Shouldice
DSE7100 Managing Service Operations
Discussion of Shouldice Hospital Limited Case
Assignment #2:
Questions for Shouldice Hospital Limited
1. How Successful is the Shouldice Hospital? 2. How do you account for the success of the hospital? 3. What is the strategic service concept of Shoudice Hospital? How are the elements in the service systems designed and managed to support the strategic service concept? 4. As Dr. Shouldice, what actions, if any, would you take to expand the hospital’s capacity? 5. How would you implement changes you propose?
How is Shoudice different from other Hospitals?
–Patents do not feel that that are staying in hospital –Patients are taking a vocation –This is a club –Focused
How Successful is Shouldice Hospital?
• 140,000 highly satisfied “Alumni”(past patients) • 1,200 backlog of scheduled operations • Demand appears to expand with supply • Superior quality Shouldice Method of Hernia operation imitated by competitor • Low recurrence rate, 0.80% vs 10% • High degree of employee satisfaction
Cost Comparison: Shouldices vs. Other Hospitals
Shouldice Costs of typical operations $954 (p9) Transportation $200-600 Time Lost from work in Hospital 4 days Time lost from work while recovering 5 days Value of time lost (ranging from $50 to 500 per day)$450-4500 Total before Allowance for recurrence $1604-6054 Probability of Recurrence 0.80% Expected Cost of Recurrence $13-48 Total cost to patient, employee and insurer $1,617-6,102 Others $2000-4000 $0 5 days 10 days
$750-7500 $2750-11500 10.00% $275-1150 $3,025-12,650
How About the Profitability of Shouldice Hospital?
Hospital: Revenues (4 days X $111/day x 6,850 patients/year) Cost Profit: Clinic: Revenues (($450+ 60 + 75 X 0.20) X6,850) Cost Profit Total Profit 3,041,400 2,800,000 241,400 3,596,250 2,000,000 1,596,250 1,837,650
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
Discussion of Shouldice Hospital Limited Case
Assignment #2:
Questions for Shouldice Hospital Limited
1. How Successful is the Shouldice Hospital? 2. How do you account for the success of the hospital? 3. What is the strategic service concept of Shoudice Hospital? How are the elements in the service systems designed and managed to support the strategic service concept? 4. As Dr. Shouldice, what actions, if any, would you take to expand the hospital’s capacity? 5. How would you implement changes you propose?
How is Shoudice different from other Hospitals?
–Patents do not feel that that are staying in hospital –Patients are taking a vocation –This is a club –Focused
How Successful is Shouldice Hospital?
• 140,000 highly satisfied “Alumni”(past patients) • 1,200 backlog of scheduled operations • Demand appears to expand with supply • Superior quality Shouldice Method of Hernia operation imitated by competitor • Low recurrence rate, 0.80% vs 10% • High degree of employee satisfaction
Cost Comparison: Shouldices vs. Other Hospitals
Shouldice Costs of typical operations $954 (p9) Transportation $200-600 Time Lost from work in Hospital 4 days Time lost from work while recovering 5 days Value of time lost (ranging from $50 to 500 per day)$450-4500 Total before Allowance for recurrence $1604-6054 Probability of Recurrence 0.80% Expected Cost of Recurrence $13-48 Total cost to patient, employee and insurer $1,617-6,102 Others $2000-4000 $0 5 days 10 days
$750-7500 $2750-11500 10.00% $275-1150 $3,025-12,650
How About the Profitability of Shouldice Hospital?
Hospital: Revenues (4 days X $111/day x 6,850 patients/year) Cost Profit: Clinic: Revenues (($450+ 60 + 75 X 0.20) X6,850) Cost Profit Total Profit 3,041,400 2,800,000 241,400 3,596,250 2,000,000 1,596,250 1,837,650
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