A CASE STUDY ON

SHOULDICE HOSPITAL

ADMINISTRATIVE
INFORMATION
Corporate Name: Shouldice Hospital Limited
Established: 1945
Location: 7750 Bayview Avenue, Thornhill
Ontario, Canada, L3T 4A3
Telephone: (905)889-1125
Fax: (905)889-4216
Toll Free: 1-800-291-7750
Specialty: Abdominal Wall Hernia Repairs

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.

 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.

 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.

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

 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 (905-889-4216) or regular mail to our office.

 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

SHULDICE UNIQUE
OPERATING METHOD

 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.

Shouldice Business Process:

4 Day Lead Time
If not OK

Day 1
30/36
Arrivals
13 pm

Check by
MD
(15 mins)

If OK:
Check-in &
admin

Surgery
(40 mins)

Rest in room
(2-3hrs)

Blood
test

Explain
process
steps

Dinner
at 6 pm

Tea &
cookies
at 9 pm

Day 2
Local
anaesthesia
(-20mins)

Start
eating &
moving

Dinner
at 6 pm

Tea &
cookies
at 9 pm

Dinner
at 6 pm

Tea &
cookies
at 9 pm

Day 3
Loosen
stitches

Walk, play, & eat with

your buddies

Day 4: Remove stitches, walk, play, eat, check out

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

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.

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

WORK LOAD
A total of 30 to 36 operations were
conducted per day.
Each surgeon performed three or four
operations a day.
A surgeons day ended by 4 p.m.

THE FACALITY AT SHOULDICE

HOSPITAL
Two facilities in one
building
Hospital
clinic

Level 3

Additional
patient rooms &
recreational
areas

Level 2

Lounge area,
admission
office, patient
rooms

Level 1

Kitchen &
Dinning
rooms

 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 TVs 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.

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

Cost Comparison:
Shouldice vs. Other Hospitals
Costs of typical operations $954
Transportation
$200-600

$2000-4000
$0

Time Lost from work in Hospital

days

Time lost from work while

recovering
5
days

10

days

Value of time lost

(ranging from $50 to 500 per day)
Total before Allowance
for recurrence
$1604-6054
Probability of Recurrence 0.80%
Expected Cost of Recurrence
Total cost to patient, employee
and insurer
$1,617-6,102

$450-4500

$750-7500

$2750-11500
10.00%
$13-48 $275-1150
$3,025-12,650

days

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)
Cost

3,596,250
2,000,000

Profit

1,596,250

Total Profit

1,837,650

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

 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
familyexperience

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. Shouldices strategic
service concept

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.

PROBLLEMS
AND
PLANS

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.

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 .

 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.

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

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

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

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

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

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