Shouldice Hospital

Executive Summary

Shouldice Hospital is the world's leading centre of excellence in abdominal wall hernia repair . Shouldice's reputation has been built on an exterior quality service and a high rate of successful hernia repair operation. A 99% success rate in hernia surgery has long been the benchmark for medical professionals internationally.

Shouldice has averaged 7,000 operations annually, while last year it performed 7,500 operations. The patient number increased a lot in recent years. The hospital's current capacity cannot meet extensive increased patient demand. The senior manager of the hospital needs to find the best option to expand the capacity to service unsatisfied demand while maintaining control over the high quality service delivered.

Shouldice Hospital has a unique operation system to ensure its success. The notable features contributed to its service delivery system are innovative hernia repair technique; specialized program of care and recovery; and sociable atmosphere in the hospital. However, the utilization of overall capacity is not high. Current operation system does not run very efficiently. Shouldice needs to take steps to redesign its operation system to increase the capacity utilization.

External analysis shows that Shouldice can use currently available high technology to further improve its operation quality. There are certain medical and health related laws to regulate hospital's operation. In addition, Shouldice needs to commit to social responsibility to implement environment friendly operation process. This will benefit the public and hence bring profit to the hospital in the long run.

Three options were suggested to Shouldice Hospital to expand its current capacity. First one is to add one more day of operation on Saturday. The second one is to add another floor of rooms to the hospital to increase 50% of number of beds. And the third option is to combine option 1 and 2.

An evaluation of three options was performed based on Shouldice's current objective, quality concern, cost-effectiveness concern and compliance of laws, as well as 5 years' financial analysis. Then, option 3, to increase 50% of beds and add one more day of operation is recommended to the hospital.

Shouldice needs to take certain actions to ensure the successful implementation of the expanding plan. Employees' awareness and fully consent of the capacity expanding plan are very important to ensure that the high quality service can still be maintained.

Finally, adding one more operation room can be considered in case the expanding plan still cannot meet increased patient demand.

1. Problem statement

Shouldice hospital's current operation is not able to meet extensive increased demand. The senior managers of the hospital need to find the best option to expand the hospital's operation capacity to meet increased patient demand, while still maintaining control over the quality of the service delivered.

2. Situation analysis

Background

Founded in 1945, Shouldice Hospital is the world's leading centre of excellence in abdominal wall hernia repair . Designed exclusively to meet the needs of hernia patients, Shouldice is a fully licensed, 90-bed surgical hospital. Over the past two decades, the hospital's specially trained surgical teams perform over 7,000 hernia repairs every year, with an unparalleled track record of success. Last year, it had a record year and performed nearly 7,500 operations.

Mission and strategy

Shouldice Hospital's mission is to deliver a quality of care to hernia patients that cannot be found anywhere else in the world. They tend to offer patients "the Shouldice Experience", which is an excellence experience from the hospital.

The business strategy for Shouldice is to be the "best hernia repair" hospital and its operation strategy helps to carry out this business strategy very well.

Objective

Senior managers' current goal is to find the best way to expand hospital's capacity to meet increased demand while still keeping its exterior quality service. And hence Shouldice can keep its leader position in hernia repair area and maximize the profit to all stakeholders in the long run.

2.1 Current operation of the organization

Shouldice has developed into a modern, 90-bed facility, with five specialized operating suites, an expert team of hernia surgeons including 12 full time surgeons and 7 part-time assistant surgeons; and nurses as well as dedicated staff of about 150 people, all working to meet the needs of patients with hernias.

Shouldice Hospital currently has 90 beds available. So, the maximum number of using beds in a week is 630 (7*90). The hospital does operations 5 days a week. Appendix A illustrates room occupancy in the current situation. There are 450 beds service used from the maximum of 630 available beds. So the utilization of beds is

71.43% (450/630). In addition, each day the hospital can perform 40 operations maximally (5 operation rooms X 8 hours *1hr per operation). The utilization of operation rooms is 75% (30/40). Moreover, Surgeons utilization per day is 62.5% (12 surgeons 4 operations per day. Maximum is 48 and current operations are 30), assuming all 12 surgeons work every day.

At this level, Shouldice is comfortable to maintain its superior quality service to current patients. On the other hand, Shouldice currently has around 29% idle capacity from its beds operation, 25% idle capacity from its operation rooms, and 37% idle capacity from its surgeons' capacity. All these indicate that Shouldice has potential ability to meet future increased demand. And the hospital also needs to improve its operation efficiency. (Please see section 2.1 as a response to case question 1)

2.2 Strength and weakness analysis

Strength

Shouldice hospital's main strength is its service delivery system which contributed to the hospital's operation success. First, the superior technique developed by Dr. Shouldice during World War II healed thousands of patients and the hospital built a solid reputation.

Second, Shouldice operates a unique program of care and recovery to service its patients. To patients' best interests, Shouldice offered "3 day process" to help patients fully recovered. Under carefully managed routines, Shouldice patients frequently return to work in a few days; the average total time off is eight days.

Third, the hospital's welcome and