Today, Dr. Ivan Zak and Ryan Leech discuss value streams and value stream mapping. Ivan walks us through the definition of value stream mapping, providing some examples of different ways you can add value in a clinic setting.
There are hundreds of processes that happen in a clinic every day, and it is important to know each step and have an understanding of how they all fit together.
Welcome to Consolidate That. We are recording live our first in-person episode. Ivan and Ryan recording live in Kyiv, Ukraine. Ivan, thanks for having me.
Well, good to see you in Ukraine, Ryan. Yeah. It’s truly the first episode and it’s the first day we met in person, even though we’ve worked for over six months now together.
So it turns out, Ryan is much taller than I was betting on with the team.
And not as fat as you thought either.
Yep. Yeah. There was the thing as well on the team.
They’ve all been very impressed by the fact that I’m not super overweight. That’s been a real treat for everyone.
I don’t think that you can say fat on the air. Can you? Is it an offensive word?
I don’t think so.
Okay. Then let’s continue. Ryan, real pleasure to have you in Ukraine, even though I’m also not a host here, so a lot of our team are here. We’re in a wonderful workspace and we’re going to kick off an episode here in person. It’s been a few little weird, it’s like, I think that’s what people feel when they’re meeting after connecting with someone on Tinder. I heard.
What we’re going to talk about today is value streams and value stream mapping.
I know we’ve been hitting on this a bit internally as we’ve been looking at some of the new thing that we’re helping our clients build and everything within VIS. I wanted to get a download from your brain on value streams, then hopefully. Maybe put this into a multi part one that we can roll out over the next few weeks, next few months of different ways that it hits the different departments.
Yep. I would split that in two parts. One, let’s talk about what value stream is and what value stream mapping is, then we can talk about various value streams and consolidation, because they’re the different levels of organization.
Value stream, I don’t know if it’s originally coming from lean. But in general, if you have a process, you can create a value stream map of the process. Essentially, what you do as a business, you are creating value. As you’re creating value, you want to capture the value that you’ve created. Value stream is sort of a visual of what phases your process is going through in order to create value. You can take anything. You can take production line in the factory. You can take consolidation. You can say, I don’t know –
With client journey? Within the clinic in that or is it more higher level?
Nope. That’s how you deliver a value to the patient or to the pet owner in the veterinary space. Let’s talk about that. This is an easier example. In the vet clinic, let me ask you. Can you map the journey or the value stream how the clinic delivers value to the pet owner? Just think about the phases that they’re going through if they came in with a particular problem. They need a diagnostic, x-ray, bloodwork and some sort of medication to go. What’s the process there? What phases they need to go through in the vet hospital?
Yes. You think the client enters the clinic.
That’s a trigger.
It’s the trigger to initiate it. Then, I know we talked about sort of Kanban. Speaking some of the Kanban type language of that, the client has checked in.
Where they do that?
At the front desk.
Let’s say first phase, first location?
Okay. Then, you’re bringing that patient and maybe the client as well into the exam room, meeting with the vet tech and meeting with the doctor. Going through that portion of it, and I think once you’ve completed the exam, that will probably be a definition of done once the initial exam is completed.
I’m glad that you touched on this term. Let’s maybe bookmark that, but we do want to talk about definition of ready, definition of done. Let’s continue with the old values. We’ll take couple of steps back.
Okay. After you finish the exam, you’ve got any outside lab work, diagnostic lab, blood samples, anything that you’re sending out or a way for results to come back in. Then you’re – if it’s just sort of a checkup and vaccines, administering any medicine or any services that are happening in the clinic. Then you have the checkout procedure, which would then happen in the payment. The checkout, accepting the payment, send them on their way and then I guess after care that would come from that.
Yeah. That’s perfect. You just mapped out the value stream in the vet clinic. Then what you’ve done, you kind of went one layer deeper and I’m glad that you did that. The way I see it, there’s a reception portion, there’s exam room portion, then there is bloodwork collection and sending the lab samples. I mentioned that there will be some x-ray, so some x-rays and then some medication prescribed and administered. Then there’s a checkout process. Those are the phases. But when you went into the exam room, you detailed it a little further and you said, there is a technician talking to the patient and then there’s a doctor.
That’s sort of what we call in Kanban is subsystem over system. You could take that one phase and you can detail it more. Because if you think about the lab work, then there’s also sub steps in there. There’s blood collection. There’s shaving, blood collection, putting into the tube, then putting into the mail or in the box outside of the hospital. They’re all subsystems of a system. The way we’re looking in the entire consolidation, there’s also multiple subsystems of a big system. Let’s talk about the value stream how consolidator generates value for a customer. Who is the customer in this case? Who do you think is the customer in the value stream for consolidator?
For the consolidator, I would say it would be the clinics that they’re acquiring?
Exactly. A lot of consolidators think about their business that they’re providing pet care. I don’t think that. I think that the pet care is provided by the clinics and that’s their customer. But the consolidator is a servant to the clinics, and their value stream is – well, let’s map that out. What do you think are the steps of the value stream for consolidators?
The consolidator, you’ve got – I would think, I know, some of the things that they’ve passed along to me is that there’s different ones. Depending on where you are in that process, but I would guess, across the whole time of it. You would start with business development, which I’m a fan of. Then you have your financial modeling or your financial due diligence as a lot of people would call it. Then you go into the legal phases, so legal due diligence. Then once you’ve pass all that, you’re going to be looking at integrating, guiding them into the family, into the corporate group. The integration process, hopefully a stabilization period before you change things with them. Then start improving the clinics. Whatever the things that you said that – with the recent, you should be buying a practice or a group of practices, and your intelligence, and your skillsets. Putting those in there and then getting people to aspire where they can do business as usual.
Yep, absolute. Those are the phases and we’ll go back to stabilization. But right now, you described all the steps, how consolidators deliver value to the clinics, as well as to their investors. There are two major value creation items. You remember when we talked about the value creation plan. There are two components of the value creation plan. Do you remember what they are?
Yeah. You’ve got your arbitrage value and then you had your margin expansion.
Where do you think in that value stream that you describe? Business development, financial modeling, legal due diligence, integration, stabilization, operational improvement. Where is arbitrage happening and where is the margin expansion happening?
Your arbitrage definitely starts the first second that you’re doing anything, right? With which clinics you’re purchasing, what you’re putting in there, what’s coming into the clinic, all of the modeling. Then I would say, it goes all the way through, would you say integration or stabilization?
Stabilization is something that we introduce. We should probably describe that a little further. Integration, to me basically, the way you find the practice, analyze the practice, abide and integrate, that’s good enough to really do that like 30, 50 times and then exit after three, five years and basically execute on the arbitrages of value creation. But if your theses are including operational improvements, then you’re going to that sort of margin expansion phase and using your growth levers, or synergies, whichever way you call them. You improve the EBITDA and you expand the margin. That’s the second part of the value creation.
Visualizing that is very important for the entire organization, because you can – a lot of the times, people don’t understand how the whole value stream is working. For business development, many instances, once they come go out the clinic, they don’t care what happens what we call downstream from them. Because they’re the upstream and downstream is operations. They just buy clinics that can fog the mirror. Then they just shut them into the operations and they don’t care how it happens. If the entire organization has this value stream and everybody understands where they are, then that process could be improved.
I want to take one step back. You just touched on definition of ready and definition of done. Even in the clinic, why is this so important. Those are sort of two things that are required in order to execute on any project. This is the mistake that a lot of consolidators do. They don’t define what does it mean complete, which is definition of done. For example, if you acquired a practice and then you immediately started integrating it. Some people say that we have 100-day plan, which is awesome if you execute on it in 100 days. But clinics are all different. There’s different culture. There’s different degree of burnout. There are different processes. There are different size of the practices. So, saying that we do the same thing for all 100 days for every single hospital I think is just wrong, because you can’t be that precise. Especially with your operations team usually being very small, you can’t predict it that way.
Instead of saying that our plan – not our plan. Plan is okay, but our process is 100 days. I just don’t think that everybody hits that mark. It could be earlier. It could be much later. What is important is not to say how many days. That could be the goal, but what’s important is to define what does it mean that it’s complete. That’s what many people don’t do. They will integrate the practice and say, “During the integration, we turn the accounts, we turn on the benefits, we transfer all the employees and then we change the pins, change the lab, change the wellness, change everything. Then that just kind of blurs and continues after that way into the operational improvement. Then they’re saying, “Okay. This is what we’re going to do in 100 days” but they never finish it.
That’s why portioning it into very distinct phases and say, “Okay. We’re done with this step, which is definition of done.” Everybody in the organization understand that when these boxes are checked, we can take it into the next phase, especially if it’s a different department and there’s a handoff. During the handoff, there should be certain things completed. Not many consolidators do that. In your example in the clinic, what does it mean that the reception portion is done? Once you checked in, what would be the trigger if you think definition of done? Because some hospitals are large, so you don’t always see what happen upfront. How do you know that this person is checked in and ready to be seen by that technician? What would be that?
I mean, I guess, sort of to your point. There would be the difference of saying, “Well, is there appointment time?” That’s when they’re going back versus, they’ve signed all of their new patients or all of the things, and you’ve collected any payments that are outstanding or just sort of a checklist of things. They have the plastic collar put on the hand or anything like that that needs to happen before they’re able to be back there and seen. Having those things done.
I want to go back to one thing though, because I think, it was interesting, you mentioned that you’re having a plan versus actual definition of done and definition of ready. Having a plan, you have to have a plan. You shouldn’t be going into things completely blind. But is the goal when you’re tracking this and growing from it, that you should be able to say, “Here’s what our plan was. It should take 18 days to complete financial modeling and legal due diligence,” but then be able to track it and be able to stay on top of it so that you can adjust what your plan is off of that actionable data that’s coming out of it.
That’s very, very important point. Because when consolidators design their plan, then they’re saying, “We’re going to do this in 30 days,” whatever that is. How do they know that they’re going to do it in 30 days? They don’t know. They just say, “This is aspirational.” But then, for the most part, they don’t have the systems that measure that or if they do have the system that measure it, they don’t extract the data. Let’s say, usual integrations manage through project management systems, whether it’s Asana, Jira, Trello, Monday.com, whatever that is, you can extract the data when the item, which is clinic in this case moves from one phase to the other. That way, you can actually get the metrics and iterate on them.
If you keep saying that our plan is 100 days, but you actually never measured it, you can say two days. Our plan is two days and we’re always behind.
I think the thing is, the example I always give is, if you’re practice manager, quit on day 90.
Yeah, it’s going to be longer.
You’re not having a 100-day plan because you’re going back to Day 5 very quickly with that group.
Exactly. I’m really glad that you said that. Once you set the goal, let’s say your goal is 100 days integration, then you’ve done 10, 20. Then if you measure it, you go back and say, “Look. Actually, it takes us about 120.” You readjust your normal and then you say, “That’s how we do it. This is the time period.” But you can’t really say that this is our plan and this our action. You really have to measure it to improve on it.
Got you. That’s the importance of having that definition of done. It’s not the 100-day isn’t the definition of done, but the definition of ready. It’s having whatever that true trigger. For example, in the clinic, the definition of done is that the patient has had the last step, which is putting the plastic name tag collar on them, which they say, “Done. We’re done with the check-in process, and now we’re ready to move them into the exam room.”
Yeah. That’s a very good sign. Good practices do that, especially emergency hospitals and specialty hospitals. They would put that plastic collar that has identification of the pet. But the true meaning behind it, that’s a visual cue that patient – without the collar, well, yes, you’re not going to know who it is if you go to other procedures. But also, that could be a visual cue that let’s say, they’re actually checked in the practice management system, because I may see the pet come in, and then you know, they have a collar, but someone on the front didn’t check them in. Now, I’m trying to find the record and I’m going back to reception. I’m proceeding back from the hospital where no one knows if this patient was checked in or not. Then the nurses are picking up the pet to take the x-ray. They go into the x-ray machine software, they can’t find the pet.
Now, they have to go all the way back and trace it that it was not checked in upfront. This happens with every business, every process. If you don’t have a very distinct steps, so it will be a definition of ready. This is actually the definition of ready I think with the check in and the collar.
You are ready. It’s a preparation phase for the appointment. Then, let’s say, the bloodwork is done when the sample is collected, put in the tube and the tubes with the requisition form or deposit into the box. It’s very important when you’re talking about the Kanban management, for those that are listening, it’s sort of, you’re taking a classic like Trello Kanban board, and then you can work with a stickies. That what’s we usually do. We just talk with the execute team and say, “What phases your hospitals are going through?” Let’s now write down all the hospitals that you haven’t. Put them in those different phases. Very quickly, you will identify that somewhere, the work is pilling up.
If I want to refer to any book, it will be again, The Goal. You will see that that’s really an inventory pile up problem if you mention the production line on the factory, where some machinery works slower than other. If you’re going to be pilling up more and more inventory in front of that machine, your whole system will have a throughput, which is another term from lean, of the slowest part of your production line.
For example, if your legal department can do two due diligence for processes per month, and you want to acquire five practices per month, then you’re not going to buy five practices per month and you’ll do only two. It doesn’t matter how many business development it’s supplying, you’ll have decaying sort of deals that will go stale and then people will go somewhere else because you can’t process it. Therefore, you can identify the bottlenecks and improve so add more legal people, get internal legal department if you’re in that phase. Then you relieve the bottlenecks. Bottlenecks travel throughout the system. You can relieve the legal, and then all of a sudden, operations have a bottleneck. Then you have the operation, you’re leaving, it goes back to financial modeling. We can’t model it fast enough. It’s kind of a continuous improvement of the entire system.
I think anyone that has every use Smart Flow to call back to another product in another company that you had. You can definitely hear, “Oh! This is very Smart Flow.” These are a lot of those ideas and you can see where the value is. Yeah, just to bring it back to the consolidated level into that executive level. For the business development, just like you said, you won’t be able to know why the pet is in there. You’re not going to know if Dr. Jones has been given a full quote for the purchase of their clinic or if they’ve cleared legal due diligence or if they actually have any additional partners, or anybody else that needs to sign off on paperwork if you’re not doing these steps in the right order and really marking them as done or ready.
That’s a really important thing I think, to be able to pull it all the way up to the top level.
Another really important thing that we want to mention here is the concept of lean just in time. Well, that means is that, as you are pushing things, Kanban or value stream is a pull system. You don’t want to push things downstream; you want to pull them from the upstream. What do I mean by that? In the clinic setting if you think about it, you can push as many patients you want in the exam room, but if doctor is not available, they’re not going to be seen. You want to make sure that people are staying upfront until the vet is ready to see them. They actually come outside and say, “Now, next.” Whoever that is in the computer system, but they pull the patient into the room. If you’ll stuff three people in the room, there’s not going to be appointment.
It’s a silly example, but if you think now about consolidation, same thing. What’s happening now is, business development just bicycle and it’s really fast, then shoves them into operations. Operations that aren’t ready. They’ve always small teams and then, they don’t do a good job if integration, and then the whole experience is ruined, and then that’s how we lose people and people are disengaged. Instead, what we recommend is, operations need to manage their capacity, and then articulate to business development how many deals they can process downstream before integration.
If we’re going to integrate three clinics at the same time, and then you’re finishing integration because you have been measuring your process. One is going to be done in five days. Before that, no more closed deals. You really need to pull them in. This is where we did this sort of new phase, which we call stabilization. That’s the buffer zone. Basically, integration should not include all the operational improvement right away. What you can do is, because you don’t want to lose the deal. Deals are coming through, the business development is excited, but you want to park them somewhere.
Then, instead of overwhelming operations team, you make this buffer zone called stabilization. The business development is doing financial modeling, then legal department does due diligence. You close the deal and you integrate the basics. Just the finance, HR and leave the clinic alone. Ideally, measure metrics in that phase in stabilization and decide that the synergies that you found preacquisition are true through couple of cycles, a quarter or something like that. Then you want to make sure that people are stable to accept new change. Then that gives a little bit of a time and space to people that are in the clinic, and also for operations to say, “Okay. We’re ready for the next one” and they can pull in next clinic.
This stabilization phase is very important to manage that buffer of multiple clinics that were brough from the upstream.
I think it’s kind of interesting, like, if we take a moment and think about what we’re doing in the human side of things, like as people and the fact that we’re dealing with people or any nature living thing. I mean, growing up, I know — if my wife listens, she’ll make fun of me because I always had fish and African a lot when I was a little kid. I used to breed them, and grow them. Whenever you get a new fish, you get it from the store and it comes from the bag or anything like that. Then you put the bag in the water that they’re going in. You don’t dump them in there and say good luck, because they’re going to end up floating at the top or sinking at the bottom. Depending on which one.
But you put them in there, and you give them a chance to acclimate to what’s going on. I think about, like we said, I’m in Kyiv right now. Yeah, I’m in Kyiv right now. It is different than Dallas, Texas. I will tell you this. Not only just culturally, language, but the time zone. I am going through stabilization right now to be able to figure out what’s going on. I don’t want to make a giant – if you were to put down a giant contract in front of me, but major decision, I’d be like, “Let’s take a minute and let me get acclimated to the time zone and where I am and get my brain functioning fully before we do that.”
I think if we think about what we as people would want, it makes a lot of sense in the same way that we want people to make those decisions joining our group and how we want to treat them. Because the stabilization period I think is a really good palate cleanser as someone joins your new consolidation group.
Hundred percent. I know we’re running out of time, but I wanted to jump or give a teaser sort of to the listeners. Because one very important topic is, we talked about the value stream, how consolidators deliver value to the clinics and their investors. That’s one of the two executives value streams and we’ll talk about executive, regional, departmental value streams. But this is one of the executive value streams. This is how our company finds, buys and then improve the clinics. But because it is a fast-growing organizations, then there’s no processes. You’re literally fixing the flying plane or assembling it and you need to have a very good process of creating a process. That is also a value stream. The second value stream at the executive level is how do you kick off initiatives, how do you create initiatives and how do you create process so it’s scalable and it could be transferred to new clinics and to other departments.
This is something that we’re going to talk about in the next episode, so value stream of how to create process.
Perfect. Well, to give people something to takeaway to be actionable with, what is the one tool or piece or if you were to implement something with your business development team because we started with that. What is a tool, or a process or a piece that you think people should talk about over the next week? Would it be determining what your definition of done is for business development? Should it be putting in a trigger? Should it be reevaluating what your timelines are? What do you think people can do today without rebuilding their entire organization?
I really like the book, so I would recommend the book. That’s first. The Goal by Eliyahu Goldratt. But if you don’t have time for the book, just go to vetintegrations.com and have a look at the frameworks, consolidated operating framework and there’s this sort of short version of or description what value streams are at each level. Then a fun exercise, something to do on Monday is to grab the whiteboard if you’re working in the office with your team, with the executive team, create the phases that clinics are going through and then take the stack of sticky notes and write the names of all your practices and put them in different sections where your clinics are at. Very quickly, it will sort out the entire organization and you will understand where your clinics are at.
Then moving those stickies as the clinics go through the pipeline would be very helpful, because that visualizes the entire organization for everybody. I would take a picture of that almost like weekly and send it to others if not the entire organization is in the same place. But I think that’s an excellent exercise to kind of put everybody in the same mindset.
Awesome. Ivan, thank you. I’m looking forward to this fun week we have in Kyiv and exploring some really great things and looking forward to our next episode.
Absolutely. We’re excited you’re here and you need some sleep. Cheers.