Shouldice Hospital Essay Example

Shouldice Hospital Essay 1. How successful is the Shouldice Hospital? Generate a PL statement using available information from the case. Treat each of the two operations—hospital and the surgery—separately. Hospital: Revenues (4 days X $111/day x 6,850 patients/year)3,041,400 Cost2,800,000 Profit: 241,400 Clinic: Revenues ((($450 + 60 + 75) X 0. 20) X 6,850 patients/year)) 3,596,250 Cost2,000,000 Profit1,596,250 Total Profit1,837,650 2. How do you account for its successful performance? The following factors account for the success of Shouldice hospital: †¢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). This technique resulted in 140,000 highly satisfied â€Å"Alumni†(past patients). †¢Doctors could conduct 600 operations in a year as compared to 25 to 50 operations per year in other hospitals, which was possible by the standardization of operating procedures. This standardization 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 a warm and welcoming environment for patients: We will write a custom essay sample on Shouldice Hospital specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Shouldice Hospital specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Shouldice Hospital specifically for you FOR ONLY $16.38 $13.9/page Hire Writer oCarpeting the hospital gave the place smell other than that of disinfectant oEncouraged interaction and recreational activities amongst patients and also with the hospital staff oMatching 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 oDeveloped 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 in 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 position edit in the market as a hospital which ensured cost effective, reliable, caring and responsive service to the hernia patients. 3. Prepare a patient process flow diagram from arrival through surgery and determine the capacities at each stage. For this diagram, only indicate major points in the process, e.g. , admitting, examination, operating room surgeries, etc. Use the actual hours of operation for each step in the process to determine the capacity of each step. Where is the bottleneck? Bottleneck in the Design Flow: †¢Shouldice has the capacity to perform 42 examinations per afternoon and send 38 eligible patients to the operation rooms. †¢It only performs 33 operations per day, so the bottleneck between these 2 processes is the number of operations being performed per day. †¢Shouldice performs 33 operations per day, which generate daily bed demand of 116 on Wednesday and Thursday, and 99 on Tuesday, all exceeding the current bedding capacity of 89. So between these 2 processes, the number of available beds is the bottleneck. †¢Overall, the bottleneck for Shouldice is the number of available beds. †¢The hospital has to increase its bed capacity by 30% [(116-89)/(89)] to simply meet its current operation schedule. 4. Do a detailed analysis of potential on-site capacity expansion alternatives (on a per week basis). Assume an average of 3. 5 days stay at the hospital for each patient, including surgery, and Sunday admits. This means that half the patients spend three days while the other half spend four days. Alternatives to be considered: An assumption must be made, due to limited information in the case, that the expansion alternatives being considered are to meet an unmet market demand and is not driven by addition profit or other reasons. 1. Add an additional day by operating on Saturday †¢Use 89 + 14 rooms (3. 5 average stay). †¢Total number of patents per week = 180 †¢137 current throughput/148 theoretical = x / 180 theoretical †¢New throughput = 180 x (137/148)= 167 patients / week †¢Additional patients per year = (167-137) x 50= 1,450 †¢Additional revenue for the clinic = 1450 x (450+0. 20 x 75) = $674,250 – Cost $124,250 †¢Net increase in profit: 550,000 for no additional investment †¢Disadvantages †¢Require to schedule 23-25 operations on Saturday †¢Six surgeons and a supervising surgeon have to work on Saturdays †¢Additional other personnel. †¢Violates the implied contract that Shouldice has with its surgeons, strong opposition by the senior doctors †¢Operating close the theoretical capacity of the facility †¢Advantages †¢No investment is needed †¢Can still maintain quality 2. Increase additional beds by 50% by adding a new floor †¢Total Number of Rooms: 89 +45= 134 †¢Total number of patents per week = 193 †¢137 current throughput/148 theoretical = x / 193 theoretical †¢New throughput = 193 x (137/148)= 179 patients / week †¢Additional patients per year= (179-137) x 50 = 2,100. †¢Additional revenue for the clinic = 2100 x (450+0.20 x 75) = $976,500 – Cost $176,500 †¢Return on investment = 800,000/2,000,000=40% †¢Disadvantages †¢Require to schedule doctors to the full capacity of five days per week †¢Increase work load on admissions, kitchen, laundry, housekeeping and accounting †¢Further staggering of meal hours for patients (100 seat dinning room) †¢Disruption during construction †¢Advantages †¢Easy to control and maintain quality †¢Retain the culture and environment 3. They can meet the unmet market demand with external capacity by opening a new facility in US or Canada †¢Advantages. †¢New location close to the customers, i. e. USA or Canada †¢Improve its competitive position and increase its profits †¢Operate in a less restrictive environment †¢New opportunities for existing personnel †¢Transfer of knowledge and expertise to the new facilities †¢Disadvantages †¢Requires a significant investment and Dr. Shoudice’s time †¢Challenging to monitor the quality of service provided †¢It is difficult to replicate the same culture and atmosphere that is so successful in the parent facility †¢Potential competition with the existing facility. Shouldice Hospital Essay Example Shouldice Hospital Essay Q1: How does shouldice compete? In other words why do patients come to shouldice hospital? Two main reasons drive customers into choosing Shouldice over other competitors/hospitals. The first is quality, and the other is cost. talking about quality of the Shouldice â€Å"product† includes both, quality of the operation, and quality of post operation activities and overall services offered by Shouldice. The Shouldice method is a focused, specified operation that deals with Hernias, with a reputation that has been built throughout the years and is still growing; the hospital doesn’t even use advertisement to attract patients, the â€Å"word of mouth† way of advertisement has been doing very well for them so far. The superior quality offered by the Shouldice method, gives the patients a motive to operate at Shouldice for what it gives regarding peace of mind, low risk and low recurrence rates. Away from the in-operation excellence in quality, the services that Shouldice hospital offers are more tempting than other hospitals. Patients do not feel that they are in a hospital; they consider it more like a recovery vacation with an excused absence from work without feeling any guilt in that. We will write a custom essay sample on Shouldice Hospital specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Shouldice Hospital specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Shouldice Hospital specifically for you FOR ONLY $16.38 $13.9/page Hire Writer Moreover, it gives patients the independence and sense of control and preserves patients’ dignity when it comes to the fast recovery after the operation, and when it comes to the fast ambulation process after the operation, where a patient rises up and walks by himself (definitely under supervised assistance by nurses), and makes him feel in control of his motion and in control of the sedative applied on him which has no effect other than ignoring the pain of the 45 minutes procedure. The financial part of this comparison holds the other big part in the decision taken by a patient to go to Shouldice. Taking into consideration the lower cost of the operation is an enough reason to pick Shouldice, yet, another important notice would be the positive opportunity cost in terms of cutting the losses or absence from work by almost a week. 9 days are sufficient for a patient at Shouldice to go through the operation and the post operation recovery, while it takes about 15 days in other hospitals. Moreover, the dollar amount saved between going to shouldice and going to another hospital is about 1000. And has Dr. Shouldice says, even if a patient buys a round ticket from the US to Toronto, the cost of the operation stays lower. Overall, a patient choosing Shouldice would be going for a cheaper, higher quality service of operations, both of which are the optimum that a patient can choose, and therefore cause him to pick Shouldice over other hospitals. Finally, as a conclusion, if we want to look at it from a Value creation perspective, their advantages can be separated into the 4 parts: 1- Cost: the cost advantages listed above 2- Quality: separated into 2 parts: a. Quality of design: made available by the services offered to the patients (welcoming his family, a high quality lunch) b. Quality of performance: made available by the specialization of the doctors in using the Shouldice method (seargons have an average of 600 operations/year and the rate of recurrence equal to 0. 8%. ) 3- Delivery: the established process enables the Hospital to offer a high admission process along with a high speed recovery (as mentioned earlier). 4- Flexibility: the fact that the secretaries are trained for multitasking Q2: Identify characteristics of Shouldice’s operations that you think have contributed to its success. The elements that contribute to Shouldice’s success can be branched into administrative, structural, and operational factors. The policy that the administration of Shouldice applies stresses on the core competence of Shouldice’s operations which is taking good care of the patient during post operational recovery and insists on personal contribution of the patient during this phase. The management at shouldice does its best to keep the patient as comfortable as possible by applying the main concepts that shouldice is built upon. Moreover, the structure of shouldice acts as a major factor in its success. Starting from the building and room equipment that lack TVs and phones, encouraging patients to get up and walk in order to mix with people and profit from the social experience offered by this program and expedite their post operation recovery. In addition to that, carpets all over the place, comfortable stairways, and easy movement between operation rooms for doctors to help each other, all act as important roles that the structure and design of shouldice depends on to contribute to its success. Not to ignore the fact that shouldice’s location is very important since it is based near the airport of a huge city with a large population and encourages international patients coming from outside the country to operate there. Moving to the operational factors that contribute the most to the success, we can find that shouldice is focusing on a narrow segment of the market(patients), with specialized surgeons who are recruited specifically to this kind of job, with characteristics like tolerance to repetition and being family oriented. In addition to allowing surgeons to observe and advice one another, which creates some peer pressure that leads into a huge quality control driven by the need of each surgeon to give his best and excel when compared to others. This huge experience acquired by the surgeons after repeating the same procedure a couple of times during the same day all through the year, attracts a lot of demand which is being treated by a frequent increase in the supply by increasing the capacity of the hospital. Another way to look at the structure from another perspective, we notice that the Shouldice’s hospital has an effective process layout (operations and laboratory at bottom level, pre-operations and examination rooms at the 1st floor, on the 2nd floor, the administration offices, and on the 3rd, the additional hostel rooms for extra capacity in case of emergency) Moreover, the systematic approach starting with the first step (admission of the patient) after being screened and given all information to study his case separately, till releasing the patient to go home, makes it more easier to apply in real time, rather than treating each patient as a case by his own. This way, estimating the operation and service time will be much easier and leads into a better control over the number of patients admitted at the same time. Another important factor of success is sharing of expensive services like the anesthetists, in addition to other factors like the high salaries given to surgeons, free annual checkups and reunions and of course having the famous high quality low cost reputation, act as reasons for the success of Shouldice. Q3: Which resource of Shouldice is the bottleneck? First, let us examin the pre-opration process. I- the Examination process: 6 rooms, working hours: from 1 to 4 pm (assuming the last patient arrived at 3pm and waits 20min for his turn to come, knowing that other have been waiting before him. ) the examination goes on for 20min. they only work 5 days a week. the formula is: (6 rooms x 3 hrs x 5 days x 60 min/hr) / (20 min / exam) = 270 patients/week II- accounting procedure: 2 people work in this department. They work from the start of the process (1o’clock) until the last patient goes out of the examination. They work 5 days a week, and their procedure takes 10min per patient. The formula is: (2 people x 4 hrs x 5 days/week x 60 min/hr) / (10min/patient) = 240patients/week III- Operating Procedure: 5 operating rooms. They are opened at 1st operation: 7h30. The surgeon’s day ends at 4pm. He’s on duty for 8. 5hours. he needs 1h to perform a normal operation. 5 days a week. †¢ (5 rooms x 8. 5 hrs/room/day x 1 hrs/patient x 5 days/week)/ = 212. 5 patients /week †¢ Surgeons: 12 surgeons work at the hospital. We assumed, on average, they perform 4 operations per day (depending on the type of the operation and thus its length) †¢ 12 surgeons x 4 operations /day x 5 days = 240 patients/week. †¢ Hospital beds: †¢ 89 beds = 178 patients per week (assuming use of weekends for convalescence and 3.5 days average stay, meaning there are 2 patients per bed per week) BOTTLENECK is the Hospitals beds By agreeing with O’dell, the most appropriate solution would be to increase the bed capacity by 50% and reach 133 beds hence, reaching a capacity of 266 patients per week. The next bottleneck would be the number of operating rooms with its 212 patients per week. This means that next step would be to increase the operating rooms and/or increase the working hours of the surgeons (forcing them to work on Saturdays). But some further cost estimations have to be made. This increase of working hours might also lead to a decrease in the quality of operations.