Shouldice Hospital Ontario Canada

Demonstrated To- (Prof.) Dr. Ekta Demonstrated By- Shivdutt Shukla,

Rastogi. Sandeep Shukla
PGDM (2020-22)
 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.

Shouldice is licensed by the Ontario Ministry of Health, which covers the entire cost
to Ontario residents of hernia operations there under OHIP, the provincial health plan.
 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 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 is located at Toronto in the southern part of Canada.

Dr. Edward Earle Shouldice
 Products

 In marketing strategy, product is not viewed as a tangible product, but the source of
value to be delivered to the customers.

 Value to the customers of Hernia Shouldice can be delivered in numerous ways such
as
 financing plans to purchase the products,
 installation and repair services,
 quality assuring brand name
 word of mouth references,
 convenience of availability ,
 Product Line Planning Decision

 Product Line Breadth Decision for Hernia Shouldice

As the position of Hernia Shouldice in its industry well established it can expand to
the adjacent segments where the customers are using complimentary products from other
brands to get the maximum value out of the products.

 Product Line Depth of Hernia Shouldice

These are decisions regarding how many different Stock Keeping Units (SKU) of a
given product. For example Apple has its iPhone in various colors even though the
hardware and software is the same.
 Product Line Length of Hernia Shouldice

The decision regarding product line has to be balanced between

complexity of the present products and service required, and available niche space
available in the market place.

From my perspective at present Hernia Shouldice should stick with the

present merchandise mix rather than launching new products to expand the product line.
 THE NURSES’

 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 counselling activities.

 THE DOCTORS’

 12 full time surgeons

 8 part time assistant surgeons.

 Each operating team required

 A surgeon.
 An assistant surgeon.
 A scrub nurse.
 A circulating nurse.
 There are not TV’s 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

Level 1= Kitchen & Dinning .

Level 2= Lounge Area, Admission Office, Patient Room.

Level 3= Additional Patient Room, Recreational Area.

 Pricing

 Cost Base Pricing

Hernia Shouldice can work out what it takes to produce the product and put a
markup based on profit it wants earn. In a highly competitive strategy with dynamic pricing
the strategy may not be feasible.

 Value Base Pricing

Value Base Pricing is a pricing strategy which is based on customer perception of

value. It inculcates put the number on both tangible and intangible benefits with a clear
understanding of elasticity of demand and competitive pressures.
 Market Penetration Pricing

Hernia Shouldice can employ this pricing strategy where it launch a new product
either at loss or at very low margin to get a foothold in the segment.

 Market Skimming Pricing

For certain well established brands, Hernia Shouldice can increase the prices as
customers can pay higher price.

 Good Value Pricing

Offering right mix of product features, quality, and service combination at fair
price.
 Cost Comparison: Shouldice vs. Other Hospitals
Particular Shouldice Hospital Other Hospital
Cost of typical operation $954 $2000-4000
Transportation $200-600 $0
Time lost from work in hospital 4 days 5 days
Time lost from work while recovering 5 days 10 days

Value of time lost $450-4500 $750 - 7500

( ranging from $50 to 500 per day)
Total before Allowance for recurrence $1604-6054 $2750-11500

Probability of Recurrence $0.80% 10.00%

Expected Cost of Recurrence $13-48 $257-1150
Total cost to patient, employee and $1,617-6,102 $3,025-12,650
insurer
 Place

 Channel Design

Hernia Shouldice needs to choose whether it wants to implement a distribution

system which is – Direct, Indirect, or Both.

The channel design decision involves - understanding of customer value

proposition, current customer convenience points, length breadth and depth of Hernia
Shouldice product line, and competitors’ distribution systems.
 Channel Management

 Channel management is about managing various power centers within the delivery
system and managing them based on bargaining power of each player in the value
chain.
 
 Customer Willingness to Search & Travel to Purchase Good

If the customer willingness is high then company has a strong brand awareness
and brand loyalty. Hernia Shouldice can design favorable channel policies vis a vis
channel partners.
 Market Development Requirement

One of the most prominent functions of channel is market development. If

Hernia Shouldice needs higher market development efforts then it is sensible to include
channel partners who have know how and skills to expand into new markets.

 Per Unit Cost of Stocking

If the cost is high then Hernia Shouldice needs channel partners which can pool
in resources. Otherwise Hernia Shouldice can do the operations on its own.
 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.
 Promotion 

 Promotion Mix or Integrated Marketing Communication strategy is a mix of various

promotion tools that are at disposal of Hernia Shouldice.

 They are – Advertising, Sales Promotion, Personal Selling, Public Relations, and
Direct Marketing.

Hernia Shouldice can use all these five communication tools to persuasively
communicate to customer – existence of the product, price of the product,
differentiating features of the product, places where people can buy the products, and
finally how consumers can effectively use the products or services.
 HOW DID THEY DO THAT?

 Patients are carefully screened.

 Patients are active participants in the service delivery process.
 The avoidance of general anaesthetics 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 counselling and positive interaction with
the patients.
 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
 Strengths

 Streamlined processes and efficient operation management

Hernia Shouldice is one of the most efficient firms in its segment. The credit
for the performance goes to successful execution and efficient operations management.

 Experienced and successful leadership team

Hernia Shouldice management team has been a success over last decade by
successfully predicting trends in the industry.
 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.
 THE FACALITY AT SHOULDICE HOSPITAL

 Two facilities in one building.

 Hospital.

 Clinic.

 The patients at the Shouldice centre 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.
 Weakness

 Low profitability which can hamper new project investment

Even though Hernia Shouldice financial statement is stable, but going forward
Hernia Shouldice 5-7% profitability can lead to shortage of funds to invest into new
projects.

 Hernia Shouldice business model can be easily replicated by competitors

According to Roger Hallowell, James L. Heskett , the business model of Hernia

Shouldice can be easily replicated by players in the industry.
 PROBLEMS 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.
 Opportunities

 E-Commerce and Social Media Oriented Business Models

E-commerce business model can help Hernia Shouldice to tie up with local
suppliers and logistics provider in international market. Social media growth can help
Hernia Shouldice to reduce the cost of entering new market and reaching to customers
at a significantly lower marketing budget.

 Increase in Consumer Disposable Income

Hernia Shouldice can use the increasing disposable income to build a new business
model where customers start paying progressively for using its products. Hernia
Shouldice can use this trend to expand in adjacent areas Manufacturing, Organizational
culture, Social enterprise.
 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.
 Threats

 Growing dominance of digital players such as Amazon, Google, Microsoft etc. can
reduce the manoeuvring space for Hernia Shouldice and put upward pressure on
marketing budget.

 Customers are moving toward mobile first environment which can hamper the
growth as Hernia Shouldice still hasn’t got a comprehensive mobile strategy.
 WORK LOAD

 A total of 30 to 36 operations were conducted per day.

 Each surgeon performed three or four operations a day.

 A surgeon’s day ended by 4 p.m.

 Political Factors

 Little dangers of armed conflict

Based on the research done by international foreign policy institutions, it is safe

to conclude that there is very little probability of country entering into an armed conflict
with another state.

 Political and Legal Structure

The political system seems stable and there is consistency in both economic
policies and foreign policies.
 Economic Factors

 Inflation rate is one of the key criteria to consider for Hernia Shouldice before
entering into a new market.

 Foreign Exchange movement is also an indicator of economic stability. Hernia

Shouldice should closely consider the forex inflow and outflow.

 A number of Hernia Shouldice competitors have lost money in countries such as

Brazil, Argentina, and Venezuela due to volatile forex market.
 ABOUT THE PROFITABILITY OF SHOULDICE HOSPITAL

Particular Amount(2019-2020)
Hospital Revenues(4 days*$111/6,850 30,41,400
patients/year)
Cost 28,00,000
Profit 2,41,400
Clinic Revenues($450+60+75*0.20)*6850 35,96,250
Cost 20,00,000
Profit 15,96,250
Total Profit 18,37, 650
 Social Factors

 Demographic shifts in the economy are also a good social indicator for Hernia
Shouldice to predict not only overall trend in market but also demand for Hernia
Shouldice product among its core customer segments.

 Leisure activities, social attitudes & power structures in society are needed to be
analyzed by Hernia Shouldice before launching any new products as they will impact
the demand of the products.
 Technological Factors

 Proliferation of mobile phones has created a generation whose primary tool of

entertainment and information consumption is mobile phone. Hernia Shouldice needs
to adjust its marketing strategy accordingly.

 Artificial intelligence and machine learning will give rise to importance of speed
over planning. Hernia Shouldice needs to build strategies to operate in such an
environment.
 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 anaesthesia. 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.
 Environmental Factors

 Environmental regulations can impact the cost structure of Hernia Shouldice. It can
further impact the cost of doing business in certain markets.

 Consumer activism is significantly impacting Hernia Shouldice branding, marketing

and corporate social responsibility (CSR) initiatives.
 Legal Factors

 Health and safety norms in number of markets that Hernia Shouldice operates in are
lax thus impact the competition playing field.

 Intellectual property rights are one area where Hernia Shouldice can face legal
threats in some of the markets it is operating in.
 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.

 Current Scenario

 Since 1945 Shouldice Hospital in Canada has maintained a singular surgical focus on
primary inguinal hernias.

 Over those 70 years the hospital has achieved a 99.5% lifetime success rate while
consistently delivering services at a lower cost than other health providers.

 Shouldice Hospital/Number of beds - 89.

 Shouldice is a privately owned hospital that takes private payers but also is covered by
the Ontario hospital plan, which covers only Canadians.
 The surgery at Shouldice reportedly costs in the neighbourhoods of $5,000 to $8,000,
less than a similar surgery in the U.S. that 90% of the time uses polypropylene mesh.

 Shouldice Hospital in Thornhill, Ont., is being sold to Centric Health Corp., a TSX-
listed company that owns surgical and medical center's in four provinces, as well as
pharmacies and home-care services.