Deloitte

Deloitte

January 24, 2012 06:00 ET

With Most Governments Now Locked Into Unsustainable Operating Models, a New Deloitte Report Advises How to Get Better Services for Less

The billion dollar question: How to break the price and performance tradeoff

TORONTO, ONTARIO--(Marketwire - Jan. 24, 2012) - Canada's $25.7 billion in provincial deficits nearly matches its $29.6 billion federal deficit, for a total national deficit of $55 billion. In order to achieve cost savings and reduce deficits while maintaining or improving service quality, governments need to adopt a radically different approach to public services, according to a new Deloitte report Public sector, disrupted: How disruptive innovation can help government achieve more for less.

"While finance ministries across the country have been crunching the numbers and reviewing public services, Deloitte has been investigating tried and tested methods of radically improving public services around the world," said Paul Macmillan, Deloitte's Global Public Sector Leader. "We found that the most common approach to improving public services typically increases its cost. As a result, while services often get better over time, they come at a very high price, an option that's no longer available."

This new report sets out a blueprint for how governments can design and deliver public services that have better outcomes for taxpayers. It argues that without a radical re-think, governments will not be able to meet increasing demands for better services at lower costs.

The report is based on numerous interviews with government officials, advisors and researchers who identified some of the most effective innovations in education, healthcare, criminal justice, defense and intelligence.

According to the report's author, William Eggers, pursuing disruptive innovation can help save billions. For example, some state governments in the U.S. are experimenting with electronic monitoring. With one state spending more on prisons than higher education, the report finds that by moving half of low-level offenders to electronic monitoring the U.S. government would save more than $16 billion. In the case of the year on year budget increases in Canada's healthcare, the study describes how technology, process innovation and specialized clinics have helped cataract surgery costs drop by up to seven per cent each year for decades.

"To be sure, performance has improved in many public services but not nearly as fast as spending has gone up," Eggers said. "What's more, costs have risen faster than our ability to pay. The money just isn't there to support the kind of rapid and sustained cost increases we've seen in the past decade or two. Disruptive innovation offers a proven path to enhance public services and lower costs."

"Canadian governments are not alone in grappling with a tough fiscal situation," Macmillan noted. "Everywhere policymakers face the difficult investment decision of balancing the benefits of service improvements with their associated costs. Our report describes how this tradeoff can be 'broken' by asking the right service design questions." He added that the report outlines some of the best practices from around the world and can help inform Canada's choices to ensure that the country's public services remain among the best in the world.

The full report is available at www.deloitte.com/govdisrupted

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