Shouldice Hospital, Ltd.
Production and Operations Management Case
Shouldice Hospital is located merely outside Toronto, Canada and specialises in handling patients with hernia. The infirmary faces the challenge of working efficaciously in the long-run. It seeks to increase the figure of patients while viing efficaciously against competition.Hernia operations ( and all medical attention ) are services ; they can easy be imitated by rivals, and holding a competitory advantage over other infirmaries that operate in this field is delicate. Shouldice Hospital 's chief competitory advantage is that it differentiates by holding a relaxing atmosphere ( like an experience of being at place or at a state nine ) alternatively of being a typical infirmary. Patients are besides encouraged to speak to other patients. The strengths are in the patients ' perceived quality of the infirmary, the high quality services provided to patients ( both medical and experiential ) and to some extent the lower monetary value the infirmary charges to its patients comparative to its rivals. The monetary value to patients for remaining at Shouldice infirmary is approximately half of that of rivals. Over the last 55 old ages, the infirmary has treated 300,000 patients with hernia with 99 % success.
It besides has a low return rate ( 0.8 % alternatively of 10 % of rivals ) . Employees are by and large pleased ; physicians have a 15 % higher salary than those who work in Ontario. The low turnover means employees derive more experience at Shouldice infirmary.
Shouldice infirmary inside informations
-5 operating suites-12 sawboness who work full-time, 8 portion clip adjunct sawboness
-34full clip nurses 24h, during no operations: 6 foot nurses
-82 % of hernia operations are consecutive frontward with few complications
-18 % of hernia operations are of patients who have antecedently failed operations from someplace else
Table 1: Current bed capacity ( 89 infirmary beds )
SundayMonday
Tuesday
Wednesday
Thursday
Friday
Saturday
26
26
26
13
26
26
26
13
26
25
25
12.5
25
25
25
12.
513
26
26
26Suites used
39
52
78
89
89
63.5
38.5% suites used
44 %
58 %
88 %
100 %
100 %
71 %
43 %operations merely take topographic point on weekdays: Monday to friday admittances are allowed Sunday to Thursday ( non Saturday ) assuming half remain 3 darks and half stay for 4 darkscheckin
operation
check-out procedure
Increasing productiveness
1. At the infirmary, 30 to 36 ( mean 33 ) operations take topographic point per twenty-four hours across 5 operating suites. 33x5=165operations a hebdomad2.33/5=6.6 operations take topographic point per operating room per twenty-four hours3. Some operating suites have 7 operations taking topographic point per twenty-four hours4. Therefore there is possible of holding 7operations take topographic point each of the 5 operating suites per twenty-four hours, this would increase the figure of day-to-day operations from 33 to 38.5. Since physicians carry out 3-4 operations per twenty-four hours, it would be wise to engage 2 excess physicians for every twenty-four hours to do certain things are running swimmingly ( so that physicians do n't do errors and to maintain criterions high for employees and clients ' experience with the infirmary ) .
6. 38daily operations x 5days ( weekdays ) =190 operations per hebdomad
Increasing capacity/the sum of beds by +50 % ( +44 beds which amount to 133 beds )
Shouldice infirmary has specialised employees who have experience. It focuses on a niche section of patients. Increasing capacity has a hazard of deteriorating the service quality of employees.The infirmary at the clip of the instance is running at really optimum degrees and patients seem really satisfied. A manner to increase end product is to put in capital and clip for building of a new sector to house 50 % more beds. Construction nevertheless can be a really strong disadvantage as the infirmary has built its repute around its ambiance. There would besides be demands to increase the sum of work force ( from housework, the kitchen, wash, to comptrollers, to admittances, to nurses to physicians ) and functional communal countries such as surgeries and the dining country. The building will do important break, nevertheless in the long tally as it is located at the same site, the infirmary will hold more control to convey back the ambiance and civilization it stands for.
If the bing 89 suites increased in capacity by 50 % there would be 133 suites ( 133.5 ) ( see table 2 below ) . This would repair the constriction job of beds with under capacity.
Table 2: Bed capacity+50 % ( entire of 133 hospital beds )
SundayMonday
Tuesday
Wednesday
Thursday
Friday
Saturday
38
38
38
19
38
38
38
19
38
38
38
19
38
38
38
1919
38
38
38Suites used
57
76
114
133
133
95
57% suites used
43 %
57 %
86 %
100 %
100 %
71 %
43 %-operations merely take topographic point on weekdays: Monday to friday
-admissions are allowed Sunday to Thursday ( non Saturday )
-presuming half remain 3 darks and half stay for 4 darks
checkin
operation
Check
Having operations on SabbatumsThe benefits of operating excess displacements on Saturday is that there is a greater per centum of suites used ( see table 3 ) and there is no impairment in service quality and the lone costs are rewards and clip. The most likely negative consequence this will hold is do the employees angry, particularly senior physicians who conduct operations, which is why the infirmary should engage extra employees for Saturday alternatively of overloading the 1s it has during the hebdomad.
Table 3: Working on Saturdays ( every bit good )
SundayMonday
Tuesday
Wednesday
Thursday
Friday
Saturday
26
26
26
13
26
26
26
13
25
25
25
12.5
25
25
25
12.513
26
26
26
25
12.5
25
25Suites used
64
64.5
77
89
89
88.
5
63.5% suites used
72 %
72 %
87 %
100 %
100 %
99 %
71 %-operations take topographic point Monday to Friday and Saturday
-presuming half remain 3 darks and half stay for 4 darks
checkin
operation
check-out procedureIncreasing beds by 50 % and operating on Saturday
Table 4: Increasing beds by 50 % and operating on Saturday
133/3=44.33 ( to maximize patients )Monday dark stay
Tuesday
dark stay
Wednesd- dark stay
Thursday
dark stay
Friday
dark stay
Saturday
dark stay
Sunday
dark stayArrived Monday
44
44
44
Arrived Tuesday
44
44
44
Arrived Wednesday
44
44
44
Arrived Thursday
44
44
Arrived Friday
44
44
44Arrived Saturday
44
44
44Arrived Sunday
44
44
44Entire stay
132
132
132
132
132
88
132( 6x132 ) +88=880 operations a hebdomad
880 operations/190current operations=4.63x
Increasing beds by 50 % , working on Saturdays and maximizing work load ( see table 4 ) would increase productiveness by 463 % . This would intend that there would be a heavy investing required in clip and capital ( such as surgeries ) , to engage over 4 times the sum of bing staff, would necessitate clip and would most likely disrupt the current relaxing cozy image the infirmary presently has. The hospital direction most probably does non hold the expertness to run such a big graduated table operation.
Making a secondary site for hernia intervention
Franchising
By spread outing through franchising, the quality of the service and the repute of Shouldice Hospital trade name name would confront hazard due to miss of control. There is a great potency to hold a high gross influx, it is an chance but it comes with hazards, as the infirmary has ever been in one location.This alternate meets face to confront with rivals, and Shouldice can spread out out of near Toronto and possibly run in the USA in a dumbly populated country that will convey it many patients. This would be expensive. Although Shouldice infirmary has the know-how in processs ( and rules on how to run that specific infirmary, act to its employees and so on ) and making the right atmosphere puting ; accommodating the already established cozy ambiance would be hard to accommodate. Shouldice Hospital might confront strong competition with the franchise.
Expanding to other types of operations is out of the inquiry as Shouldice Hospital specialises and is good renowned for hernia intervention ; in add-on sawboness and their helpers do non desire to be cross trained.Shouldice infirmary besides has the option to non take any action. The infirmary is making good as it is. The instance does non present plenty information from rivals other than the fact that services can easy be replicated.Another class of action is to team up or purchase out competition.
They have expertise but can besides be trained. If you ca n't crush them you can fall in them.
Table 5: Comparison classs of action
50 % excess bedsSaturday Operations
FranchisingCost
-Very high
expensive
$ 2m
-Low
-Either addition rewards of bing physicians or engage new 1s
-Medium
-Training Shouldice Hospital 's rules would be requiredCompletion Time
-High, need to be after and construct
-Need to engage and develop staff across sections
-Low/Medium
New employees might necessitate developing = takes clip
-Medium
Depends on franchiser 's investing
Troubles
-Construction goes against the image Shouldice Hospital has-Will need more staff ( from all sections ) , capital/surgery, there are many concealed costs
-Low expertness in running a bigger infirmary. Might have to engage external directors who have run infirmaries in the yesteryear
-Would a larger hospital harm the warm/home feeling of the infirmary?
-bad word of oral cavity during building would hold a negative impact
-If the infirmary has a higher capacity but does non run into demand in the hereafter it will hold a greater job than it does at the minute as it would hold invested a batch-It merely partially addresses the constriction job
-Senior physicians might respond negatively about working on Saturday, might make tenseness and unproductive competition between younger physicians and older physicians, this might interrupt harmoniousness among employees,
therefore they would necessitate to be trained and explained to about the state of affairs. It is necessary for the infirmary to maintain its bing professional employees. They can develop extra work force.
-If bing employees are used, there is a hazard of service quality decreasing in quality-Does non address the constriction issue at the current location of operations
-What Shouldice Hospital bases for might be at hazard
-no control over operations
-Franchisee might turn into a rival
-Employees would be less experient with the rules of the infirmary, they might pinch some of our employees
-If the franchisee has jobs, Shouldice infirmary may be held partially accountable
-Will be hard to supervise
Advantages
-Fixes constriction job-Increases beds by 50 % and hence allows more patients to be served-Patient Capacity would increase +20 % or 1500 people per annum
-Low investing
-The infirmary supports runing successfully as it is already making, merely at a somewhat better productive rate-Potential to gain grosss fast
-Goes head on with competition
-Can expand fast in dumbly populated countries with hernia sick persons, in Canada or the USA, if the USA, they might hold different Torahs, so it would be a good thought for the infirmary to see what it can and ca n't make in the USA.
-42 % of clients are already from the USA
Decision
Shouldice infirmary demands to repair its constriction jobs in order to run and vie efficaciously against competition. There are 3 chief options ( see table 5 ) .The infirmary has the capacity to hold 50 % more beds ; nevertheless this is highly expensive, and would necessitate engaging excess forces in every section in order for bing workers to go on runing swimmingly and expeditiously.
The infirmary besides does non hold the experience of running a larger scale infirmary. It would besides endanger the cozy image. The building would profit the long tally but in the short tally it would merely worsen both patients and employees.Operating on Saturdays merely partially helps the constriction state of affairs. This is the cheapest of the 3 possible solutions, nevertheless the infirmary might necessitate to engage and develop new physicians which might take a little sum of clip until they gain experience.Franchising gives Shouldice the chance to spread out and run in a different part.
The job nevertheless lies in control. The infirmary will non hold complete control, it merely gives the guidelines. This is hazardous and is rather expensive to make efficaciously. Shouldice infirmary must pass on its values or else the infirmary hazards losing its repute.The proposed recommendation would be for Shouldice Hospital to engage extra staff, to go on runing successfully as it is on the right path and avert hazard or recreations.
Shouldice Hospital should run at its maximal capableness during weekdays and Saturday ( 38 operations alternatively of 33 per day=228 operations per hebdomad alternatively of 165 ) . This will merely partially assist work out the constriction, but the benefits outweigh the hazards. It is imperative that the infirmary provides its physicians with the right preparation ; it must explicate to senior sawboness that they must non experience threatened and alternatively they should steer new physicians towards excellence for everybody to profit.
