Operations Management

Case study

On

SHOULDICE

Submitted By: Garima Khatri(056) Gaurav Chandwani(057) Gaurav Chaudhary(058) Gaurav Sharma(059) Gauraw Prasad(060) Geetika Dham(061) Harsimranjit Kaur Chahal(062)

SHOULDICE HOSPITAL LIMITED

ABOUT THE COMPANY

The SHOULDICE Hospital Ltd was started in July 1945 with six room nursing home. Over the

years, It has focused mainly on repairing external hernia both for first time and recurring cases.

By the time the number of patients increased, Dr. Shouldice extended his facilities to 36 beds

capacity hospital after acquiring the 138-acre estate with 17,000-square foot main house in the

suburb of Thornhill, 15 miles north of Down Town Capital, Toronto. After planning for some

more years, he added a wing to the house ,thereby, increasing the capacity to 89 beds. In 1965 Dr

Shouldice passed away. Dr Nicholas Obney, his long-term associate, then became the surgeon-in-

chief and the chairman of Shouldice Hospital Limited. He then started operating both the hospital

and the clinical facilities.

HISTORY

Dr. Edward Earle Shouldice graduated from the University of Toronto in 1916. During World

War II, he was called on to serve the Medical Examining Board. Dr. Shouldice, found that many

young men who were willing to serve their country denied enlistment. These men needed

surgical treatment to repair their hernias before they could be pronounced physically fit for

military training. But the problem was that there were very few doctors and the hospital space

was also restricted for this non-emergency surgery .So he performed an innovative method of

surgery by contributing his services to seventy of these people without charging a fee .The

delighted recruits soon made known their success stories. By the war's end, more than 200

civilians contacted the doctor for the surgery. The scarcity of hospitals beds, however, created a

major problem. He therefore opened his own hospital in Toronto in the southern part of Canada.

OPERATIONAL STRATEGY AND EFFICIENCY

THE UNIQUE SELLING POINT OF THE HOSPITAL

“There is No Substitute for Experience”

Shouldice Hospital has been dedicated to the repair of hernias for over 55 years. The trained

team of Shouldice Hospital surgeons have repaired more than 300,000 hernias with a greater

than 99% success rate. Surgeons at Shouldice Hospital have a virtual 100% success rate

performing primary inguinal indirect hernia repairs.

THE NURSES’ EXPERIENCE

• Shouldice appoints 34 full time equivalent nurses for a 24 hour period.

• During non-operating only 6 full time equivalent nurses were present in the premises.

• Performed counseling activities.

THE DOCTORS’ EXPERIENCE

• 12 full time surgeons

• 8 part time assistant surgeons.

• Each operating team required :

• A surgeon

• An assistant surgeon

• A scrub nurse

• A circulating nurse

WORK LOAD

• A total of 30 to 36 operations were conducted per day.

• Each surgeon performed three or four operations a day.

• A surgeon’s day ended by 4 p.m.

THE FACILITY AT SHOULDICE HOSPITAL

• Two facilities in one building

• Hospital

• Clinic

PROCESS FLOW AT SHOULDICE

Process at Shouldice Hospital

BOOKING A SURGERY

• Patients living within 100 km (60 miles) from the hospital come to the office for a

personal examination.

• Examination Hours are:

Monday to Friday :

WALK-IN CLINIC, no appointment necessary (helpful for near-by patients)

Time : 9:30 am to 3:30 pm

Saturday : BY APPOINTMENT ONLY from 10:00 am to 2:00 pm

• Patients living at a greater distance who wish to arrange an examination, admission and

operation all in one visit complete and send Questionnaires 1 and 2 and they are replied

through mail with review of information by a surgeon, the details of their appointment.

CUSTOMER (PATIENT) CONTACT POINTS/SCHEDULES

CONTACTS WITH THE PATIENT ON THE DAY BEFORE OPERATION

1. Examination upon arrival in one of the examination rooms by surgeons: 15-20 minutes

2. Meeting one of the two admitting personnel in the accounting office: 5-10minutes

3. The queries of patients were dealt with by the receptionist

4. Patients are checked for haemoglobin and blood in nurses’ stations: 5-10minutes

5. At 5 pm discussions on what to expect, drugs to be administered and the post-operative

routine is done in the Nurses’ orientation.

CONTACTS WITH THE PATIENT ON THE DAY OF OPERATION

1. The circulating nurse monitors the patient’s comfort during operation.

2. Directly after operation, patients are invited to get off the operating table and walk to the

post operating room, in order to boost the morale of the patients.

3. Throughout the day, nurses and housekeepers talk to the patients (operated)and encourage

them to exercise. And they also encourage them to walk down to the dining room and help the

newly admitted patients.

POST-OPERATION CONTACTS

Patients are encouraged to explore the premises, talk to the people on the hospital and

make friends.

KEY DIFFERENTIATORS

The following features differentiates Shouldice from its other competitors and account for its

performance –

• Unique and pioneering surgical technique for Hernia operation which reduced the suffering of

the patients and led to rapid recovery as compared to the existing methods. The Shouldice

technique enabled the patients to resume their normal routine and jobs in a much shorter period

of time ( one to four weeks) as compared to other hospitals ( two to eight weeks).

• Doctors could conduct 600 operations in a year as compared to 25 to 50 operations per year in

other hospitals this was possible due to the Standardization of operating procedures which led to

efficient utilization of the medical staff and other resources.

• To adhere to the Shouldice technique and match the value system with that of the hospital,

experienced doctors and nursing staff were recruited carefully.

• Due to the following techniques adopted by Shouldice created the ‘Un-hospital’ like

experience for patients :

o carpeting the hospital gave the place smell other than that of disinfectant.

o encouraged interaction and recreational activities amongst patients and also with

the hospital staff

o Matching of roommates based on similar background and the scheduling of their

operation at the same time are examples and care exerted to create a friendly environment

which led to faster recuperation.

o Developed feeling of belongingness to the hospital during the stay.

•Unique recovering techniques that stressed upon ambulation led to minimizing the cost by

cutting down on various post-operative patient care activities such as common dining areas,

common recreational facilities etc. This also resulted low nurse to patient ratio compared to other

similar hospitals (0.44)

•Offering the cheapest option for treatment of hernia in the region.

•High reliability of Hernia operation with very small recurrence rate of 0.8 % as compared to

high recurrence rates of close to 10 % as in the United States.

• Doctors and nurses were motivated by way of higher salaries and profit sharing systems in the

form of bonuses compared to other hospitals in the region and reasonable workload leading to

sense of belongingness amongst the doctors and nurses leading to low attrition.

•Encouraged group cohesiveness and fraternity type of coordination mechanism within the

organization leading to greater operational efficiency.

The above factors resulted in remarkable credibility for the Shouldice Hospital that

positioned it in the market as a hospital which ensured cost effective, reliable, caring and

responsive service to the hernia patients. All this also shows that the Shouldice service delivery

model followed Deming’s 14 point model and also the Deming Wheel (PDCA – Plan Do Check

Act cycle). As part of the operational strategy of the Shouldice Hospital, it implemented the

waiting line analysis model for service improvement which provided quick service to patients.

ALTERNATIVES AND RECOMMENDATIONS

Shouldice Hospital seems to be caught on the horns of a dilemma when considering capacity

expansion. The hospital is a successful venture and even without mass advertising, due to the

unique methods employed for surgery, it operates at close to 100% capacity. Thus the possibility

of not being able to cope up with increasing demand is very real. Another problem is that of

certain other doctors not associated with the hospital trying to cash in on the success of Shouldice

method.

Since very limited operating facts are available in the case, there are certain assumptions that

have to be made regarding this case. First, it is assumed that they are operating at the “best

operating level” because of the way the case describes how efficiently the hospital is ran and how

the patients appear to be pleased with their treatment. It is also assumed that the current staff is

satisfied with the existing work schedule and does not desire any change in the same. Increase in

the number of working days would lead to a more rigorous work schedule and may directly affect

the attitude and motivation of the staff.

It can be safely assumed that if Shouldice does indeed decide not to go ahead with the expansion

plans, the market will fill in the demand one way or the other. Also since the operating

procedures employed have been around for a reasonable time now, they are probably well known

to the medical fraternity. We also assume that the expansion will take place only to cater the need

of unmet demand and is not driven by the motive to earn profits or any other such agenda.

NO CHANGE

The simplest path of all is to do nothing. The existing system and reputation gives Shouldice

Hospital an edge over the others. It cannot be determined whether the existing setup is

satisfactory to the management in terms of profits and other operating metrics are concerned.

However, assuming that it is, we can conclude that Shouldice Hospital is not under any threat of

losing its share of patients to competition.

EXTEND OPERATIONS TO SATURDAYS

This option would increase the number of patients served by 20% per week. However, it is

unknown whether this additional capacity would be enough to meet the unmet demand of the

market. Also, the extended working hours may be a direct cause of quality degradation in terms

of services offered at the hospital due to employee resentment as six surgeons and a supervising

surgeon would have to work on Saturday. Also, since additional hours would violate the implied

contract in place, additional staff would need to be hired. Also, added expenditure for training

and time cost for the additional staff to come up to the efficiency curve will need to be

considered.

INCREASING THE NUMBER OF BEDS BY 50% BY ADDING ANOTHER FLOOR

This would not be a sound idea since the construction will require large capital investment, time,

and would disrupt the country club atmosphere of the hospital for an extended duration.

Increased capacity would also require scheduling of available doctors to full capacity for 5 days a

week and also increase pressure on support departments such as housekeeping, laundry, kitchen,

accounting etc. Moreover, the capacity expansion of other areas such as the dining hall would

also need to be considered, or alternatively, the meal hours would need to be staggered for the

patients.

MEETING THE UNMET MARKET DEMAND WITH EXTERNAL SOURCES OF CAPACITY

Shouldice may want to consider other facilities that are similar to their own and team with their

doctors to train them in the Shouldice processes. This would help keep the competition out of the

market and at the same time add to the profits of the hospital. Shouldice may want to do this as a

silent partner until the service quality at the new facility reaches a level where Shouldice would

want to associate their name with the new facility.

OPENING A NEW VENUE IN CANADA OR A NEW VENUE IN US

Given the fact that a large percentage of patients belong to Canada and US, opening a new

facility in either of these countries may be a viable option. Besides improving Shouldice’s

competitive position and profits, a new facility would also provide new opportunities for the

existing personnel. The downsides of this option are that it requires significant investment to

begin with. Also, it would be a challenging task to monitor the quality of service provided and

even more challenging would be the task of replicating the same culture and atmosphere

prevalent in the parent facility.