Case 1 – Shouldice HospitalIntroduction and Over View: Shouldice hospital limited widelyknown for the Hernia Repair’ having 90 bed healthcare facility located in thesuburb Thornhill of Toronto, Canada. The 17,000 sq.
ft facility is extended ona 130 acre estate and specializes in clinical and operation of abdominalHernias. Currently, 76,00 surgeries are performing every year on patients fromall across the Canada and USA. Dr. Edward Earle Shouldice founder of this reputed Healthcare organizationof the Shouldice method for repair of inguinal Hernias. This unique surgicaltechnique is considered superior or differentiate to all other TraditionalCanadian Hospitals for Hernias. The Shouldice Method for Hernias Repair/Healthcare Performance: The successful contribution of theDr. Shouldice was develop the methods are (1) external hernia and (2) patientsare subject to early ambulation, which promote rapid recovery. repair by Dr.
Shouldice . The purpose to designed the method for Hernias repair to beminimally invasive. In the result patients requires much less sedation, patientshave immediate post-operative mobility, can be eat during the evening aftertheir surgery and patients are discharge by the fourth morning after theiroperation.
Comparatively the traditional hospital release the patients after 5to 8 days or as earlier because of the pressure to make sure more bed availability. Method is applicable for the firsttime is 45 minutes procedure. The second procedure is 90 minutes for therecurrences of Hernias which was previously repaired from elsewhere. Also the method involves separation ofmuscles layer and six rows of stitches in an overlapping fashion that resultingin a reinforced muscular wall. For the immediate post-pop ambulation and rapidrecovery are allowing to use of a sleeping pill, a pain killer and a localanesthetic.
Business Performance: Shouldice’s provided services areoversubscribed despite a lack of advertising. Shouldice Hospital advertisingonly relies on word of mouth, doctors’ referrals and patients’ own research toattract customers. The success of the Shouldice hospital has reflected inseveral aspects of its business. But major element of the success of itscomprises of provide quality of healthcare services, patients and employeessatisfaction. Other successful element can be measured in terms of its cost,Shouldice hospital offers half rate for the external Hernias treatment compareto the market rate and its competitors.
The viability of the business modelexhibit the management of Shouldice to expanding the hospital’s capacity toserve considerable unsatisfied demand.The Patient and Employee Experience: TheShouldice hospital adopts holistic approach to the patient satisfaction andhealthcare which is high. The hospital facility recommended the patients to associate,interact and socialize with each other by knowing the hospital services thatprovide to the patients. The effective experience in their time on the hospitalis pondered in the preference of a few patients to add an additional day totheir stay and their participation at the yearly Hernias reunion event.Furthermore, more than 95% of patients at the Hernias reunion dinner that theywere inspired that Shouldice did not “look like a Hospital and Clinic”. The turnover rate of the Shouldicehospital employees are comparatively seems like very low from other CanadianHospitals, 10% annual turnover rate are observing in nurses and the surgeonsmostly who have been in service more than 5 years are likely to be remainpermanently. Others Canadian hospitals usually faced high turnover rate amongsthospital staff at that time.
The Shouldice keep maintaining low turnover ofsurgeons is due to giving handsomesalary packages ($144k + bonus – 15% over competition) and a good work-lifebalance. Shouldice hospital linked low turnover to the higher productivity dueto less time being devoted to training the new staff and less experience beinglost. Alternatives1. Add a new floor to increase 50% ofthe capacity.2. Establish a new facility for herniawhere other surgeries could be undertake other than hernia3.
Work on Saturday Add a new floorto increase 50% of the capacity.The alternativeto build an addition to the current property to increase capacity and maintainproper control. Dr.
Shouldice explained that building an addition couldincrease capacity of beds by 50%. This alternative would lead to an increase inbed availability and allow relief in the backlog of scheduled patients.Currently a surgeon is performing 3-4 procedures per day in total 7400-7600 peryear. The backlog is of 2400 which can easily be handled after increasingcapacity by 50%. This alternate will be enough in handling the increase of 100patients per six month for next seven years. v ProsØ Low capital expenditureØ Easy monitoring and qualityassurance.
Ø Operational and procedural economyand effectiveness easily be ensureØ No and Low risk of the procedure tobeing copied or misapplied. Exhibit 4 as others are trying to emulate thehospital techniqueØ Quality and high span of managementcan easily be maintained. v ConsØ Problems in construction.Ø Increase in work load on admissions,kitchen, laundry, housekeeping and accountingØ Require to schedule doctors to thefull capacity of five days per week.Ø After seven years the hospital willbe unable to handle the backlog of patients again. Establish a newfacility for hernia where other surgeries could be undertake other than herniaThe secondalternative is to expand to another location such as the United States.
In2000, approximately 1,000,000 operations took place in the U.S. alone. TheShouldice hospital can take advantage of the market and open a new facility totake market share in the U.S.
This could potentially double the capacity overtime but unknown. v ProsØ Easy for patient who are coming fromremote area which will save both time and cost.Ø Hospital can easily take theadvantage of Market size as it is well known in United States as wellØ Significantly increase in profits.Ø Operational Efficiency can bemaintained.Ø An opportunity to get more expertiseby offering a variety of procedures other than hernia.
v ConsØ High risk of the procedure to beingcopied or misapplied. Exhibit 4 as others are trying to emulate the hospitaltechniqueØ High investment is involved.Ø Risk of control and low span ofmanagement.Ø The hospital may face certainproblems in complying certain regulatory requirements at new place. Adding Saturdayoperation to increase bed utilizationThe finalalternative, the group has decided to add a sixth day of operations. By doingso, the bed utilization will increase from 71% to 86% as seen in figure 2.
1 and2.2. For computational purposes, we used90 beds with an average of 30 operations per day.v ProsØ No capital is required.Ø No construction is required. v ConsØ Employee dissatisfaction. Ø Decrease in quality of care.Ø High turnover rate.
Figure 2.1 USAGE OF BEDS FOR CURRENT OPERATIONS Check In Monday Tuesday Wednesday Thursday Friday Saturday Sunday Monday 30 30 30 Tuesday 30 30 30 Wednesday 30 30 30 Maximum amount of beds possible Thursday 30 30 30 630 Friday Saturday 71% Sunday 30 30 30 Total Bed Utilization % Of Bed Utilization Total 60 90 90 90 60 30 30 450 0.71 Figure 2.2 USAGE OF BEDS FOR SATURDAY SURGERY OPERATIONS Check In Monday Tuesday Wednesday Thursday Friday Saturday Sunday Monday 30 30 30 Tuesday 30 30 30 Wednesday 30 30 30 Thursday 30 30 30 ` Friday 30 30 30 Saturday 86% Sunday 30 30 30 Total Bed Utilization % Of Bed Utilization Total 60 90 90 90 90 60 60 540 0.86 Maximum amount of beds: 90 beds X 7 days = 630Normal Operations: 450/630= 71%Normal Operations with Saturday: 540/630 =86% Based on theanalysis, we recommend that combining two options together will solveconfronting issues of increasing hospital’s capacity while maintaining controlover the quality of the services. In other words, Shouldice should invest $4 million in a new space that will expand thenumber of beds by 50% and perform Saturday operations that will increase thecapacity by 20% as well. Using this business plan, Shouldice’s annual revenuewill be $24,616,400 (Please figure 2.
5) and be capable to payback $4 million inshorter period of the time. The benefits of the expansion and Saturdayoperations will outweigh its drawbacks and risks and help Shouldice succeedwhile continuing to use the unique technique “Hernia” repair.