedules to analyze and update these costs. Why post the pay costs for the entire unit to see?
Posting the salary and overtime costs weekly makes it clear that the biggest dollar cost of running the unit every week is associated with the people doing the work. To be financially smart, don’t waste the energy and capacity of your people, the most expensive component of care. Redesign the work so that the nurses and assistants can provide the expected care to their patients with less waiting, rework, and stress.
What is the cost of Cheaper Gloves?
As part of review of supply costs this summer, the value management project team looked at exam gloves. Care team members use a lot of gloves. The price-tag is thousands of dollars a month. A lower-cost glove, purchased in high volume, could yield meaningful savings. On the other hand, lower-cost gloves may not perform as well as the previous standard. Problems with glove tearing and difficulty extracting gloves from the glove boxes waste the time of staff, add stress to the job and require more gloves per task. The value management team identified just such problems this summer after a change to glove supply. The Box Score reminds everyone that the cost of cheaper gloves is not just the price-tag.
