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SHOULDICE HOSPITAL

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					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
      low
                                    Hospital
            Low              High
                                      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                 REJECTS
                                                                              ROOM

    Questionaire    Diagnosis


                   Waiting List                     Waiting Room
                    30 days max. wait
                                                                 Billing
                            Waiting Room
                              20 min   Examinations   5/10 minutes
                                                                     Less than 10 min.
         ROOM
                         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        = $3,040,000
  Costs (pg.10)                                  = $2,800,000
  Profit                                         = $ 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)            $95               $2000 – 4000
Transportation                    200 – 600
Time lost from work at Hospital   5 days            10 days
(pg. 07)

Time lost from work recovering    5 days            10 days
Value @ 50 to 500 / day           $1,600 - $6050    $2,250 - $11,500
Recurrence                        0.8%              10%
Weighted cost                     $15 – 20          $275 – $1,150

Total all costs                   $1,615 - $6,100   $3,025 - $12,650
                 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:       screening of patients
•   Participation:         patients do much of the work
•   Work environment:      staff freed from usual disagreeable work
•   Economics:             sharing of expensive services
•   Best practice:         interaction of surgeons
•   Motivation:            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 =    137 patients/week
  Examination Room              270 patients / week
  Admitting Procedure           240 patients / week
  Nurses’ Station               240 patients / week
  Operating Room                      188 patients /
    week
  Doctors                       178 patients / week
  Rooms           89   =        134 patients / week
                  103 =         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

				
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