Last week there was a lot of discussion in the Swedish media regarding reports coming in on poor performance within the health-care sector. Reports show that health-care all around Sweden has extended waiting times in both Accident and Emergency departments and to get specialist treatment for identified illnesses. Reports also highlighted the fact that hospitals are overcrowded.
Politicians were interviewed in the course of the media debate on how to invest more money into the system. Those in control in different regions defend investments made, whilst the opposition is accusing them of not doing enough. It seems that only the amount spent on health-care is discussed, not how the money is used.
After around 20 years of helping organizations to perform better, I have to say that I have seen this issue before. I do also have to stress that the money is there – you have all you need, so please use it more efficiently.
Many of the organizations that I look into have a waste-factor of about 35-45 %. That means that of all the expenses the organizations have, more than a third goes on activities that should not have been performed at all. Money is spent on things that are of no value whatsoever to the customer, or to anyone else for that matter. These activities occur because the organization lacks focus on what is important – the value created for customer – but also, they lack the leadership to take them further.
For a company this waste means they will have a financial result worse than they otherwise would have. The revenue will have to cover costs that should not be there. This also means they may have to charge the customers more than is necessary to have a positive result at all. By increasing the efficiency level of the performed work, they will have a directly positive impact on the result.
A public organization is mainly paid in advance as the taxpayers’ money is collected first and then distributed by a budget process. This means that the level of service that the organization is giving is decreasing at the same rate as the activities categorized as waste are increasing. By performing activities that are waste the organization also wastes some of their budget.
The solution to the problem is to stop wasting the potential. You do that by organizing the business in the manner of creating customer value, aka the processes. The line organization is an obstacle in this matter, since it does not support a focus on the customer.
Another solution is to start managing the designed processes, then you are concentrating on creating value to the customers and that is the most important task you can work with. If you concentrate on creating value, you will also be able to increase the level of value you can offer your customers and consequently create more value for the same cost.
Stop screaming for more money. The problem is not lack of money; it is the inefficiency of the business. The Swedish health-care sector and many other businesses have all the money they need, they just need to handle it with more care!
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To you and your organization’s excellence.
Matts
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