Management by knowledge has been discussed for a long time. In my opinion, it has mostly seemed like a new name for traditional reporting. The keyword of “management by knowledge” should be management. To me, management is, as the title suggests, primarily decision-making. It is a process of setting goals, deciding on the actions required to achieve those goals, and implementing a clear, organization-wide framework for leadership, engagement, motivation, and monitoring to track the progress of actions.
What should actually be managed in a welfare area? A good answer could be “producing maximum health benefits for the responsible population at the lowest possible cost.” However, let’s lower the level of abstraction a bit. Welfare areas are already seeking savings on the scale of tens and hundreds of millions. The variable costs of social and health services mostly consist of personnel costs, so in practice, savings are achieved by reducing the number of staff and outsourced services. Digitalization is promised to save money for welfare areas, but the truth is that digitalization does not save anything if personnel costs do not decrease simultaneously.
At the same time, the entire social and health sector suffers from a constant staff shortage. Reducing personnel does not mean layoffs, but operations must be streamlined so that the current staff is sufficient. The social and health sector must take concrete actions and get more right things done. This brings us to the key question of management by knowledge. What is this “right thing”?
Maximizing health benefits would be an excellent answer. But I would rather start with something more concrete, such as the amount of correctly targeted client work per person-year. Correctly targeted client work means work done at the right time, in the right way, with the right client. This is the reason why the health care staff comes to work in the morning, isn’t it?
There are two components to producing correctly targeted client work:
- Direct internal efficiency: How much of the working time is generally allocated to client work.
- Actual targeting: How much of the client work done is correctly targeted. That is, it is done the right way, at the right time, and with the right patient.
Reporting on the first component is easy. You just count the outputs and divide by person-years. At best, you first convert the outputs into comparable time so that phone calls and home visits are not counted one-to-one. For the second component, valuation is needed. Each output must be assigned a coefficient that indicates whether the output met the current operational model at the time of execution.
The image below shows a real example from psychiatry. It simplifies and averages the intensity of treatment for mood disorder patients as a function of the length of the treatment period. The data reflects services equivalent to a population base of about two million, which we have modeled over the course of our company’s existence. Simplified, correctly targeted work is quickly initiated and limited-duration weekly treatment for a new patient. Under the ellipse are visits that current guidelines indicate are unnecessary if the active treatment phase is executed correctly.
Positive Leadership as an Enabler of Change
Before the transition to welfare areas, municipal billing created pressure for outputs to be delivered. Now there is an opportunity to focus more on quality alongside quantity. That is, targeting. Let’s continue the example from psychiatry. A typical goal in care work is four client visits per day. The actual number is 3–3.5. Of the visits made, 1.5 fall under the ellipse in the image. The result: 1.5–2 correctly targeted visits per day.
What if welfare areas would now meet the employees halfway and state that 3.5 client visits per day is enough? The only condition would be that each client meeting should be correctly targeted. This would actually produce 75–133% more correctly targeted work. This would ensure that the current resources are sufficient, improve the quality of care, and the best performers could be rewarded separately. And best of all, the effectiveness of care would improve because the work would be done according to treatment recommendations.
How do we get to this situation? By management by knowledge. The necessary information on the qualitative targeting of client work can be obtained with a solution that defines the desired operational model (treatments and their implementation parameters) and the valuation of outputs based on it. For management support, analytics is needed to help set clear goals and track their achievement. From the level of the entire result area down to the individual employee. Unbiased reward development would also be of great help. The more the reward is based on the amount of correctly targeted client work, the more self-directed the employees will be. Then good work would also be compensated in such a way that the long-standing flow from public to private could be reversed.
Kalle Horjamo, CEO of Integritas Oy
kalle.horjamo@integritas.fi / +358 40 569 2840 / www.integritas.fi