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Q1: How does shouldice compete? In other words why do patients come to shouldice hospital? Two main reasons drive customers into choosing Shouldice over other competitors/hospitals. The first is quality, and the other is cost. talking about quality of the Shouldice “product” includes both, quality of the operation, and quality of post operation activities and overall services offered by Shouldice. The Shouldice method is a focused, specified operation that deals with Hernias, with a reputation that has been built throughout the years and is still growing; the hospital doesn’t even use advertisement to attract patients, the “word of mouth” way of advertisement has been doing very well for them so far. The superior quality offered by the Shouldice method, gives the patients a motive to operate at Shouldice for what it gives regarding peace of mind, low risk and low recurrence rates. Away from the in-operation excellence in quality, the services that Shouldice hospital offers are more tempting than other hospitals. Patients do not feel that they are in a hospital; they consider it more like a recovery vacation with an excused absence from work without feeling any guilt in that.
Moreover, it gives patients the independence and sense of control and preserves patients’ dignity when it comes to the fast recovery after the operation, and when it comes to the fast ambulation process after the operation, where a patient rises up and walks by himself (definitely under supervised assistance by nurses), and makes him feel in control of his motion and in control of the sedative applied on him which has no effect other than ignoring the pain of the 45 minutes procedure. The financial part of this comparison holds the other big part in the decision taken by a patient to go to Shouldice. Taking into consideration the lower cost of the operation is an enough reason to pick Shouldice, yet, another important notice would be the positive opportunity cost in terms of cutting the losses or absence from work by almost a week.
9 days are sufficient for a patient at Shouldice to go through the operation and the post operation recovery, while it takes about 15 days in other hospitals. Moreover, the dollar amount saved between going to shouldice and going to another hospital is about 1000. And has Dr.Shouldice says, even if a patient buys a round ticket from the US to Toronto, the cost of the operation stays lower. Overall, a patient choosing Shouldice would be going for a cheaper, higher quality service of operations, both of which are the optimum that a patient can choose, and therefore cause him to pick Shouldice over other hospitals. Finally, as a conclusion, if we want to look at it from a Value creation perspective, their advantages can be separated into the 4 parts: 1- Cost: the cost advantages listed above
2- Quality: separated into 2 parts:
a. Quality of design: made available by the services offered to the patients (welcoming his family, a high quality lunch) b. Quality of performance: made available by the specialization of the doctors in using the Shouldice method (seargons have an average of 600 operations/year and the rate of recurrence equal to 0.8%.) 3- Delivery: the established process enables the Hospital to offer a high admission process along with a high speed recovery (as mentioned earlier). 4- Flexibility: the fact that the secretaries are trained for multitasking Q2: Identify characteristics of Shouldice’s operations that you think have contributed to its success. The elements that contribute to Shouldice’s success can be branched into administrative, structural, and operational factors. The policy that the administration of Shouldice applies stresses on the core competence of Shouldice’s operations which is taking good care of the patient during post operational recovery and insists on personal contribution of the patient during this phase. The management at shouldice does its best to keep the patient as comfortable as possible by applying the main concepts that shouldice is built upon.
Moreover, the structure of shouldice acts as a major factor in its success. Starting from the building and room equipment that lack TVs and phones, encouraging patients to get up and walk in order to mix with people and profit from the social experience offered by this program and expedite their post operation recovery. In addition to that, carpets all over the place, comfortable stairways, and easy movement between operation rooms for doctors to help each other, all act as important roles that the structure and design of shouldice depends on to contribute to its success. Not to ignore the fact that shouldice’s location is very important since it is based near the airport of a huge city with a large population and encourages international patients coming from outside the country to operate there. Moving to the operational factors that contribute the most to the success, we can find that shouldice is focusing on a narrow segment of the market(patients), with specialized surgeons who are recruited specifically to this kind of job, with characteristics like tolerance to repetition and being family oriented.
In addition to allowing surgeons to observe and advice one another, which creates some peer pressure that leads into a huge quality control driven by the need of each surgeon to give his best and excel when compared to others. This huge experience acquired by the surgeons after repeating the same procedure a couple of times during the same day all through the year, attracts a lot of demand which is being treated by a frequent increase in the supply by increasing the capacity of the hospital. Another way to look at the structure from another perspective, we notice that the Shouldice’s hospital has an effective process layout (operations and laboratory at bottom level, pre-operations and examination rooms at the 1st floor, on the 2nd floor, the administration offices, and on the 3rd, the additional hostel rooms for extra capacity in case of emergency)
Moreover, the systematic approach starting with the first step (admission of the patient) after being screened and given all information to study his case separately, till releasing the patient to go home, makes it more easier to apply in real time, rather than treating each patient as a case by his own. This way, estimating the operation and service time will be much easier and leads into a better control over the number of patients admitted at the same time. Another important factor of success is sharing of expensive services like the anesthetists, in addition to other factors like the high salaries given to surgeons, free annual checkups and reunions and of course having the famous high quality low cost reputation, act as reasons for the success of Shouldice. Q3: Which resource of Shouldice is the bottleneck?
First, let us examin the pre-opration process.
I- the Examination process:
6 rooms, working hours: from 1 to 4 pm (assuming the last patient arrived at 3pm and waits 20min for his turn to come, knowing that other have been waiting before him. ) the examination goes on for 20min. they only work 5 days a week. the formula is: (6 rooms x 3 hrs x 5 days x 60 min/hr) / (20 min / exam) = 270 patients/week II- accounting procedure:
2 people work in this department. They work from the start of the process (1o’clock) until the last patient goes out of the examination. They work 5 days a week, and their procedure takes 10min per patient. The formula is: (2 people x 4 hrs x 5 days/week x 60 min/hr) / (10min/patient) = 240patients/week III- Operating Procedure:
5 operating rooms. They are opened at 1st operation: 7h30. The surgeon’s day ends at 4pm. He’s on duty for 8.5hours. he needs 1h to perform a normal operation. 5 days a week. • (5 rooms x 8.5 hrs/room/day x 1 hrs/patient x 5 days/week)/ = 212.5 patients /week • Surgeons:
12 surgeons work at the hospital. We assumed, on average, they perform 4 operations per day (depending on the type of the operation and thus its length) • 12 surgeons x 4 operations /day x 5 days = 240 patients/week • Hospital beds:
• 89 beds = 178 patients per week (assuming use of weekends for convalescence and 3.5 days average stay, meaning there are 2 patients per bed per week) BOTTLENECK is the Hospitals beds
By agreeing with O’dell, the most appropriate solution would be to increase the bed capacity by 50% and reach 133 beds hence, reaching a capacity of 266 patients per week. The next bottleneck would be the number of operating rooms with its 212 patients per week. This means that next step would be to increase the operating rooms and/or increase the working hours of the surgeons (forcing them to work on Saturdays). But some further cost estimations have to be made. This increase of working hours might also lead to a decrease in the quality of operations.