Shouldice Hospital

Case 1 - Shouldice Hospital

Mohammad Alqam

Muhammad Danyal

Hera Khan

Enkhjargal Khishgee

Rashid Ali

Introduction and Over View:

        Shouldice hospital is renowned for hernia repair. It is a 90 bed healthcare facility located in the suburb Thornhill of Toronto, Canada. The 17,000 square foot facility extends on a 130 acre estate and specializes in clinical and operational abdominal hernias. Currently, 76,00 surgeries are performed every year on patients from Canada and United States. Dr. Edward Earle Shouldice is the founder of this reputable healthcare organization and the method used to repair inguinal hernias. This unique surgical technique is considered superior to all other traditional hernia repairs.

The Shouldice Method for Hernias Repair/Healthcare Performance:

        Dr. Shouldice renovated surgical procedures of external hernias and patients are subject to early ambulation, which promotes rapid recovery. Not only is his hernia repair considered to be minimally invasive, it requires much less sedation and patients have immediate post-operative mobility. Compared to traditional discharges which may range between 5 to 8 days, Shouldice is known to discharge their patients within the fourth day.

        First-time hernia repairs require 45 minutes. Hernia repair that required about 90 minutes tend to be recurrences previously repaired elsewhere.  Furthermore, the method involves separation of muscle layers and six rows of stitches in an overlapping fashion that resulted in a reinforced muscular wall.

Business Performance:

         Shouldice Hospital advertising only relies on word of mouth, doctor’s referral and patients research of hernia repairs. The success of the Shouldice hospital has reflected in several aspects of its business. Shouldice is a major competitor for hernia repairs due to quality of service and satisfaction among patients and employees. Other successful elements can be measured in terms of its cost, Shouldice hospital offers half rate for the external hernias treatment compared to the market rate.

Issues/ Problems

Risks of Expansion

The case highlights number of risks faced by Shouldice Hospital and the risk of expansion or increasing capacity is the most prevalent one. The risks faced by the hospital are both short and long term. The short-term perspective takes into account the existence of demand for increased capacity. This goes along with the management being fearful of advertising the service provided, due to the expected increase in demand, which cannot be met due to existing capacity constraints.

The business case for expansion needs to be studied carefully along with the potential of less tangible impacts, which this kind of decision would lead to. The success of the hospital lies within the operational efficiency of Shouldice and the service level that is provided through the atmosphere created by the service provider. The size of the facility contributes to this atmosphere created by the service provider and the potential to increase the capacity of this facility contributes significantly to the detriment of the customer experience.

Brand protection

Another concern is the use of hospital’s methods by other clinics, having similar techniques but different results. Such a limitation is difficult to fix since the procedures used in an operation theatre cannot be protected or patented in any way.  One way in which this issue could be resolved is by marketing services that the hospital provides and that are not offered by other clinics. This would indicate that the services offered and methods adopted by Shouldice Hospital were pioneered and innovated at the Hospital and other clinics are simply trying to copy or imitate them. Another way could be to allow other clinics to imitate the procedures and methods since it’s not the operational model behind the success of the Hospital, rather their cost model and patient experience.

Issues of atmosphere dependence

The Shouldice brand and the services experienced by its patients is dependent on the atmosphere created in the hospital as well as the attitudes of the staff members. Customer experience is vital to the Hospital’s success like any other service industries e.g. hotels, restaurants etc. However, the main issue involves the maintenance of such high standards and attitudes set by Shouldice at all times. Any misbehaviors by the Hospital’s staff members could significantly impact customer experience.

        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

• Low capital expenditure
• Easy monitoring and quality assurance.
• Operational and procedural economy and effectiveness easily be ensure
• No and Low risk of the procedure to being copied or misapplied. [Exhibit 4 as others are trying to emulate the hospital technique]
• Quality and high span of management can easily be maintained.

• Cons

• Problems in construction.
• Increase in work load on admissions, kitchen, laundry, housekeeping and accounting
• Require to schedule doctors to the full capacity of five days per week.
• 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

• Easy for patient who are coming from remote area which will save both time and cost.
• Hospital can easily take the advantage of Market size as it is well known in United States as well
• Significantly increase in profits.
• Operational Efficiency can be maintained.
• An opportunity to get more expertise by offering a variety of procedures other than hernia.

• Cons

• High risk of the procedure to being copied or misapplied. [Exhibit 4 as others are trying to emulate the hospital technique]
• High investment is involved.
• Risk of control and low span of management.
• 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.