Executive Summary: Shouldice hospital is a specialized hospital for the treatment of external abdominal hernias in Canada.

The hospital was established by Dr. Shouldice the founder of a new and superior surgical technique, now known as the Shouldice method, which yields better medical results as well as a significantly shorter recovery time. Shouldice is operating at its best level of 6850 operations in the year 1982. Over the years the capacity of the hospital is increased from 36 beds to 89 beds. Backlog of scheduled operations of 1200 is a cause of concern even always. Options of Saturday working, increasing an additional floor or new facilities at USA are worked out rigorously and recommended to work on Saturdays (only in peak periods).

Total Number of words used Situation Analysis:

: 120

Shouldice is a private hospital founded by Dr. Earle Shouldice in Toronto in July 1945. The hospital started out as a six-room nursing home in downtown Toronto. Shouldice offers a new technique to cure the hernia, which is the protrusion of an organ through a weakness in the abdominal wall; this technique was invented by the founder during the World War II. This technique allows the patient to go back to their routine very quickly. Just after four hours of operation patients are encouraged to start walking around the place and feel more comfortable. The typical recurrence rate for the hernia approaches 10%, the gross recurrence rate

for all operations performed at Shouldice was only 0.8%. The advantages of Shouldice method is enclosed in exhibit 1.This method proved to be a big success. As demand increased for hernia operations, Shouldice expanded the facilities from 36-beds to 89-beds in the mid 1960s.

The Problem: The hospital is having a successful run but there is a huge backlog of 1200 patients needs to be operated. Because of an increasing backlog, patients may tend to go to other hospitals which may result in losing the potential market. The next chief surgeon after Dr.Obney, who is due to retire soon, has to be selected, at the same time retaining the existing talent pool of doctors is also a primary issue.

The Objective: The objective of the study is To clear the backlog of patients to be operated To select a successor for Dr.Obney who is retiring soon To sustain quality in services, ensuring good patient experience To remain the leader in the field of hernia operations

The options: Three different options were thought of to clear the backlog of patients. A) Add another floor of rooms to the hospital and expand the number of beds by 50% (i.e) addition of 45 more beds (Expanding facility). B) Opening a new hospital in US (New facility in US) C) Operations to be carried out on Saturday (Saturday working) Criteria for Evaluation:

Cost feasibility to the organization Retain the quality, culture and environment Working staffs (Doctors, Nurses & others) comfort

Evaluation of Options:
A) In expanding facility option, the increase in number of bed by 50% , would

be the best option to maintain the quality, culture and environment. This option proves to be costly and the details are enclosed in exhibit 2 & 3. This option would not be advisable unless addition of more doctors and surgery rooms because the existing capacity and number of doctors could not ful-fill an addition of 45 beds. Increase in work load on admissions, kitchen, laundry, housekeeping and accounting are the cause of concerns in this option. Expanding option can cause some kind of disruption to the

patients hospitalized during construction. The meal hours of the patients to be staggered to accommodate the increase in beds/patients.

B) The new facility/hospital in US option takes care of certain problems faced by the hospital. The need for the hospital to increase the working hours of the employees, as was the case in the earlier option, does not exist since the new hospital would need new employees. Since 42% of Shouldice patients belong to US, it also reduces the load on the present setup. The hospital will be able to handle the problems of patients going to unqualified doctors since it will give such patients the option of coming directly to them. The quality, culture and environment of this new facility will not be maintained as in the case of Toronto campus. The well experienced surgeons and other staffs are required to be recruited in this new campus which is a herculean task. A very well planned induction training programme is to be conducted to all the new staffs to simulate the Toronto campus culture & environment. The development of new facility will require huge investment and time to complete. Also, this new facility will lead to underutilization of facility at Toronto campus as patients from US may not be interest to come to Canada. Hence this may not be a good option to solve the short term objective of reducing the backlog of patients.

C) Adding an additional operating day on Saturday is also a valid consideration. It would utilize ideal hospital capacity. The cost incurred 4

will be the least among all other options. In this option the existing facilities are maintained at status quo and utilized to offer more services. In this option there is no additional investment is required. The culture and the environment of the hospital can be very well maintained in this option. There is a little possibility of deterioration in quality as the doctors /nurses & other staffs are given additional work load only for a maximum period of 8 weeks.

The additional work load for the staff will be as follows:

Surgeons and assistant surgeons

: To do the operation on

Saturdays & examination/diagnosis on Friday. To take care of additional 28 patients on Friday, Saturday and Sunday.

Nurses/ Admission staffs are also required to take more work on Friday & Saturday.

All of the above increases are well within the maximum capacity of facilities. Hence in-order to avoid staff resistance they shall be given specific incentives to take up the additional work load on these days. Exhibit 4 shows the cost incurred and net profit of this proposal. Recommendations: From the three different options analysed,

It is recommended to adopt Saturday working option with some minor modifications. The existing procedure needs to be synchronized with the various activities and to be well planned. Only in the peak period (like in September) to reduce backlog, Saturdays to be made working days. During the peak periods (Usually September) of operations, the fourteen additional rooms located in the third floor to be used for patients stay.

It is recommended to look for a successor for the chief Dr.Obney, from the available well experienced doctors in the same campus.

As such marketing for getting more patients is not that important, because Shouldice hospital is already well established. The recent reunion function was attended by 1400 alumni itself is a proven evidence.

Action Plan:
1. Perform Saturday operations only in the peak period of backlog

(September- Max of 4- 8 weeks)

2. Admission of patients to be made on Sundays with the available

administrative staff.
3. During the peak period of operations, use the 14 hostel rooms available in

the third floor for accommodating the patients.

4. Incentives to doctors, nurses and other staffs for the Saturday working

days to be paid twice that of normal days. 5. Successor for Dr.Obney from the existing experienced doctors to be done within six months.

Total Number of words used EXHIBITS

: 1,112

Sl.

Description Sun

Mon

Tue

Hernia Treatment Fri Wed Thu

Sat

No Admitted 30 1 Operated of bed rest Period

30 30 30 General Treatment 30A week time needed 30 30

30 Shouldice Technique Immediately after 4 30 30 30 hours 30 30 1 to 4 weeks

In observation 30 30 2 No. of beds Required Period of 2 to 8 weeks for Rest accommodati on 30 90 90 3 Cost of Treatment 60 Approx. $2,000-4,000 (operation)

90 60 30 Approx. $900 (excluding travel)

Exhibit 1 Advantageous of Shouldice Technique

Exhibit 2 Current accommodation facility usage pattern Total No.of operations can be performed Total number of operations performed (in the year 1982) Annual average operations per week Max number of operations in a year / week = 5 days x 30 Operations = 150 = 6850 = 6850 / 50* = 137 = 165 (September month) 7

Annual avg.operations per week < Existing capacity of operations per week < Max. Number of operations (only for two months) Note: * Hospital closed for two weeks in December Exhibit 3 Option A) Expanding the facilities/beds Investment (Fixed Cost) =$ 2 Million (Budget costs estimated per year for clinic were $2 million as per 1983) Revenue per patient =$510 ($450 surgical fees, $60 of assistant surgeon fees) No. of Operations in a week (Assumed 50 % of 30 operations = 15 Nos) =15 Nos x 5days = 75 No.of weeks operations performed beyond existing capacity = 8 weeks (It is assumed that Peak of 165 operations, performed only for one month (September 4 weeks) beyond the annual average of 137. Assuming a factor of safety of 2, the total no.of weeks 4 weeks x 2= 8 weeks) Revenue from hospital = 45 beds x 8 weeks x 5days x $111 = $199,800 Revenue from clinic = 75 operation x 8weeks x $510 =$306,800 Total revenue from clinic & hospital / year = $505,800 Time for recovery of costs =$2,000,000/505,800 =3.95years =4 years (It is assumed that there is no additional doctors, surgeons, nurses, other staffs and their costs are included)

Exhibit 4 Option C) Saturday working Revenue per patient =$510 ($450 surgical fees, $60 of assistant surgeon fees) No. of Operations in a week (It is assumed that Peak of 165 operations, performed only for two months (8 weeks) beyond the annual average of 137. Hence 165-137 = 28 to be performed on Saturday) =28 Nos x 1day No.of weeks operations performed beyond existing capacity = 8 weeks (It is assumed that Peak of 165 operations, performed only for one month (September 4 weeks) beyond the annual average of 137. Assuming a factor of safety of 2, the total no.of weeks 4 weeks x 2= 8 weeks) Revenue from hospital (28 Operations x (8 weeksx1saturday) days X 3days per operation x $111) = $74,592 Revenue from clinic (28 operation x (8weeks x1saturday) x $510 =$114,240 Total revenue from clinic & hospital / year = $188,832 Cost to hospital Surgeon salary = $50,000/365 =$137 / day Asst Surgeon salary =$ 63 / day Nurses & admin staff salary =$100 / day Misc expenses =$100 / day Total cost =$400 / day To perform additional 28 operations, assuming the same team (12 nos) has to 9

work for an additional day (per week) for eight weeks, the total cost incurred =$400x 12 x 8 days =$38,400 By giving incentives twice of the normal day, the cost incurred = $38,400 x 2

= $76,800 Net additional Profit = $188,832 - $76,800 = $112,032

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