HOW MUCH DO SERVICES DELIVERED BY YOUR AGENCY COST?
“How much is the price of your service?” is not an often asked question to social service workers. The answer by commercial organizations is based on the cost of resources utilized to offer such service. While the price question may never be encountered in the delivery of human services, costs have to be estimated to complete proposals for funding, budgets, service plans, operational plans and continuous improvement projects. This article, the first of three parts, introduces the concepts comprising a simple but effective cost information system. The second will deal with data collection planning and the third will exhibit an example of an effective costing system implemented in Microsoft Excel. An administrator may choose to develop a more robust cost information system with in-house staff proficient with one of common database platforms such as Microsoft Access.
A social service delivery transaction begins with a worker guided by information and other agency collaterals preparing for a client visit. Worker time is utilized to travel, to make the visit and to record the visiting transaction. Added to these resources are administrative support and direction. Illustrated in the SIPOC diagram above are the source, the input, the process, the output and the customer of a typical service delivery transaction.
The chart below exhibits the inverse relationship of cost per unit and productivity of a service delivery process. The dollar value of worker time input on a month of client visits divided by the number of clients visited that month, represents cost per unit. When this ratio is turned over where the output measure is now over the input measure, the ratio becomes a productivity performance measure. In an augmented service cost information system, quality may be considered as either adjustments to input or adjustments to output.
As guide to data collection, consider an example of a social service worker making a monthly visit according to an elderly client’s service plan. The visit took an hour and a half engaging with the client, noting the condition of residence, appraising living status and completing documentation of the face to face service transaction. Workers in this service area average two hours and fifteen minutes a visit, including travel, and visit two and a half clients a day. Input to the cost per unit ratio, in this case, is 110 hours and 30 minutes a month while process output consists of service deliveries to 52 clients. Dividing 110 hours and 30 minutes by 52 clients gives 2 hours and 8 minutes, the average time to deliver this particular service to a client during the month. This ratio of hours input to number of clients, may be looked at as client requirement, a performance measure. This ratio when inverted becomes the average number of clients served in one hour. Completing the calculation, 52 clients divided by input of 110 hours and 30 minutes results in a ratio of 0.47 clients served for each hour of worker input or productivity of the agency’s delivery process.
By Noel Jagolino, contributing management consultant
Mgmtlaboratory.com 2018