Lean Veterinary Scoreboards

In my last post, I discussed the difference between Management By Means (MBM) versus Management by Results (MBR). MBR means only focusing on the end result of the metric or KPI (and hoping the means of getting there are efficient and value-adding processes) or focusing on the processes that lead to that result, understanding that if all of the processes are behaving as designed and under control, the end result is a reasonable assumption. Too often with MBR, dollars is the only metric.

So, I wondered, could it be possible (theoretically speaking only!) to successfully manage a practice without actually measuring any money related metrics? And, what would that look like?

In other words, without tracking gross income, average client invoice, payroll expense as a percent of gross; any money metric?

What non-financial Key Performance Indicators (KPIs) could be used to assure the monetary goals are met? The trick is to be able to identify all (or many) of the processes that are components of the money goals and to assign a metric to adequately monitor those processes.

For example, Average Client Transaction is composed of gross income divided by the number of client visits. However, these two components are the result of other systems, such as fees, reminder efficacy, ease of appointments, number of incoming calls that result in a busy signal, hours of operation, client satisfaction, medical record audits (% of services performed that get invoiced) , etc.

Here is a list of some of the non-monetary metrics I came up with in order to manage a veterinary practice:

Quality 

• Door to Doc time 
• The time from the moment the client enters the practice to the time they see the doctor; a measure of flow and, therefore, value to the client.
• Number of unscheduled follow-ups
• The number patients needed to be seen a second ( or more) time in order to get resolution of the pet's condition. Notice this is not scheduled follow-ups for additional treatment, tests or monitoring.
• % visits scheduled for recall
• % recalls made
• Response to 1st reminder
• Response to 2nd reminder
• Response to 3rd reminder
• % pets current on RV (rabies vacs)
• # client surveys returned
• # of client referrals
• % staff completely cross trained
• % dogs current on HW (heartworm) prevention
• % pets current on flea prevention
• % blood sample hemolysed
• # of blood samples requiring redrawing
• % of medical rounds performed on time

Morale

• # idea (kaizen) cards submitted
• # idea (kaizen) cards/ staff
• # idea (kaizen) cards completed
• % idea (kaizen) cards completed

Safety

• # staff injuries / time period
• # pet injuries / time period
• # of adverse anesthesia events

Costs

• # of drugs or supplies found to be out of stock
• % blood sample hemolysed
• # of blood samples requiring redrawing

Some of these probably have sub-systems or sub-processes that might require monitoring and, thus, metrics of their own.

I am not proposing that no financial KPIs be watched. Veterinary practice is a business, after all. Some financial metrics are important and necessary. (However, they shouldn't all be financially focused, either.) Maybe we have not thought about the role that systems, processes, quality, waste, and flow plays in the money numbers; the Lean mindset. Maybe we should not worry as much about the end results and concentrate more on how we get there.

What metrics you decide to monitor is up to you and your staff. Remember, Lean is about making your practice the best "your" practice it can be, not a carbon copy of the practice down the road or on the other side of the country or, even, what a management guru says it should be in order to conform to some cookie cutter model. Your True North and your team (and some experimentation) will decide what metrics are important.

There would be high level, focus area metrics for leadership to monitor, sub-system metrics that managers would monitor and, still another layer (sub-sub-system) that frontline staff would create. These metrics are all aligned and make up your management scoreboards. Incidentally, this is an example of visual management.

Scoreboards

Note that these layers generally flow down from our True North statement (they're top down, but there's input from lower levels along the way). Leadership metrics arise from our practice's focus areas. They check the destiny or course of the ship. Are we heading in the right direction?

The middle and lower level metrics, created by the people responsible for that work (with some input from their leaders), check the systems and processes that make up the focus area (leadership) metrics. Are we getting to our destination with quality, safety, effectiveness and without waste?

This flow is, in essence, what Lean strategy deployment (hoshin kanri) is all about; getting the ideals of the practice down to the floor (gemba) and aligned throughout the practice. It is everyone pulling the same rope, from the same end, in the same direction and at the same time.

The routine of management and frontline staff huddling together in a safe, honest and trusting environment every morning to discuss the scoreboards is Lean Daily Management; a topic of later posting.

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Management By Means

There are several reasons why some organizations have had difficulty obtaining the kind of results with Lean that Toyota has. One of the main reasons could be that they confuse the use of Lean "tools" with the incorporation of  the complete Lean philosophy and mindset deep into their DNA.

Take, for example, the difference between Management By Means (MBM) and Management By Results (MBR), also known as Management By Objective (MBO).

With MBR/MBO, management sets the goals (usually financial) for the metrics. The objective of the organization is to reach the goal, without much attention to the processes or methods involved. Leaders might say things like, "I don't care how you get the results, just get it done, no matter what." Pay incentives or threats of dismissal often can, at different times, be part of the conversations and scenarios. 

Look at the Process Behavior Chart below, which shows only the last data point (for a metric where higher is better). 

This is typical top-down management, which is common in the West. Workers do whatever they feel necessary in order to arrive at the goal by the deadline set by the forces that be. The method or means of getting there is a distant second concern. The focus is the end result.

One of the problems with this approach, as seen below, is that the systems and processes, if they were exposed, may be riddled with errors, defects and/or fraud (ala Wells Fargo). There is a lot of variation which implies the systems and processes are not as tight as they could be. In addition, notice there is a recurring pattern to the data-- three weeks of down data followed a an up data. This very well could indicate that, for three week every month, the employees not hitting there number until the week before monthly reports come out. If the reports only show the ending point for the current month, leadership is happy (and leaves the staff alone!) 

MBR is similar to trying drive by looking in the rearview mirror. 

Workers have no control over systems. They are at the mercy of systems, good or bad. It is management or leadership that is responsible for the system in place. As such, if results are not predicted to be good, then the only pragmatic way they can affect the result, and not be disciplined, is to "fudge" the system somehow. 

In a bad system, no amount of motivational rhetoric, monetary prizes or threats is going to change the system. The system gets changed by the "uppity ups" changing the system. An object in motion tends to stay in motion in the same direction unless some external force is applied to the system. That isn't part of the job description (or domain) of workers.

MBR is managing the results

By contrast, MBM is focused on the processes and systems ("the means") that lead to the results ("the ends"). The metrics of MBM monitor the systems involved. The idea is that if all of the processes are stable and positive, then the results are a foregone conclusion. It is much more of a bottom-up style of management since the staff is much more involved in choosing the metrics and monitoring the day to day functioning of the organization. The journey is as important as the destination.

In the graphic above, we really don't need to see the final result (below) to have a reliable expectation that it will be where it needs to be. In addition, we know that our systems and processes are probably functioning properly and free of waste. While there is some variation, they appear to be under control. 

(Notice that three out of the last four data points are closer to the upper limit,  which indicates that the system has changed for the better; improved. If we do know why this has occurred, we need to investigate in order to understand how to continue this trend.)

MBM is managing the processes; the operations

This is the management style of Toyota and promoted by Lean. People often say, "The right process brings the right results." We care about results... but you manage a process, not the results.

Lean is all about objective systems thinking!

I will continue with the next idea in this theme in my next blog "The Practice Scoreboard."

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