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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) 4. 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 5. Focus SegmentResponsiveness Shouldice high operations frontier One general facility World-class General low Hospital Low High Variety 6. Service at ShouldiceWhat 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 7. 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 Socialization7 8. Service success at ShouldiceEvidence 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 9. Profitabilityat ShouldiceEvidence 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 10. Cost to patient at Shouldice Shouldice Other hospitalsOperating cost (pg.13) $95 $2000 – 4000Transportation 200 – 600Time lost from work at Hospital 5 days 10 days(pg. 07)Time lost from work
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recovering 5 days 10 daysValue @ 50 to 500 / day $1,600 - $6050 $2,250 - $11,500Recurrence 0.8% 10%Weighted cost $15 – 20 $275 – $1,150Total all costs $1,615 - $6,100 $3,025 - $12,650 11. 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. 12. 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 customerFacilities for patients:• Avoidance of hospital atmosphere• Use of TVs, ‘phones• The Schedule and Programme (keep moving!)• Stairways• Operating rooms in semi-circle 13. 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 14. 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 15. 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
