Case View: Shouldice hospital limited widely known for

Case 1 – Shouldice Hospital

Introduction and Over View:

            Shouldice hospital limited widely
known for the Hernia Repair’ having 90 bed healthcare facility located in the
suburb Thornhill of Toronto, Canada. The 17,000 sq. ft facility is extended on
a 130 acre estate and specializes in clinical and operation of abdominal
Hernias. Currently, 76,00 surgeries are performing every year on patients from
all across the Canada and USA. Dr. Edward Earle Shouldice  founder of this reputed Healthcare organization
of the Shouldice method for repair of inguinal Hernias. This unique surgical
technique is considered superior or differentiate to all other Traditional
Canadian Hospitals for Hernias.

The Shouldice Method for Hernias Repair/Healthcare Performance:

            The successful contribution of the
Dr. Shouldice was develop the methods are (1) external hernia and (2) patients
are subject to early ambulation, which promote rapid recovery. repair by Dr.
Shouldice . The purpose to designed the method for Hernias repair to be
minimally invasive. In the result patients requires much less sedation, patients
have immediate post-operative mobility, can be eat during the evening after
their surgery and patients are discharge by the fourth morning after their
operation. Comparatively the traditional hospital release the patients after 5
to 8 days or as earlier because of the pressure 
to make sure more bed availability.

            Method is applicable for the first
time is 45 minutes procedure. The second procedure is 90 minutes for the
recurrences of Hernias which was previously repaired from elsewhere.  Also the method involves separation of
muscles layer and six rows of stitches in an overlapping fashion that resulting
in a reinforced muscular wall. For the immediate post-pop ambulation and rapid
recovery are allowing to use of a sleeping pill, a pain killer and a local
anesthetic.

Business Performance:

            Shouldice’s provided services are
oversubscribed despite a lack of advertising. Shouldice Hospital advertising
only relies on word of mouth, doctors’ referrals and patients’ own research to
attract customers. The success of the Shouldice hospital has reflected in
several aspects of its business. But major element of the success of its
comprises of provide quality of healthcare services, patients and employees
satisfaction. Other successful element can be measured in terms of its cost,
Shouldice hospital offers half rate for the external Hernias treatment compare
to the market rate and its competitors. The viability of the business model
exhibit the management of Shouldice to expanding the hospital’s capacity to
serve considerable unsatisfied demand.

The Patient and Employee Experience:

            The
Shouldice hospital adopts holistic approach to the patient satisfaction and
healthcare which is high. The hospital facility recommended the patients to associate,
interact and socialize with each other by knowing the hospital services that
provide to the patients. The effective experience in their time on the hospital
is pondered in the preference of a few patients to add an additional day to
their stay and their participation at the yearly Hernias reunion event.
Furthermore, more than 95% of patients at the Hernias reunion dinner that they
were inspired that Shouldice did not “look like a Hospital and Clinic”.

            The turnover rate of the Shouldice
hospital employees are comparatively seems like very low from other Canadian
Hospitals, 10% annual turnover rate are observing in nurses and the surgeons
mostly who have been in service more than 5 years are likely to be remain
permanently. Others Canadian hospitals usually faced high turnover rate amongst
hospital staff at that time. The Shouldice keep maintaining low turnover of
surgeons is  due to giving handsome
salary packages ($144k + bonus – 15% over competition) and a good work-life
balance. Shouldice hospital linked low turnover to the higher productivity due
to less time being devoted to training the new staff and less experience being
lost.   

            Alternatives

1.      
Add a new floor to increase 50% of
the capacity.

2.      
Establish a new facility for hernia
where other surgeries could be undertake other than hernia

3.      
Work on Saturday

 

Add a new floor
to increase 50% of the capacity.

The alternative
to build an addition to the current property to increase capacity and maintain
proper control. Dr. Shouldice explained that building an addition could
increase capacity of beds by 50%. This alternative would lead to an increase in
bed availability and allow relief in the backlog of scheduled patients.
Currently a surgeon is performing 3-4 procedures per day in total 7400-7600 per
year. The backlog is of 2400 which can easily be handled after increasing
capacity by 50%. This alternate will be enough in handling the increase of 100
patients per six month for next seven years.

 

 


Pros

Ø 
Low capital expenditure

Ø 
Easy monitoring and quality
assurance.

Ø 
Operational and procedural economy
and effectiveness easily be ensure

Ø 
No and Low risk of the procedure to
being copied or misapplied. Exhibit 4 as others are trying to emulate the
hospital technique

Ø 
Quality and high span of management
can easily be maintained.

 


Cons

Ø 
Problems in construction.

Ø 
Increase in work load on admissions,
kitchen, laundry, housekeeping and accounting

Ø 
Require to schedule doctors to the
full capacity of five days per week.

Ø 
After seven years the hospital will
be unable to handle the backlog of patients again.

 

 

 

 

 

Establish a new
facility for hernia where other surgeries could be undertake other than hernia

The second
alternative is to expand to another location such as the United States. In
2000, approximately 1,000,000 operations took place in the U.S. alone. The
Shouldice hospital can take advantage of the market and open a new facility to
take market share in the U.S. This could potentially double the capacity over
time but unknown.

 


Pros

Ø 
Easy for patient who are coming from
remote area which will save both time and cost.

Ø 
Hospital can easily take the
advantage of Market size as it is well known in United States as well

Ø 
Significantly increase in profits.

Ø 
Operational Efficiency can be
maintained.

Ø 
An opportunity to get more expertise
by offering a variety of procedures other than hernia.

 


Cons

Ø 
High risk of the procedure to being
copied or misapplied. Exhibit 4 as others are trying to emulate the hospital
technique

Ø 
High investment is involved.

Ø 
Risk of control and low span of
management.

Ø 
The hospital may face certain
problems in complying certain regulatory requirements at new place.

 

Adding Saturday
operation to increase bed utilization

The final
alternative, the group has decided to add a sixth day of operations. By doing
so, the bed utilization will increase from 71% to 86% as seen in figure 2.1 and
2.2.  For computational purposes, we used
90 beds with an average of 30 operations per day.


Pros

Ø 
No capital is required.

Ø 
No construction is required.


Cons

Ø 
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 = 630

Normal Operations: 450/630= 71%

Normal Operations with Saturday: 540/630 =86%

 

           

 

Based on the
analysis, we recommend that combining two options together will solve
confronting issues of increasing hospital’s capacity while maintaining control
over the quality of the services. In other words, Shouldice should invest $4 million in a new space that will expand the
number of beds by 50% and perform Saturday operations that will increase the
capacity by 20% as well. Using this business plan, Shouldice’s annual revenue
will be $24,616,400 (Please figure 2.5) and be capable to payback $4 million in
shorter period of the time. The benefits of the expansion and Saturday
operations will outweigh its drawbacks and risks and help Shouldice succeed
while continuing to use the unique technique “Hernia” repair.