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Back Office Integration in Ontario’s Healthcare Delivery

With each changing of the guard in the provincial legislature, it’s not uncommon for the new party to dismantle the work of the old party with an assumption of providing a superior solution premised on fiscal responsibility. From a practical vantage, the continuous dance of shelving one approach and replacing it with another costs ratepayers more over time as analysis paralysis sets in and noting gets done. Such is the case in the health care sector today – specifically related to back office integration and service efficiencies across support functions, like Human Resources, Information Technology and Accounting – in the thousands of service providers under the Local Health Integration Network (LHIN) umbrella. There are numerous empirical studies which show the value of back office integration – ASSOCIUM Consultants conducted such a comprehensive study for the South East LHIN in 2010 that realized millions in cost savings. What seems to be missing, according to those in a position to implement recommendations, is leadership commitment.

The following op-ed was written by a leader within a client organization and offers a glimpse into the frustration of those that actually want to change the system from within.

The Time is Now… for Change

“Do the best you can until you know better.
Then when you know better, do better”.
– Maya Angelou

As we examine past practices, policy and fiscal responsibility for our social systems, one must question – who will be daring enough to make the change necessary to facilitate the required system destabilization that will ultimately stabilize our province from a fiscal and social equity lens.  Innovation and integration take risk, courage and tenacity in order to provide more efficient and effective service delivery for Ontarians. Doing things the same way with the same lens will not provide new solutions or outcomes to our problems.  Although we have ample research, surveys, and information that provide direction on how to ‘do better’ we are often stuck in repeating patterns and behaviours that maintain the current state of affairs.

Need to Shift Momentum

In order to address our ongoing provincial budget challenges, we must be prepared to question the status quo and the manner in which ratepayer funds are allocated and utilized.  One must consider, for example, the vast number of charities and not-for-profit (NP) entities across the province that provide similar scopes of services, with similar overall visions of care with often times the only significant difference being geographical location.  In 2003, there were over 45,000 not for profit agencies in Ontario with the government being the single greatest source of funding[1]. With the fear of failure associated with mergers across the NP landscape – is there a better answer for increasing productivity, accountability and outcomes within the sector?  According to research the most common reasons why mergers and acquisitions fail include mismanagement of risk, price, strategy, cultures, or management capacity[2].  The frequency of private sector failures no doubt influences the lack of trust for mergers within the social sector[3]. There is, however, an option that provides integrative solutions with a reduction in the overall five risk categories – back office integration.

In 2006, a report commissioned by the Ministry of Health and Long Term Care and completed by Reville[4], provided clear recommendations regarding back office integration.  Unfortunately, as we look for implementation examples across the province to date we would find few.   Many service providers filter the recommendations through their organizational lens and not always the greater good – they look at it from a ‘how is this going to impact myself and my organization’ vs ‘how will this advance the social good and be mindful of spending ratepayers money’. If we adopt the believe that shifting our lens to produce outcomes for the greater good – could we in fact build a system that provides a moderate amount of risk and maximum amount of change?

Systems Thinking: A Proposed Solution

According to A. Einstein “The problems cannot be solved using the same level of thinking that created them”. Systems thinking tends to focus on the broader ecosystem rather than the problem itself – this type of thinking is missing on the operational side of healthcare service delivery.  Perhaps the problem is the method by which our social systems, like healthcare, have been designed and funded. Siloed thinking still predominates within both funders and service providers.

Echoing the current government’s mandate, a reduction of administration, back office and executive expenditures can be achieved by implementing strategies and aligning systems with the goal of moving expenditures to direct care and services. With the ongoing competition between service providers and a hierarchical structure, a proposed system that is flattened with greater focus on internal and external accountability could result in the solution to the problem we are facing with respect to NP operations and overhead that is not directly related to front line care. Research demonstrates up to a 30% reduction in expenditures when we align back office functions[5].

We need to nurture a social sector leadership culture that has a stronger back office and operational accountability focus – perhaps through innovative performance-based compensation programs. We also need to seriously consider reducing the 45,000 different Chief Executive Officer/Executive Directors that ultimately compete for the same funding resources – and in so doing, put their organizational priorities ahead of the social good.

Is the risk of change so great that we are forced to ignore clear and proven recommendations and research regarding the merits of integration?

[1] http://www.imaginecanada.ca/sites/default/files/www/en/nsnvo/d_ontario_sector_report.pdf
[2] https://www.forbes.com/sites/georgebradt/2015/01/27/83-mergers-fail-leverage-a-100-day-value-acceleration-plan-for-success-instead/
[3] One could also argue NP leaders have low risk tolerance levels compared to their private sector peers.
[4] https://www.opdi.org/de/cache/resources/3/rs_reville-report.pdf
[5] http://www.hbrconsulting.com/wp-content/uploads/2017/05/HBR_Vendor_Base_Integration_White_Paper.pdf


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