Download - Shouldice Hospital Group8
OPERATIONS MANAGEMENT
CASE STUDY REPORT
SHOULDICE HOSPITAL LIMITED
GROUP 8 -- SECTION C
Davneva PhiraRamya A
Vivek MenonAravind A M
Suman Mondal
About The Company
The Shouldice Hospital Ltd started as a six room nursing home in July
1945. The main focus of this hospital is repairing external hernia, both first time
cases and recurring ones too. As the number of patients increased, Dr Shouldice
extended his facilities by acquiring a 138-acre estate with a 17,000-square foot
main house in the suburb of Thornhill, 15 miles north of Down Town Capital,
Toronto, with a 36 bed capacity. After some years of planning he added a wing to
the house increasing the capacity to 89 beds. In 1965 Dr Shouldice passed away
and Dr Nicholas Obney, his long-term associate, became the surgeon-in-chief
and the chairman of Shouldice Hospital Limited. By then they started operating
both the hospital and clinical facilities. By 1982, the volume of activities had
increased to 6850 operations per annum.
Differentiating Factors
The hospital had a narrow focus. The doctors used innovative “Shouldice
methods”. Under this technique the recurrence rate reported was very low. Due
to this technique early post-operation ambulation was possible. The whole
operation took only 4 days on an average so the patients could go back to work
in 2-8 weeks. Also an important factor is that the cost of operations and the fee
charged were much competitive in comparison to competitors.
Customer satisfaction was of immense importance and this was ensured
by counseling provided by nurses throughout their stay in the hospital,
recreational activities organized for the patients and high socializing among the
patients.
Out-of-town patients were diagnosed online using the medical information
questionnaire, saving $200-$400. The ambience of the hospital was such that
patients felt at home. The employees were efficient in cross-functional activities.
The only form of advertising was through word-of-mouth. The average time taken
to recover by a patient post operation was much lesser compared to other
hospitals.
How successful is the Shouldice Hospital?
Dr. Earle Shouldice started off this venture with a sole mission of providing a
painless hernia operation and a fast recovery at an affordable cost. By 1983, the
hospital had achieved exactly that and has delivered on all the aspects of its
founder’s vision. The hospital charges about $1030 for a hernia operation which
is very less when compared to the $2000 - $ 4000 charged elsewhere. Also the
patients were discharged much sooner than the other hospitals. The patients
with lighter jobs could get back to work in a week. Ambulation was possible
immediately after the operation and this allowed interaction amongst the patients.
The annual alumni meet of its patients increased its reputation by word of mouth
which resulted in a huge demand. Considering that the hospital did not need any
advertising, it was a significant achievement.
The doctors at Shouldice take a keen interest in every patient and in spite of
so many patients and operations every day, the patients were provided with
personalized care. The success of the process is evident from the fact that the
competitors emulated the same. Not only the local patients, people from outside
Canada visited this hospital for their medical needs. This does indeed prove that
Shouldice Hospital is a success.
How do you account for its performance?
The service system at Shouldice hospital consists of four stages, the initial stage
of identifying the illness, the preparation process for the specific patient, the main
process of operating on the patient and the final steps are the post operative
procedures which involve the recovery of the patient. The hospital has been able
to carry out a smooth process flow which results in the patients being attended
on time and aids in their fast recovery. From the time a mail is sent out to the
prospective patient to the final operation and the patient being discharged, the
doctors, the nurses and the employees at Shouldice ensure a hassle free and
swift response action plan.
Shouldice was able to standardize the hernia operation as it treated only the
external types of abdominal hernias. This way it was able to standardize the
equipment to be used and also train its doctors and nurses in a routine manner
without having to bother about specialization in other fields of medicine. This
saved a lot of operating costs for the hospital.
The first of the four stages includes the patient learning about the hospital
from doctors and previous patients, the fact that the hospital kept the operation
simple was not viewed as the final solution and hence was not recommended by
the doctors. However, most of the patients first got a diagnostic done from the
doctor or by themselves and then got in touch with the hospital. The out of town
patients were contacted via mail and a medical questionnaire was sent to them.
This way the hospital had already started the first process of diagnosing the
patient even before he had reached the place. This gives more first hand
information to the doctors and saves a lot of time about the medical situation of
the patient. After the contact and the medical questionnaire has been filled, the
patient is diagnosed by the hospital and then an appointment is fixed with the
hospital for the surgery.
The second stage comprises of the preparatory procedures for the
operation. The process flow that takes place when a patient arrives at the
hospital is as shown.
The third stage deals with preparing the patient for the operation which
includes preparing the patient, administering the anesthetic, and finally the
operation which lasts for about 45 minutes. The hospital is able to complete an
operation in such a short time as everything is pre planned and the doctors are
aware of the number of patients he/she is going to operate on today. There is no
sudden demand of doctors nor there is any emergency cases coming in.
After the operation, the patient is taken for the post operative exercises
and then by the end of day 4 the stitches are removed and the patient is free to
go home and begin working again.
Process Flow
Arrival 1-3 PM
20 Mins
Prelim Exam 15 mns
Dinner
Blood n Urine 5-10 mins
15 mins
Check In+Orientation
Insurance 10 mins
Interaction
Bed @ 9 30
Process Flow
The following characteristics are important in the context of Shouldice as it
explains the smooth functioning of the process.
The service system is consistent with operating focus which is fast and effective.
Every step of the process is geared for maximum efficiency. The process is also
very much customer friendly as the patients are allowed to be with the kids.
The entire process as a whole is completely structured form the time of the
patient’s arrival to his departure, there is a time constraint on every activity and
also a lot of leeway is there for the activity to be completed in that time. The front
office and the back office operations are in perfect synchrony to enhance the
smooth flow of the process and have been merged effectively.
The entire process is extremely cost effective and the delivery promise of
the hospital to put its patients back on their feet within a week is also very much
honored. Though there is a small flaw in the system in case of higher demand at
which the system cannot cope with the available resources. Hence the hospital
has to chalk out action plans in order to retain the business and attend to the
growing demand.
As Dr. Shouldice, what actions, if any, would you take to expand the hospital’s capacity?
As Dr. Shouldice, I would execute the following actions to increase the capacity
of the hospital:-
1. Work on Saturdays
2. Additional Floor
Cost Facts:-
Budget for operating costs= $ 4.8 million
Hospital costs-$2.8 million
Clinic costs -$2 million.
Operations per year = 6850.
Hence average cost per patient borne by the hospital =$4.8million/6850 = $701.
Amount collected fro m the patients =$1029.
1) 4 days of hospital stay=4*$111
2) Surgical fee=$450
3) Fee for the assisting surgeon=$60
The net profit earned =$1029-$701=$328.
How would you implement changes you propose
Option 1
Work on Saturdays
This option would naturally increase the working days by 52.
Given number of operations=6850
No of working day (without Saturday and Sunday) =261
(Assuming 365 days in 1 year)
Therefore, number of operations per day = 6850/261=27
Net profit = $ 0.46million
Also an important factor is that a day (Saturday) in hospital will not be wasted.
Hence, patients staying over the weekend would be discharged a day earlier and
new patients could be admitted hence increasing the capacity.
This option would give immediate results so it can be a short term solution.
Action Plan
Part-time doctors and nurses can be appointed for the Saturday
operations, as some of the current staff are unhappy with this idea.
Doctors who can work on Saturdays can be given off on weekdays.
OPTION 2
Additional Floor
An additional floor would increase the capacity to accommodate more patients.
Assuming a floor can accommodate 60 beds the profit of the hospital would
increase even with the consideration of the cost associated with it. As I consider
the welfare of the patients to be as important as earning increased profits.
However, this option will be a long term solution.
Action Plan
Since 60 beds are proposed to be added, 13 doctors have to be recruited.
(19 doctors for 89 beds).
Similarly, 26 nurses have to be recruited for this capacity.