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Transcript of Shouldice Hospital
In Shouldice’s own customer surveys, price is not the primary concern.
Shouldice could raise its fees to elevate the perceived quality of the service and still provide a service at a cost lower than the market. This could also help curb demand.
An Introduction to Shouldice Hospital
89 Beds (circe 45 patient rooms)
5 Operating Rooms
6 Examination Rooms
1 Patient Recovery Room
Specialty: External abdominal hernias.
Focus: Immediate post-operative patient ambulation.
Facilitated rapid recovery.
Reduced hospitalization time (4 days).
Privately owned and operated healthcare facility located in a suburb of Toronto, Canada.
Founded in 1945 by Dr. Earle Shouldice.
Has global renown for the innovation in hernia surgery known as the "Shouldice Method."
Shouldice: An Overview
The Main Issue
In their words, the facility needs to increase capacity while maintaining control over the services delivered.
In other words, the hospital wants to see more people receive their superior treatment, to have patients get satisfying results, but to not give up their ability to ensure that their procedure is done properly and safely.
Patients are on campus for four days:
• Day 1: Begins in the afternoon and consists of a doctor’s exam to qualify the patient for surgery. There is an orientation session in the evening.
• Day 2: Surgeries are performed in the morning; by that evening surgeons are meeting with new arrivals in their orientation session.
• Day 3: Recover from surgery.
• Day 4: Check out in the morning so rooms can be available for a new patient that afternoon.
Cause of Demand Increase:
• Flexible diagnosis method available for non-local patient via questionnaire.
• Hernia is removed by a skilled and experienced professional surgeon.
• Good social experience: Patients are assigned rooms based on job similarities and personnel interest to facilitate interactions and friendships.
Option 1: Expand the Current Facility
The current capacity of Shouldice is 42 examinations per afternoon, with 38 patients being eligible for surgery the
next day. However, on average they only operate on 33 patients each day.
For 4 million dollars the Shoulice hospital could increase capacity by building a new wing. This option would not see a return on investment for around 6 years.
Capacity increases by 50%, (85 new beds).
However, more doctors and staff would
need to be hired, lessening the central
control of the current administration.
To Build or Not to Build
In the end the two best options are expanding the current facility or extending the surgeon work week. Ideally, the long-term solution to Shouldice's capacity problem is expansion, while the short-term answer lies in Saturday surgeries.
If Shouldice was strongly profit-driven, it could both expand
provide Saturday operations.
"Shouldice Hospital hardly seemed like a hospital at all."
Option 2: Increase Surgeon Workload
The surgeons at Shouldice Hospital currently operate on around 4 hernia cases of varying difficulty each day.
If the surgeon's were required to perform five or six surgeries daily instead of four, the growing demand would be much better met.
The cons are that Shouldice prides itself on the fact that surgeons can remain focused on the patients rather than on profit. If each surgeon sees more patients, it is forseeable that each patient will receive less individual attention.
Additionally, the doctor's quality of work might suffer from overwork, with additional stress placed upon individual surgeons. With this method, there is danger of malpractice suits as the doctor's focus is disrupted by fatigue.
Option 4: Over the Border
Shoudice has the option of opening up new branches in other parts of Canada or the United Stated, but for a company that resists working on Saturdays, opening up a whole new operation seems to be farfetched.
One problem is that it will be difficult to recreate the Shouldice experience elsewhere.
The United States has different political regulations, is more profit-driven, and has a different business atmosphere than Canada.
Moreover, even if they build a new Shouldice Hospital in the USA
that still does not solve the demand problem in Canada.
Option 3: Saturday Operations
Option 5: A Marketing Solution?
Option 6: Do Nothing
10 full-time surgeons specialized exclusively in treating hernias
8 part-time assistant surgeons
34 full-time nurses
The Shouldice Service Experience
A unique and innovative facility
High level of medical and patient care
Reliable, safe, and cost-effective method
Low risk because of local anesthesia (over 90% success rate)
Ongoing commitment to patients through the annual follow-up program
Mostly male with first-time repairs.
Mostly from around the Toronto area (60%).
Generally healthy (no weight problems, no heart conditions).
Tend to have a low risk of complications and recurrence.
One of the main issues Shouldice Hospital faces is growing demand - a backlog of 2400 growing by 100 new patients every six months. This creates a bottleneck, and thus a greater possibility of patients going to less qualified doctors.
Since Shouldice Hospital seems resistant to change, this option allows them to capitalize on a system that is proven to work.
No costs are incurred, patients receive the same individualized attention, the administration can keep a close eye on the workings of the hospital, and the doctors keep a tolerable number of surgeries.
On the other hand, the growing demand for services remains unaddressed, and Shouldice Hospital loses potential growth, profit, and patients to other clinics.
We feel that from a marketing perspective, the intimacy of maintaining a smaller, controlled facility is preferable to outright expansion, but that Shouldice Hopital can deal with its capacity problem by implementing a Saturday work schedule and hiring two additional surgeons.
Shouldice Hospital currently does not have admissions on Fridays or surgeries on Saturdays; Monday through Thursday is the only period during which patients are admitted. Implementing weekend operations would increase Shouldice's capacity by 20%, to approximately 107 patients.
If this change is performed:
There will not be a need for more beds.
Two new surgeons should be added (20% more = 12 doctors total).
The cost will be $288,000 yearly (the salary for the new surgeons) rather than $4 million (for expansion).
The business model does not change, control is maintained.
Doctors could be compensated via bonuses (from the extra income).
It may be popular with patients who could be discharged on Saturday, have less time off work, and could enjoy the weekend at home instead of spending it in the hospital.
There is a danger of physician exhaustion, and more opportunities for error.
A lack of initial strategic planning regarding growth is responsible for the uncontrolled demand.
Shouldice's continuous increase in growth is due to its value proposition - it appears to be very good to its customers.
• Patients stay three days in total to make sure they are perfectly recovered before being released.
• Relatively simple surgical procedure completed within 40 minutes and only requires a local anesthesia.
• Great facility features allows patients to exercise, have fun and recover quickly.
• Most affordable price found anywhere. Rates at Shouldice are 2.7 times less than rates commonly charged for typical Hernia surgery.