Shouldice Hospital Case Analysis

Of these alternatives, which one (if any) do you recommend and why? What are the problems you foresee in implementing your selected alternative? Note: the hostel rooms each have one bed and are not used daily but for occasional excess demand.

ALTERNATIVES

Some of the recommendations we recommend for Shouldice hospital, along with the advantages and disadvantages of each, to expand while maintaining strict control over quality are:

1. Add an additional day by operating on Saturday

* Use 89 + 14 rooms (3.5 average stay)

* Total number of patents per week = 180

* 137 current throughput/148 theoretical = x / 180 theoretical

* New throughput = 180 x (137/148)= 167 patients / week

* Additional patients per year = (167-137) x 50= 1,450

* Additional revenue for the clinic = 1450 x (450+0.20 x 75) = $674,250 - Cost $124,250

* Net increase in profit: 550,000 for no additional investment

* Disadvantages

* Require to schedule 23-25 operations on Saturday

* Six surgeons and a supervising surgeon have to work on Saturdays

* Additional other personnel

* Violates the implied contract that Shouldice has with its surgeons, strong opposition by the senior doctors

* Operating close the theoretical capacity of the facility

* Advantages

* No investment is needed

* Can still maintain quality

2. Increase additional beds by 50% by adding a new floor

* Total Number of Rooms: 89 +45= 134

* Total number of patents per week = 193

* 137 current throughput/148 theoretical = x / 193 theoretical

* New throughput = 193 x (137/148)= 179 patients / week

* Additional patients per year= (179-137) x 50 = 2,100

* Additional revenue for the clinic = 2100 x (450+0.20 x 75) = $976,500 - Cost $176,500

* Return on investment = 800,000/2,000,000=40%

* Disadvantages

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

* Increase work load on admissions, kitchen, laundry, housekeeping and accounting

* Further staggering of meal hours for patients (100 seat dinning