CASE ANALYSIS: SHOULDICE HOSPITAL LIMITED
Executive Summary: The Shouldice Hospital, Ontario, Cana
da is a pioneer in the field of treating patients suffering from external abdominal hernia. The spee
dy ambulation coupled with its reasonable price rates leads to satisfied patients publicizing the ho
spital by word of mouth. The issues that confront the hospital management are: ·Deciding on ways to
meet the backlog of operations, by expanding the hospital's capacity, while still maintaining contro
l over the overall quality of service delivered. ·Handling piracy and bad mouthing due to piracy. ·S
election of the next chief surgeon after Dr.Obney.
After analyzing various plans of actions, it is
proposed that the capacity of the hospital be increased by scheduling the operations on Saturdays al
so. At the same time a successor to Dr. Obney must also be selected. This solution seems like the mo
st feasible in terms of cost and time and also leverages the existing strength of the hospital in pr
oviding quality services to the patients.
To implement the solution discussed above, first of all,
awareness must be created among all the employees by means of workshops etc., about the urgent need
for such a step to expand capacity. The selection of the new chief surgeon must be done by carefully
scrutinizing all the surgeons in the hospital as well as interviewing new candidates for the same.
The administrative processes in the hospital must be made computerized to improve their efficiency.
Proper training for using them must also be imparted to the employees.
If it is not possible to inc
rease capacity beyond a certain limit due to the above plan and the backlog list continues to expand
, then opening an additional facility in some other geographical location, such as the US of A may b
e considered. Situational Analysis and Problem Definition:
The Shouldice Hospital, Ontario, Canada
is a pioneer in the field of treating patients suffering from external abdominal hernia. With its cu
rrent capacity, it can treat 6850 patients annually.
The patients are treated using the operated up
on using the Shouldice Method, and on an average each patient has to spend four days in the hospital
recuperating. The USP of the Shouldice Hospital is its distinct surgical procedure. The speedy ambu
lation coupled with its reasonable price rates leads to satisfied patients publicizing the hospital
by word of mouth.
The hospital is having a successful run as a niche player catering to the demand
for treatment of hernia patients. In spite of this, there is a huge backlog that the hospital needs
to meet. Because of an increasing backlog, patients tend to go to other doctors for operations.
The
issues that confront the hospital management can be primarily listed as follows: ·Deciding on ways
to meet the backlog of operations, by expanding the hospital's capacity, while still maintaining con
trol over the overall quality of service delivered. The primary issue here is deciding on the manner
in which the capacity should be increased without diluting the quality of service rendered.
·The i
ssue of piracy and bad mouthing due to piracy are also important concerns for the hospital. Many cli
nics or doctors claim to use the Shouldice technique or the Canadian method and in the eventuality o
f the operation performed by them being unsuccessful it brings a bad name to the Shouldice Hospital.
·The next chief surgeon after Dr.Obney, who is due to retire soon, has to be selected. At the same
time, retaining the existing talent pool of doctors and attracting newer doctors willing to learn t
he specialized hernia operations skill is also a primary issue.
Long Term and Short Term Objectives
: Short term: -To clear the backlog by increasing capacity of the hospital services. -To select a su
ccessor for Dr. Obney, the chief surgeon who is to retire soon.
Long term: -To sustain quality in t
heir services, ensuring good patient experience. -To remain the leader in the medical field of herni
a operations. -To maintain the brand equity associated with the specialized technique of Shouldice M
ethod for performing hernia operations. -To ensure working towards goal of profitability while at th
e same time serving the society by passing on the proper knowledge of the Shouldice technique to oth
er surgeons.
Evaluation Criteria:
-Whatever step is taken, it must ensure that there is no dilutio
n in the quality of the services rendered by the hospital. -The action plan implemented must adhere
to the government regulations regarding the profitability of hospitals. -The solution implemented mu
st be economically viable. Hence any step taken must be cost effective. -There is an atmosphere of c
oncern for the employees in the hospital. The decision with regard to the issues at hand must ensure
that the employees are receptive in accepting that decision. -The existing strengths of the hospita
l setup must be leveraged in any decision taken. -Also because of the increasing wait lists of patie
nts to be attended to, it must be ensured that the plans be implemented as swiftly as possible.
Alt
ernatives:
1.Capacity of the hospital could be expanded by scheduling operations on Saturdays also,
leading to a 20% increase in existing capacity. 2.An additional floor of rooms could be added to th
e hospital, with an investment of $2 million and permission from the provincial government. This wou
ld expand the number of beds by 50% and result in scheduling the operation rooms more heavily. 3.Exp
ansion into other geographical locations such as the United States could be undertaken. For having a
quality level in the new facility equivalent to that as in the current Hospital facility at Canada,
one option maybe to transfer 6 of the 12 specialized surgeons to the new facility. Also diversifica
tion into other related medical fields of surgery such as eye surgery, varicose veins, and hemorrhoi
ds is possible. 4.Another alternative could be scheduling operations at other times during the day t
oo, by utilizing the capacity of the operation theatres to the optimum level. This can be implemente
d by having doctors and other medical staff to work in shifts. 5.The successor to Dr. Obney as Chief
Surgeon has to be selected. The selection of such a candidate should preferably be done among the e
xisting doctors in the hospital. In case a specialized doctor from outside is appointed, proper indu
ction to acquaint the existing surgeons must be carried out. 6.Currently the hospital's services are
not being marketed. Plans to adequately market them in order to create awareness of the genuine Sho
uldice method of surgery should be undertaken. This would also aid in protecting against privacy to
an extent.
Evaluation of alternatives:
1.Increasing the capacity by scheduling Saturday operatio
ns is a swift and cost effective solution (See exhibit 2 and 3). No additional capital expenditures
need to be incurred to carry out this plan. It does not violate any government regulations and at th
e same time also leverages the existing strength of the hospital in rendering high quality services
to the patients. However, some employees seem to have some reservations about operations on Saturday
. 2.This plan involves an additional capital expenditure of $ 2 million. While this would lead to an
increase in capacity of the number of beds by 50%, but it would also require additional well qualif
ied surgeons who will be able to carry on the quality tradition at the Shouldice Hospital. Also this
solution would take some time to implement. 3.The plan of expanding the capacity by moving into ano
ther geographical segment such as the United States, involves extensive capital expenditure in setti
ng up a new facility. Also by dividing half of the specialized staff into the two respective facilit
ies, the quality levels may not remain same for the initial span of time. Since we are looking at th
e United States as an alternate the government regulations of Canada would not be applicable. This p
lan would be beneficial in meeting the demand in the US of A of the 42% American patients of the Sho
uldice Hospital. By diversifying into other medical fields of surgery, the low cost and high quality
advantage, which the Shouldice Hospital currently enjoys, will be diluted. Currently the patients a
re made to become self sufficient soon after the operation. 4.By implementing the shift system, the
existing strengths of the hospital will be leveraged. This is similar to the plan 1 in terms of the
expenditure involved and the time frame being talked of. However, under the given case facts, the em
ployees might resent this move of working in extra shifts during the day. 5.The selection of a succe
ssor to Dr. Obney is a step that must be taken soon, in conjunction with any of the above plans chos
en. 6.Marketing the services of the hospital, though would lead to an increased awareness of the aut
henticity of the Shouldice method, while exposing the piracy in the method, but at the same time it
will also lead to an increased number of patients wanting to come to the hospital. The backlog list
would continue to increase.
Recommended Solution: After analyzing all the alternatives I would prop
ose a combination of plans 1 and 5 to be implemented. The operations should be scheduled on Saturday
s also (see Exhibit 1). At the same time a successor to Dr. Obney must also be selected. This soluti
on seems like the most feasible in terms of cost (see Exhibit 2 and 3) and time and also leverages t
he existing strength of the hospital in providing quality services to the patients.
Plan of Action:
To implement the solution discussed above, first of all, awareness must be created among all the em
ployees about the urgent need for such a step to expand capacity. Workshops for the same will help d
ispel any fears in the minds of the existing staff. The selection of the new chief surgeon must be d
one by carefully scrutinizing all the surgeons in the hospital as well as interviewing new candidate
s for the same. The administrative processes in the hospital must be made computerized to improve th
eir efficiency. Proper training for using them must also be imparted to the employees.
Contingency
Plan: If it is not possible to increase capacity beyond a certain limit due to the above plan and th
e backlog list continues to expand, then plan 3 may be considered. This would need some capital expe
nditure but at the same time will help us expand our capacity into another geographical location, i.
e., the USA.
Information Adequacy Issues: There is insufficient amount of information given in the
case about the internal dynamics of the hospital vis a vis the issue of the successor to Dr. Obney.
Also no information is forthcoming about the market status of other hospitals, that is whether they
are open on Saturdays or not. This bit of information is likely to hasten our decision making proces
s. EXHIBITS
Exhibit 1 : Average Cost borne by patient
Charges for 4 day hospital stay= $111 per da
y Surgical fee = $450 Fees for Assistant Surgeon = $60 Fees for Anesthetic= $75 (assuming all patien
ts use anesthetic)
Total cost excluding hospital stay = 450+60+75 = $585 Total Cost borne by patien
t per day = 585/4 + 111 = $257.25 Total Cost borne by patient over four days = $1029 (assuming patie
nt takes our days for recovery)
Exhibit 2 : Average Cost per patient borne by the Shouldice Hospit
al
Budget for operating costs For hospital= $ 2.8 million For clinic = $ 2 million
Total budget fo
r operating costs= $ 4.8 million Total number of operations performed in 1982 = 6850 Hence Average
Cost per patient borne by the hospital = $ 4.8 million / 6850 = $ 701
Exhibit 3 : Net profit increa
se using proposed solution
Net profit per patient = 1029 - 701 = $328
By working on Saturdays we
are increasing the working days by 52. No of operations per year = 6850 No of working days per year
= 261 Hence, number of operations per day= 6850/261 = 27
Hence net profit increase per year = 328 *
27 * 52 = $ 0.46 million
case analysis shouldice hospital limited executive summary shouldice hos
pital ontario canada pioneer field treating patients suffering from external abdominal hernia speedy
ambulation coupled with reasonable price rates leads satisfied patients publicizing hospital word m
outh issues that confront management deciding ways meet backlog operations expanding capacity while
still maintaining control over overall quality service delivered handling piracy mouthing piracy sel
ection next chief surgeon after obney after analyzing various plans actions proposed that capacity i
ncreased scheduling operations saturdays also same time successor obney must also selected this solu
tion seems like most feasible terms cost time also leverages existing strength providing quality ser
vices patients implement solution discussed above first awareness must created among employees means
workshops about urgent need such step expand capacity selection chief surgeon must done carefully s
crutinizing surgeons well interviewing candidates same administrative processes made computerized im
prove their efficiency proper training using them imparted employees possible increase beyond certai
n limit above plan backlog list continues expand then opening additional facility some other geograp
hical location such considered situational analysis problem definition shouldice ontario canada pion
eer field treating suffering from external abdominal hernia with current treat annually treated usin
g operated upon using method average each patient spend four days recuperating distinct surgical pro
cedure speedy ambulation coupled with reasonable price rates leads satisfied publicizing word mouth
having successful niche player catering demand treatment hernia spite this there huge backlog that n
eeds meet because increasing tend other doctors operations issues confront management primarily list
ed follows deciding ways meet expanding while still maintaining control over overall quality service
delivered primary issue here deciding manner which should increased without diluting service render
ed issue piracy mouthing important concerns many clinics doctors claim technique canadian method eve
ntuality operation performed them being unsuccessful brings name next chief surgeon after obney reti
re soon selected same time retaining existing talent pool doctors attracting newer willing learn spe
cialized skill primary issue long term short term objectives short term clear increasing services se
lect successor retire soon long sustain their services ensuring good patient experience remain leade
r medical field maintain brand equity associated specialized technique method performing ensure work
ing towards goal profitability while serving society passing proper knowledge technique other surgeo
ns evaluation criteria whatever step taken ensure there dilution rendered action plan implemented ad
here government regulations regarding profitability hospitals solution implemented economically viab
le hence step taken cost effective there atmosphere concern employees decision regard issues hand en
sure receptive accepting decision existing strengths setup leveraged decision taken because increasi
ng wait lists attended ensured plans implemented swiftly possible alternatives could expanded schedu
ling saturdays leading increase additional floor rooms could added investment million permission fro
m provincial government this would expand number beds result scheduling operation rooms more heavily
expansion into geographical locations such united states could undertaken having level facility equ
ivalent current facility canada option maybe transfer specialized surgeons diversification into rela
ted medical fields surgery surgery varicose veins hemorrhoids possible another alternative times dur
ing utilizing operation theatres optimum level having medical staff work shifts successor selected s
election candidate should preferably done among case doctor outside appointed proper induction acqua
int carried currently being marketed plans adequately market them order create awareness genuine sur
gery should undertaken would protecting against privacy extent evaluation alternatives saturday swif
t cost effective exhibit additional capital expenditures need incurred carry plan does violate gover
nment regulations leverages strength rendering high however some seem have some reservations about s
aturday involves capital expenditure million would lead increase number beds require well qualified
will able carry tradition take implement expanding moving into another geographical segment united s
tates involves extensive capital expenditure setting dividing half staff respective facilities level
s remain initial span since looking united states alternate regulations applicable beneficial meetin
g demand american diversifying fields high advantage which currently enjoys will diluted currently m
ade become self sufficient soon implementing shift system strengths will leveraged similar terms exp
enditure involved frame being talked however under given case facts might resent move working extra
shifts during conjunction above chosen marketing though lead increased awareness authenticity exposi
ng lead number wanting come list continue recommended analyzing alternatives propose combination sch
eduled saturdays exhibit seems like most feasible terms exhibit leverages strength providing action
implement discussed first created among about urgent need workshops help dispel fears minds staff do
ne carefully scrutinizing well interviewing candidates administrative processes made computerized im
prove their efficiency training imparted contingency beyond certain limit list continues then consid
ered help another location information adequacy insufficient amount information given internal dynam
ics information forthcoming market status hospitals whether they open likely hasten making process e
xhibits average borne patient charges stay surgical fees assistant fees anesthetic assuming anesthet
ic total excluding stay total borne total borne over four days assuming takes days recovery average
budget operating costs million clinic budget operating costs performed hence profit proposed profit
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