SHOULDICE HOSPITAL

Presentation submitted by Group 8

Agenda
History of Shouldice Hospital Market served Service at Shouldice Process structure Evidence of success of Shouldice Hospital
Patients Profitability Cost to patients

Operational Concept Service delivery system Causes of service success Options to expand

History
Dr. Edward Earle Shouldice
Performed his first postmorterm of cow at age of 12 graduated from the University of Toronto in 1916. During World War II, he pioneered in pernicious anemia, intestinal obstruction, hydrocephalic cases etc.

July 1945:
First hospital was formed on request of civilians who wanted to get their hernias operated 6 room nursing home Later grew to 130 acre estate, at Thornhill.

Dr. Nicholas Obney

Surgeon in chief and chairman of board of Shouldice hospital after death of Dr. Shouldice (1965)

Market Served

focus on a narrow segment of potential patients who have hernia

they are predominantly male, older in age, essentially in good health large market potential: 600,000 operations in US in 1979

Focus Segment

Responsiveness Shouldice
high operations frontier

One general facility World-class General Hospital

Low High

low

Variety

Service at Shouldice
What is the service concept of the hospital?
To the patient:
Peace of mind A holiday experience New friends a fraternity You are special but treatment is standard

To the employee:
A direct professional contribution A team and a place in the team

Process Structure:
Potential Patients

REJECTS
Questionaire Diagnosis

REJECTS
ROOM

Waiting List 30 days max. wait

Waiting Room Billing

Waiting Room Examinations 20 min ROOM

5/10 minutes Less than 10 min.

Orientation

Dinner

Tea & cookie

Socialization
7

Service success at Shouldice

Evidence of service success: The reunion The recommendation to others The extended orderbook The position of potential expansion The profitability of the hospital The value to patients The motivation of the employees

Profitabilityat Shouldice

Evidence of profitability For the Hospital: Revenues: 4 days x $111 x 6850 patients Costs (pg.10) Profit = $3,040,000 = $2,800,000 = $ 240,000

For the Clinic: Revenues: $510 x 6850 + 20% anaesthetic ($75 x 6850) = $3,596,000 Cost (pg.10) = $2,000,000 Profit = $1,596,000

Cost to patient at Shouldice

Shouldice

Other hospitals

Operating cost (pg.13) Transportation Time lost from work at Hospital

(pg. 07)

$95 200 600 5 days 5 days $1,600 - $6050 0.8% $15 20

$1,615 - $6,100

$2000 4000

10 days 10 days $2,250 - $11,500 10% $275 $1,150

$3,025 - $12,650

Time lost from work recovering Value @ 50 to 500 / day Recurrence Weighted cost
Total all costs

Operating Concept
Shouldicce achieves outstanding results as a low price and at a high profit because:
Everything done by the hospital is designed to maximize the difference between perceived quality and the value of the service provided patients on one hand and the cost of providing the service on the other.

Service delivery system at Shouldice

Standardisation: Participation: Work environment: Economics: Best practice: Motivation: screening of patients patients do much of the work staff freed from usual disagreeable work sharing of expensive services interaction of surgeons all employees interface with the customer

Facilities for patients: Avoidance of hospital atmosphere Use of TVs, phones The Schedule and Programme (keep moving!) Stairways Operating rooms in semi-circle

Explaining Service success of Shouldice

Every employee has a role Every employee interfaces with customer Control of customer input Necessary flexibility to keep to schedule Small enough to work; big enough to be known

Future expansion options

Capacity at present:
6850 operations/50 weeks = Examination Room Admitting Procedure Nurses Station Operating Room week Doctors Rooms 89 = 103 = 137 patients/week 270 patients / week 240 patients / week 240 patients / week 188 patients / 178 patients / week 134 patients / week 148 patients / week

 Bottleneck: number of rooms

Future expansion options

Add a floor (45 more beds)
29% increase, $930,000/year, i.e. 45% return on investment

Add a Saturday shift

148 to 177 patients/week = $627,000 /year

Develop another facility Replicate Shouldice on new specialty BUT: when will service system break down?
for patients for individual employees for team and concept

Thank You