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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 nonemergency 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.
CONT..
Hospital specializes in hernia repair surgery Currently facilitates 7,000 surgeries per year Effective operations with quick turn-a-round Patients subject to early ambulation, which promotes healing
Hospital only accepts patients with uncomplicated external hernias, in otherwise good health.
Our Patient Care A unique program of care and recovery A welcoming, supportive atmosphere A relaxing, resort-like setting A lifetime of care and support Worlds largest database on hernia repair Our People Our Doctors Surgical training Our nurses Our support staff
A total environment
Doing a single procedure and repeating it with high frequency allows you to become a perfectionist.
If not OK
Check by MD (15 mins) If OK: Check-in & admin
Blood test
Dinner at 6 pm
Day 2
Local anaesthesia (-20mins)
Dinner at 6 pm
Day 3 Loosen stitches Walk, play, & eat with your buddies
Dinner at 6 pm
3,041,400
2,800,000 241,400
RETURN ON EQUITY
Total Depreciated Assets: $5 mil Return on Asset:
1,837,650/5,000,000 = 37%
What is the return on Asset if they expand the capacity by 50% at the cost of $2 mil?
Shoudice is offering:
High
Shodice
is having
Shouldice is also
Making
high profit
Maximizing the difference between perceived quality and value to the patient on one hand and the cost of supplying services on the other.
A Focus Strategy
Market Focus focus on a narrow segment of potential patients who have hernia and they are predominantly male, older in age, essentially in good health large market potential: 600,000 operations in U.S. in 1979 Internal Focus Doctors: Dedicated to quality of shoudice method, tolerance for boredom, family oriented Nurses: people oriented, assist patients Staff: flexible, team oriented
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.
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
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 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 ELEMENTS IN THE SERVICE SYSTEM TO SUPPORT THE SERVICE CONCEPT (MANAGERIAL ELEMENTS)
Service
encounter
Doctors and nurses are carefully recruited Employees trained to help / counsel patients Communal dinning for doctors, nurses , staff and patients
adherence to Shouldice method opportunity for surgeon to observe & advise one another
Quality
THE ELEMENTS IN THE SERVICE SYSTEM TO SUPPORT THE SERVICE CONCEPT (MANAGERIAL ELEMENTS) Managing capacity & demand Admission by appointment: scheduled service Screening patients: easier to estimate the service time walk-in patients or local residents on waiting list to make up cancelled reservation Information Medical Information questionnaire Free annual check-up -> unique data base on the result of the surgery Annual reunion to keep alumni informed and gather customer feedbacks-> loyal customer base -> effective word-of-mouth
THE ELEMENTS IN THE SERVICE SYSTEM TO SUPPORT THE SERVICE CONCEPT (STRUCTURAL ELEMENTS)
Delivery system Maximum degree of customer participation Efficient and low cost Avoid a typical hospital atmosphere Facility design Acres of gardens to encourage exercise & rapid recovery minimize hospital feeling (carpeting and odorless disinfectant etc) Stairways are designed for patients to use right after operations No TVs and Telephones in rooms to encourage walking Operating rooms are located in semicircle to encourage doctors to help each other and use the same anesthetist
THE ELEMENTS IN THE SERVICE SYSTEM TO SUPPORT THE SERVICE CONCEPT (STRUCTURAL ELEMENTS)
Location
large city near air port -> access to worldwide market large local population to fill up cancelled bookings
Capacity
planning
Elective procedures -> scheduled operations Balancing Capacity and improving capacity utilization Needs to increase capacity
is the bottle neck? How should they increase the capacity? How should they implement that change?
Capabilities
Examination Rooms: (6 rooms x 3 hrs (1-4 PM) x 5 days x 60 min/hr) / (20 min / exam) = 270 patients /week Admitting Procedure: (2 people x 4 hrs (1-5 PM) x 5 days/week x 60 min/hr) / (10min/patient) = 240 patients/week Nursing Station: (2 stations x 4 hrs (1-5 PM) x 5 days/week x 60min/hr)/(10 min/patient)=240 patients /week
Add Saturday operations Add a new floor (45 more hospital beds) Establish a new facility for hernia Expand to other types of operations Others?
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
Advantages
Easy to control and maintain quality Retain the culture and environment
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 Operating close the the theoretical capacity of the facility
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 and Dr. Shoudices time Control of quality It is difficult to create the same culture and atmosphere Potential competition with the existing facility
recovery Carpeting and odorless disinfectant etc to minimize hospital feeling Stairways are designed for patients to use right after operations No TVs and Telephones in rooms to encourage walking Operating rooms are located in semicircle to encourage doctors to help each other and use the same anesthetist Located to a large city: Toronto, access to worldwide market, large local population to fill up cancelled bookings
Goods:
Medical
Services
Quality hernia surgery using the Shouldice method, low recurrence Very experienced doctors
Implicit Services
Peace of mind/low risk Independence/Dignity/Control Social experience, fraternity Excused absence from work without guilt A vocation
Simultaneity
Intangibility Perishability
Heterogeneity
END
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