Shouldice Hospital

case study of shouldice hospital

1. A CASE STUDY ON
SHOULDICE HOSPITAL

2. ADMINISTRATIVE
INFORMATION
•Corporate Name: Shouldice Hospital Limited
•Established: 1945
•Location: 7750 Bayview Avenue, Thornhill
Ontario, Canada, L3T 4A3
•Telephone: [phone]
•Fax: [phone]
•Toll Free: 1-800-291-7750
•Specialty: Abdominal Wall Hernia Repairs

3. HISTORY
•Dr. Edward Earle Shouldice graduated from the
University of Toronto in 1916.
• During World War II, he was called to serve on the
Medical Examining Board.
•Dr. Shouldice, a major in the army, found that many
young men willing to serve their country had to be denied
enlistment. These men needed surgical treatment to
repair their hernias before they could be pronounced
physically fit for military training.

4. •In 1940, hospital space and doctors were
scarce, especially for this non-emergency
surgery
•Contributing his services at no fee, he performed
an innovative method of surgery on seventy of
these men.
•The delighted recruits soon made known their
success stories and by the war's end, more
than 200 civilians had contacted the doctor and
were awaiting surgery.

5. •The scarcity of hospitals beds however,
created a major problem. There was only
one solution; Dr. Shouldice decided
to open his own hospital.
•Location: The hospital was located in
Toronto in the southern part of
Canada.

6. BOOKING A SURGERY
•Patients living within 100 km (60 miles) from the
hospital should come to the office for a personal
examination.
•Examination Hours are:
Monday to Friday :
WALK IN CLINIC, NO APPOINTMENT NECESSARY
from 9:30 am to 3:30 pm
Saturday :
BY APPOINTMENT ONLY from 10:00 am to 2:00 pm

7. •For patients living at a greater distance who wish
to arrange an examination, admission and operation
all in one visit, please complete Questionnaires 1
and 2 by taking the following steps:
•Step 1.
Click on Medical Information , and print the
questionnaire on your printer.
•Step 2.
Return to the Booking for Surgery page, click on
Insurance Information, and print it on your printer.
•Step 3.
Complete all documents as required and forward by
fax [phone]) or regular mail to our office.

8. •Upon receipt of your completed
documents, a surgeon will review the
information, and office will make the
necessary arrangements to schedule you
for surgery.
•Please allow two to three business days
for processing

9. SHULDICE UNIQUE
OPERATING METHOD

10. •There is no use of foreign bodies such as
synthetic screens or meshes, except in
extremely rare cases where there has
been destruction of the tissue usually due
to previous surgery.
•The vast majority of our hernia repairs are
done with a sedative (sleeping pill),
analgesic (pain relief pill) and local
anesthesia. If necessary, additional
medication is administered.
•The youngest patient to date was a child
of 4 months, while the oldest was a man of
100 years.

11. Shouldice Business Process:
4 Day Lead Time
30/36
Arrivals
1–3 pm
If OK:
Check-in &
admin
Dinner
at 6 pm
Check by
MD
(15 mins)
Tea &
cookies
at 9 pm
Blood
test
Day 1
Day 2
Explain
process
steps
Local
anaesthesia
(-20mins)
Surgery
(40 mins)
Rest in room
(2-3hrs)
Start
eating &
moving
Dinner
at 6 pm
Tea &
cookies
at 9 pm
Day 3
Loosen
stitches
Walk, play, & eat with
your buddies
If not OK…
Dinner
at 6 pm
Tea &
cookies
at 9 pm
Day 4: Remove stitches, walk, play, eat, check out 

12. WHAT IS THE UNIQUE SERVICE
CONCEPT?
•What does Shouldice hospital offer to its
customers?
•The hernia surgery (the Shouldice method)
•Peace of mind/low risk/Low Recurrence
•Independence/Dignity/Control
•Social experience, fraternity
•Excused absence from work without guilt
•A vocation

13. 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.

14. 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

15. 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.

16. THE FACALITY AT SHOULDICE
HOSPITAL
•Two facilities in one
building
•Hospital
•clinic
Kitchen &
Dinning
rooms
Level 1
Lounge area,
admission
office, patient
rooms
Level 2
Additional
patient rooms &
recreational
areas
Level 3

17. •The patients at the Shouldice center take some of care
of themselves.
•In Shouldice, all the patients were encouraged to walk up
and down the halls and to get in dialog with the other
patients and the surgeons. In thought of encouraging the
patients, the steps between the floors are constructed
with a smooth inclination,
•there are not TV’s at the bedrooms and the rooms were
designed as if it were a home instead of a hospital.
•Every square foot of facility is carpeted to reduce the
hospital feeling and the possibility of a fall.
•Patients and staff are served food prepared in the same
kitchen.

18. PATIENT SATISFACTION
“Never did I think that I would write to a
hospital and tell them how much I enjoyed
my visit, but I find myself doing that very
thing. It took me a year to get the courage
to have my hernia repaired, but my fears
were all unfounded. And the food was
excellent."
Robert C. Cole-Rochester, New York

19. Cost Comparison:
Shouldice vs. Other Hospitals
Costs of typical operations $954 $2000-4000
Transportation $200-600 $0
Time Lost from work in Hospital4 days 5 days
Time lost from work while
recovering 5 days 10 days
Value of time lost
(ranging from $50 to 500 per day)$450-4500 $750-7500
Total before Allowance
for recurrence $1604-6054 $2750-11500
Probability of Recurrence 0.80% 10.00%
Expected Cost of Recurrence $13-48 $275-1150
Total cost to patient, employee
and insurer $1,617-6,102 $3,025-12,650

20. ABOUT THE PROFITABILITY OF
SHOULDICE HOSPITAL
Hospital:
Revenues ( in $ )
(4 days X $111/day x 6,850 patients/year)3,041,400
Cost 2,800,000
Profit: 241,400
Clinic:
Revenues (($450+ 60 + 75 X 0.20) X6,850) 3,596,250
Cost 2,000,000
Profit 1,596,250
Total Profit 1,837,650

21. HOW DID THEY DO THAT?
•Patients are carefully screened
•Patients are active participants in the service
delivery process
•The avoidance of general anesthestics allows
a wide range of involvement of patients
•Staff is freed from much disagreeable work
•Reducing the cost of nursing, housekeeping
and laundry
•Structure hospital jobs that involves more
counseling and positive interaction with the
patients

22. –The Clinic is a focused factory resulting in:
–Highly productive surgeon:
•300 hernia/yr Vs. 30 by less focused surgeon
–Sharing of expensive services such as
anesthetist
–Short and relatively regular hours for surgeon
–high compensation ($50,000 + $40,000)
–Opportunities for surgeons to observe and
advise one another
– Peer group pressure that leads to higher level
of self-control of quality
–A conscious effort is made to make Shouldice a
“family”experience

23. 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. Shouldice Hospital has offered its Medical
Guarantee for more than 55 years. Shouldice’s strategic
service concept

24. MARKETING STRETEGY
•The three important aspects of services marketing triangle are the
employees, customers and the company itself.
•Shouldice keeps its staff happy through profit sharing policy, wherein the
employees are paid a part of the profit in addition to their fixed salaries.
•This sharing is done based on their contribution towards the success of the
firm. This entices them to work hard and put in more efforts. From the
management point of view, they have given their staff a lesser working load
and weekends off.
•This enables people to spend time with their family and this in term keeps
them contented and in the long run reduces the attrition rate
• This is internal marketing for the company.

25. PROBLLEMS
AND
PLANS

26. INCRESE CAPACITY ??
•The problem is that Shouldice is facing a
paradox of change. Shouldice is operating at its
“best operating level” for a service company with
limited flexibility in its plant, a specialized work
force but are failing to meet all the demand for
its chosen market niche. Adding additional
capacity to meet the unmet market need may
upset the existing work force and lower service
quality. Failing to meet the market demand may
invite competition that could eventually cause
Shouldice to loss market share and end up with
excess capacity.

27. PROBLEM
JUSTIFICATION
•There is limited operating facts presented
in the case so assumptions have made
based on the information that was
presented.
•It is assumed that they are operating at
the “best operating level” because the way
the case describes how efficiently the
hospital is ran and how the patients
appear to be pleased with there treatment.

28. •Because it is a service they can not store there
product. To increase their output and maintain
their quality they would need to increase they
size of the plant where the service is provided.
This involves large capital investments and
considerable time. Construction would also
cause a disruption to the quality and country
club atmosphere of the hospital. Therefore the
plant has limited flexibility.
•The staff also has limited flexibility. Surgeons
and surgeons’ assistants are specialized fields
that have limited desire to be cross trained.

29. LIST OF ALTERNATIVE
COURSES OF ACTION
–Add Saturday operations
–Add a new floor (45 more hospital beds)
–Establish a new facility for hernia
–Expand to other types of operations

30. EVALUATION OF
ALTERNATIVES
Schedule Saturday as an Operating Day
•Advantages
–No investment is needed
–Can still maintain quality
•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

31. Add in a new floor (45 beds)
Total Number of Rooms: 89 +45= 134
•Advantages
–Easy to control and maintain quality
–Retain the culture and environment
•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

32. A Second Facility for Treating Hernia
•Advantages
–New location close to the customers, say USA
–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.
–Control of quality
–It is difficult to create the same culture and atmosphere
–Potential competition with the existing facility

33. BEST ALTERNATIVE
Start operations on Saturdays
•No fresh investment required.
•Can maintain quality.
•New surgeons not required.

34. Case Presenters :
Tarun Khandelwal Abhinav Kalia
Karan Kaushik Sunny Gupta
Ankit Singhal Gaurav Gupta
Neeraj Kumar