Shouldice Hospital Limited Abridged
3/26/2013
Shouldice Hospital Limited (Abridged)
Summary of case discussion
Indicators of success
• Profits
– Revenue = 7600 * (320*4 + 650 + 300*20%) = $15 mil. – Costs = $8.5 mil for hospital + $3.5 for clinic $ $ – Profits = $3 mil
• Word‐of‐mouth advertising
– Afraid of advertising for fear of generating too much demand
• Backlog of demand
– Currently 2400, growing at 100 / 6 mo.
• High percentage of doctors as patients • L Low recurrence
– 0.8% vs. 10% at other hospitals
• Patients reunions • Low employee turnover
2
1
3/26/2013
Capacity at key resources
• Examination
– 6 rooms x 3 patients/hr x 3 hrs/day (1‐4pm) x 5days/wk = 270 patients/wk
• Operating rooms
– 5 rooms x 7hrs/day x 5days/wk x 1 patient /(hr.room) = 175 patients/wk
• Surgeons
– 10 surgeons x 1 patient/(hr.surgeon) x 8 hrs/day x 5 days/wk = 400 patients/wk
• Rooms
– Assume patients stay for 4 nights, and level demand – Number of patients per day (Sun – Thur) = 89 rooms/4 = 22 – Capacity = 5days/wk x 22/day = 110 patients/wk
“Rooms” is the bottleneck. So indeed capacity expansion, if any, should start with this resource. Notice that this processing rate does not add up to 7600 patients per year that Shouldice is handling. Possible reasons: patients stay for fewer nights, or they admit more patients toward the end of week, or there is an “overflow” area in the hospital.
3
Why patients like Shouldice?
• Low price
– $1990 (excluding travel) vs. $5240 at other hospitals
• Low recurrence rate • Facilities/décor
– Investments made in assets such as carpeting, common areas (the Florida room e.g.), low stairs, nice grounds.
• Socialization/ambiance
– Schedule patients with similar backgrounds in the same room – Group activities (e.g., tea and cookies) to alleviate anxiety and build p relationships – Create pleasant, non‐hospital‐like atmosphere
• Fast recovery
– Days vs. weeks at other hospitals – Early ambulation
Shouldice Hospital Limited (Abridged)
Summary of case discussion
Indicators of success
• Profits
– Revenue = 7600 * (320*4 + 650 + 300*20%) = $15 mil. – Costs = $8.5 mil for hospital + $3.5 for clinic $ $ – Profits = $3 mil
• Word‐of‐mouth advertising
– Afraid of advertising for fear of generating too much demand
• Backlog of demand
– Currently 2400, growing at 100 / 6 mo.
• High percentage of doctors as patients • L Low recurrence
– 0.8% vs. 10% at other hospitals
• Patients reunions • Low employee turnover
2
1
3/26/2013
Capacity at key resources
• Examination
– 6 rooms x 3 patients/hr x 3 hrs/day (1‐4pm) x 5days/wk = 270 patients/wk
• Operating rooms
– 5 rooms x 7hrs/day x 5days/wk x 1 patient /(hr.room) = 175 patients/wk
• Surgeons
– 10 surgeons x 1 patient/(hr.surgeon) x 8 hrs/day x 5 days/wk = 400 patients/wk
• Rooms
– Assume patients stay for 4 nights, and level demand – Number of patients per day (Sun – Thur) = 89 rooms/4 = 22 – Capacity = 5days/wk x 22/day = 110 patients/wk
“Rooms” is the bottleneck. So indeed capacity expansion, if any, should start with this resource. Notice that this processing rate does not add up to 7600 patients per year that Shouldice is handling. Possible reasons: patients stay for fewer nights, or they admit more patients toward the end of week, or there is an “overflow” area in the hospital.
3
Why patients like Shouldice?
• Low price
– $1990 (excluding travel) vs. $5240 at other hospitals
• Low recurrence rate • Facilities/décor
– Investments made in assets such as carpeting, common areas (the Florida room e.g.), low stairs, nice grounds.
• Socialization/ambiance
– Schedule patients with similar backgrounds in the same room – Group activities (e.g., tea and cookies) to alleviate anxiety and build p relationships – Create pleasant, non‐hospital‐like atmosphere
• Fast recovery
– Days vs. weeks at other hospitals – Early ambulation