Shouldice Hospital is very successful and highly reputable hospital that specializes in only external

type abdominal hernias. This hospital is a prime example of the advantages that a business can drive
from specializing in a service focusing on a definite and limited market segment. This specialization
coupled with efficient patient flow management and service delivery system at the hospital is what
makes Shouldice such a successful hospital.
There are several factors that account for the success of Shouldice hospital and its operations. They
selected their patients and had strict screening criterions. They treated people with only external
type abdominal hernias and those who were otherwise healthy (not overweight etc). The early
ambulation was utilized in a great way in hospitals operations. Because of early ambulation,
patients were not only customers but they had found a way to utilize them in the postoperative
state as counsellors to other incoming patients. Patients were self-sufficient and did not require
much care from the nursing staff. The nursing staff did not have to use bedpans, change laundry and
move patients from one place to another. This had two positive effects on the organisation. First,
they had reduced cost as they did not hire a huge nursing and laundry staff. This gave hospital the
flexibility to pay high salaries and higher good workers. Secondly, unattractive part of the nursing
profession was done away with and relatively lessor work made them cling to their jobs.
Different parts of Shouldice hospital are glued together by the sense of belongingness and the family
like culture among its employees. They made sure that there was communication between different
organs of the facility. The patients and staff were served food from the same kitchen and they had to
pick up their food and coffee etc. from a cafeteria line that was in the very centre of kitchen. They all
had their lunch in a common dining room. Team work was also a very important part of Shouldice as
each secretary was trained to do other job and could work cross functionally at crunch times. This
allowed proper day to day communication between different parts of the organisation and bound its
employees together.
Another key stakeholder in this business is the doctors. They hire doctors who want to see their
children grow up, are experienced and well educated. The hospital is efficient at scheduling doctors
and rotating the staff members every few weeks. They were very focused on a particular type of
operation and a typical doctor at shouldice would complete on an average around 600 hernia
operations per year as compared to a typical general surgeon who would be doing around 25 to 50
per year. Regular weekly work hours coupled with relatively high salaries (50000) and bonus (41660
on average) kept the doctors happy and focused. Also because of the fairly focused facility, they
required only a single anaesthetist which led to reduction in overall cost.
Shouldice is also very successful and profitable because it is able to differentiate itself from other
hospitals by the personalized treatment of their patients and not hospital like environment. They
took special care to assign beds in a room to patients with similar work background or interests and
scheduled operations for roommates at the same time to do away with extra anxiety. They used
carpets on the floor to reduce the hospital like feeling , built stairways with small steps for
recovering patients, no telephones and television in the room so that patients would walk and
exercise to reach them. They also provided excellent recreational facility and encouraged their
patients to socialize which made an operation in to an enjoyable break from work for the patients.
The biggest concern at Shouldice is the capacity bottleneck in terms of the number of beds and the
number of operation theatres
1
.( Analysis in Appendix 1)
From the analysis we can see that there is a mismatch between the capacity at various steps in the
entire process. The biggest constraint is that because of the availability of 89 beds, Shouldice can
handle only 161 patients in a week. This is the lowest number in the entire service map and hence is
the bottleneck that needs to be addressed. Doctor Shouldice talks about two options:-
1) Converting Saturday into a working day for hospital staff
2) Addition of another floor
Working on Saturday is a good option for increasing the capacity by 20%(given in case) but it has
been opposed because they are already at a good level of capacity utilization of the facility and if the
add an extra day, it might be very difficult to maintain the same working relationships and attitudes.
Working on Saturday is a misfit for Shouldices culture as the Doctors that work there are not very
willing to work on Saturday and want to spend time with family and relax. The compensation
package might get unattractive for the doctors in this case. Hence, this might not be the best way to
expand capacity. Hence I do not recommend this option.
Building an additional floor is also a profitable option but the potential disadvantages are that it will
require employment of additional staff which will be derogatory for the overall family like culture of
Shouldice as the personalized experience will not be possible with a larger workforce. Excess
workload on kitchen, laundry, administration and other departments might take away the smooth
functioning of the facility which may be disastrous for the business. Hence I do not recommend this
option.
Perhaps the best option that Dr. Byrnes Shouldice is evaluating is of a second facility for treating
hernias outside Canada. A very lucrative option is to open up a facility in U.S. (as close to Thornhill,
Ontario as possible). They have the knowhow and should implement a mentorship program at
Thornhill to train doctors and personnel for their U.S. operations. But, the only issue and potent
challenges in this implementation is that it can create a problem of control and administration over
the new facility and the personalized culture and experience of Shouldice hospital may not be the
same as it is at the Thornhill facility. Also, extra financing requirements might be another hurdle in
the way. If they can take care of these problems then they should definitely go ahead and
implement this strategy.
Another problem that Shouldice is facing at this time is Dr Nicholas Obneys succession plan i.e. a
new Chief Surgeon for the facility. It is evident that this is a very important position for the
organisation and as Shouldice works on a specific method and culture. Also the kind of employees
that are hired at Shouldice are not very ambitious and are looking to stay and work for shouldice
over a long period. Bringing in someone from outside for filling in the position of Dr. Obney is not
advisable as that person may be a misfit for the organisation. In the ideal case Dr.Obney should
groom a successor who will be ready to take his position and operate the facility to an equal level of
quality control for the facility.
Shouldice is also grappling with the problem of competition by other doctors and usage of their
name by less reputable doctors that is hurting its brand image. I feel that the hospital should go
ahead with the promotional pamphlets that they have printed as that will attract more patients and
create excess demand for Shouldice hospital. They can drive this excess demand to charge slightly
higher prices and it will also have a positive impact on profits as well as its overall image and
reputation. Scarcity of this service, in a way, will be advantageous for the hospital. They should
popularize the fact that they are the only providers of the Shouldice Method of hernia operations
and should also look at intellectual property rights and should copyright Shouldice Method to
prevent misuse of their reputation.

Appendix 1
Examination room capacity

6 rooms

20 minutes per patient

Time period=3 hours(1pm to 4 pm)

no. of working days in a week=5 days

Assuming 100% efficiency rate and no loss of time between patients
total number of patient capacity in examination rooms=6*(180/20)*5=270

Number of patients that can be admitted per week

Given: Number of people at the admission desk=2, time taken per patient=10 minutes
Assuming hours of operations to be 1 PM to 4:30 PM

total=2 people*(210/10)*5 days per week

210 patients per week

Operating Theatre capacity

5 rooms
Assuming that each regular patient takes 45 minutes+ 15 minutes(patient's file and post operative
instructions) =60 minutes
Conservative estimate of a complicated operation of 90 minutes
30 minute coffee break

3 operation in afternon from 1 PM to 4 PM( assuming regular hernia patients)
So, an Operation Theatre can handle 4 operations before 1 pm and 3 operations after 1 pm
A total of 7 operations per day per room

Total operations capacity per week=7operations*5rooms*5days per week
175 patients per week


No of operations that could be performed depending on the number of full time doctors
assuming a doctor either works in morning 7:30AM to 12:30PM(4 operations) or in the afternoon 1PM
to 4PM (3 operations)
Also assuming 6 doctors work in the morning shift and 6 work in the evening shift
Weighted average number of operations per doctor per day= 0.5*4+0.5*3
3.5 operations per day

no of operations per week=3.5operations*5days*12 doctors=210 operations per week

Number of operations per week constrained by the number of rooms
Assuming that a patient stays for a total of 3 days and are discharged early morning on the fourth day
and 36 patients admitted per day
Given: capacity =89 beds





Days #Admitted # discharged

Monday 36 0

Tuesday 36 0

Wednesday 17 0

Thursday 36 36

Friday 36 36

Saturday 0 17

Sunday 0 36

Monday 36

161


161 operations per week

Appendix 2
Extra floor
Assuming that a patient stays for a total of 3 days and are discharged early morning on the fourth day
and 36 patients admitted per day
Given: capacity =133 beds(89+ 50%of89)

Days #Admitted
Monday 36
Tuesday 36
Wednesday 36
Thursday 36
Friday 36
Saturday 36
Sunday 0
Monday


180 operations per week
We can actually admit close to 44 patients per day without overshooting our capacity if we assume 3
day total stay at the hospital
but then all other steps will be very close to complete capacity under 100 % efficiency assumption