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Shouldice Hospital Case
Transcript of Shouldice Hospital Case
Justin Walker FACTS: OPTION ONE: OPTION TWO: BEDS AND CAPACITY THE BEST OPTION: PRESENT
UTILIZATION: CONCLUSION External Hernia Repair Surgeries
Two Options... Add a day of operations. Increase beds by 50%
Decrease quality? 90 Beds/Day, 5 Days/ Week Current Capacity=90 Beds
150 Operations/5 days=30 Operations/Day
Max. Capacity=5 rooms*8 Op's=40 Op's/Day
40 Op's*5 Days=200 Op's/Week
45 New Beds, Max of 10 Occupied Add a day of Operations. Both options would increase productivity.
Additional floor could not be fully utilized.
Shouldice quality should not be negatively affected. 5 vs. 6 Day Workweek
Decrease Job Satisfaction? Add a floor of patient rooms. Capacity
Rate Capacity Used
Best Operating Level Capacity used=
SUM ∑Daily Capacity=
60+90+90+90+60+30+30=450 Best Operating Level=
Capacity maximum*7 days=90*7=630 Current Capacity utilization rate =
450/630=71% Capacity used=
SUM Daily Capacity=
60+90+90+90+90+60+60=540 Best Operating Level=
Capacity Maximum*7 Days=
90*7=630 Capacity Utilization Rate with Saturdays =
540/630=85.7% 71% vs. 85.7% = Addition of Saturdays: 45 Additional Beds
Est. Cost $100,000/Bed
$600 Surgeon's Pay/Operation
75 More Operations/Week The Numbers... Expansion Cost=45*$100,000=$4,500,000
Profit Per Operation=$1300-$600=$700
Profit Per Week=$700*75=$52,500 Payback Period= $4,500,000
$52,000 =85.7 Weeks=1.6 Years CALCULATIONS Until Profit Only 3 days not used to full capacity.
No capital required.
Revenue outweighs extra costs PRO's CON'S Decrease in Employee Satisfaction?
Decrease in Quality
of Services? QUESTIONS? The End! Potential Profit in 5 years = $6,678,000