One of our most common challenges to execs within our client organisations is that “if you are attempting to manage cost, chances are your actions are causing costs to rise”. We get a wide array of responses, and understandably so. James Martin’s hospital food provides an interesting and helpfully non-threatening example which perhaps helps us to understand how managing cost causes cost to go up. The backdrop in this case was a devilish combination of two ill-judged management concepts.
- An inappropriate application of economies of scale, and
- The ever reliable folly of command and control.
The challenge is simple enough; how to deliver a high volume of appetizing and nutritious meals on a in short timescales with a very limited budget (in some cases down to £0.89p per meal). The “conventional management” response to this is to leverage buying power and economies of scale to purchase food stuffs on a national basis, and to make sure the untrustworthy local managers in the hospitals stuck to the rules their purchases were tied to the “approved suppliers” list. The net result of this, compared to foodstuffs abundant locally, paying over the odds for inferior quality and lack of variety. In addition, decisions regarding capital investments in kitchen equipment being made from afar resulted in food preparation being hampered by worn out kit, whilst new expensive kit, neither requested nor required, was taking up valuable space whilst busily depreciating on the balance sheet.
The result of these two factors was stressed out catering managers and staff who felt unsupported and as a consequence were in survival mode and going through the motions; where is the reward in churning out meals you could’t make yourself eat? The knock-on effect of that of that, complaints (failure demand), massive amounts of plate waste, and presumably patients not even consuming an appropriate quantity let alone quality of nutrients. I’m sure you don’t need me to explain the connection between nutrition and recovery rates in hospital. Although I do have an interesting example from my own experience; being a mountain biker I’m not unaccustomed to spending time on orthopedics wards, I will never forget the patient who occupied a bed for a whole ten days waiting for his ankle operation, not because he was malnourished of course, not even because he hadn’t made it onto the theater list, but because he found the ward round food so bad he would hobble across the site to the canteen or shop for his sustenance. As a result of this his foot was becoming more swollen not less, and the surgeons knew that if they unzipped him in that state they’d never stitch him up again. 8 days of bed blocking at £500 a day buys you a lot of 5-a-day material.
I digress, back to James Martin; what was his answer? I don’t know if James is a systems thinker but he recognised straight away the causes of the poor quality output and began addressing the problems with the inputs and system conditions i.e. raw materials, equipment and management philosophy. For example at the hospital on the Welsh boarders, (literally surrounded by sheep) he did a deal with a premium lamb producer who had no local market for the low grade cuts, at a considerable saving over the approved supplier sourcing their lamb from New Zealand (food miles debate anyone?). In Scarborough a town surrounded by fishing ports the general hospital was sourcing their fish from Somerset. He got the execs into hair nets so they could see the impact of capital decisions being made at a distance, and the impact the combinations of factors was having on the front line managers and staff. The change process was tough, (sound familiar?) and the there were plenty of tears along the way, but it was great to see in the final episode that the team had put in the work, the execs had let go the reigns and the catering staff were producing meals that they were proud of and that the patients loved. All this was achieved within the original budget, but the benefits of fixing the system incalculable. If you want to better understand your systems and help your managers make the shift from managing cost to managing value, why not give us a call – we love a good conversation…