Shouldice Hospital

3/21/12

MGT 6400 – Management of Business Processes and Operations

Dr. Grady S. York

Yellow Team:
Jeanie Neumeyer
Paul Thompson
Krystle Grogan
Mia Hughes
Fallan Faulkner
Amie Sistad

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Table of Contents

INTRODUCTION 3

PROCESS/ PROJECT ANALYSIS 5

THE CURRENT PROCESS 7
IDENTIFICATION OF THE ISSUES 8
INTEGRATION ISSUES 9

QUALITY 10
PERFORMANCE 10
FEATURES 11
RELIABILITY / DURABILITY 11
SERVICEABILITY 11
AESTHETICS 12
PERCIEVED QUALITY 12
COSTS OF QUALITY 12
APPRAISAL COSTS 12
PREVENTION COSTS 13
INTERNAL FAILURE COSTS 13
EXTERNAL FAILURE COSTS 13
POKA YOKES 14

GOALS AND OBJECTIVES 14

RECOMMENDATIONS 16

COURSE OF ACTION 22

RESULTS AND OUTCOMES 24

WORKS CITED 27

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INTRODUCTION

Shouldice Hospital, in Ontario, Canada, is well known in North America for its specialty in

external hernia repairs. Dr. Earle Shouldice developed his innovative technique during World War II

while helping men that were unable to enlist due to their hernias. Due to the growing demand of hernia

surgeries and the scarcity of doctors during the war, Shouldice discovered that he could resolve a problem

for patients with hernias (Hospital, 1996). These men needed surgical treatment to repair their hernias

before they could be pronounced physically fit for military training. During this time he also discovered

that ambulation shortly after surgery helped in the recovery process. With this newly discovered

knowledge he further improved his method, in which he required patient movement shortly after surgery,

and this quickly restored the young recruits to prime physical shape for training.

When Dr. Shouldice opened the doors of Shouldice Hospital in 1945, his goal was to only repair

external hernias. Along with his special surgical technique on these types of hernias and post-operative

patient ambulation, he became renowned in the field and widely sought after. The recurrence rate for all

operations that take place at Shouldice hovers slightly lower than one percent. The Shouldice technique

and success rate created a niche for Shouldice Hospital where it became the leader in external hernia

repair.

Currently, Shouldice Hospital consists of 89 beds and performs around 7,000 hernia operations

annually. In total, the team of surgeons at Shouldice has repaired more than 300,000 hernias and has a

virtual 100% success rate performing primary inguinal indirect hernia repairs. However, due to its

success, the demand for the service of hernia operation is much greater than the hospital’s capacity,

creating a backlog. For the current bed capacity, see Appendix A.

Patients travel from all over Canada and the United States for surgery, and part of the hospital’s

burdening success is due to the facts listed above and a reduced price compared to other institutions.

“Charges for a typical operation include four days of hospital stay, at $320 per day, and a $650 surgical

fee for a primary inguinal. An additional fee is charged for general anesthesia, which totals approximately

$2,230 compared to $5,240 elsewhere” (Hallowell, 2005).

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 As for Shouldice’s market segment, it is an expert in the field, and the fact that Shouldice accepts

‘normal/primary inguinal’ and strategically only a minimal case of secondary surgeries to avoid

complications for patients and doctors, only contributes to its success. Also, people that are basically

‘healthy’ are accepted for surgery at Shouldice. Those people with more complicated cases, especially

those with other medical problems, are not accepted. The primary advantage of admitting only a certain

type of patient is a shorter hospital stay, which means new patients, can be admitted with higher

frequency. This becomes crucial to profits generated by the clinic based on constraints of the current

number of beds at Shouldice Hospital.

Further, because the patient is healthy enough to walk around, there is no need for bedpans, sheet

washing or additional macro issues that could arise with more bedridden patients during their stay. In turn

this reduces the amount of time nurses need to devote to each patient, and they are better able to utilize

their time by conducting orientation programs, counseling and assisting during surgery. This type of work

is preferable to nurses, which is evident by a very low turnover rate (Hallowell, 2005).

Another advantage is the satisfaction of the patients who attend Shouldice. Due to the unique

atmosphere and encouraged ambulation, patients are treated more like Club Med patrons than patients.

Dining in the same room as the doctors and rooms that are designed such that patients have an

opportunity to visit each other has helped to create a service culture with the help of Shouldice

employees. With the thought of patients in mind, the floors were constructed with smooth inclinations.

There are no TV’s in patient rooms, which fosters communication, and every square foot of the facility is

carpeted to reduce the sterile hospital stereotype (Hallowell, 2005).

As mentioned briefly above, nurse turnover rate is exceptionally low, but so are all of the other

employee turnover rates. The organization reveals no fixed structure, which could contribute to the

employee satisfaction rate. Based on conversations with Shouldice employees, there is an ‘open door’

policy in place for staff allowing them to come in and discuss various personal and professional issues

helping keep the staff happy and engaged.

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 There are a few challenges facing Shouldice with the main problem being bed capacity, and the

second burden is the patient backlog. Due to the high demand of Shouldice Hospital, the waiting list is

around 2,400, increasing by 100 every six months or so, and they currently hold steady with 89 beds and

five operating rooms (Hallowell, 2005). We will discuss in depth each of the possible methods in which

to decrease this backlog, in turn increasing revenue and patient output for the hospital. We will also

discuss the inefficiency of the medical screenings, government regulations and scheduling.

The goals for Shouldice will include: increasing inflow of surgeries per week, decreasing

throughput time, increasing screening efficiency and maintaining the current culture and core

competencies. Overall quality of service and delivery is still a large concern of hospital officials;

therefore, any decision made must not adversely affect these two desirables. Selection of new surgeon and

successor, Dr. Obney will also be briefly discussed, as well as the implementation and handling of any

personnel issues.

PROCESS / PROJECT ANALYSIS

Shouldice Hospital has a variety of distinctive competencies that contribute to its current success.

Although improving the efficiency of the existing process should be the primary goal, it must be done in a

way that ensures that it does not sacrifice the factors that make Shouldice a market leader. These existing

success factors are a combination of internal expertise and the patients’ experience.

Internally, Shouldice’s most valuable asset is its human capital. Hernia operations are not very

difficult for surgeons, but Shouldice recognizes the importance of retaining a staff that only performs this

procedure. The specialization in this specific surgery dramatically reduces the amount of errors that could

occur within the process, and Shouldice cites that less than one percent of its patients suffer from

recurring problems. That same statistic in the United States approaches ten percent (Hallowell, 2005).

Since surgeon specialization in hernia operations is a key factor to its success, any suggestion of

diversifying their offered surgical procedures should be discouraged.

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 To attract and retain the highest quality surgeons, nurses, and administrative staff, Shouldice pays

its employees an above-average salary, which includes bonuses for performance. In addition, the practice

respects the surgeons’ desire for a balanced lifestyle. Shouldice surgeons typically work from 7:00 A.M. -

4:00 P.M. and have limited obligations during the weekend. These employee management techniques

have a direct impact on Shouldice’s ability to retain experienced employees, and adversely altering any of

these employment conditions would most likely reduce the long-term quality of service for the

organization. While the suggestion of expanding operations to include Saturday surgeries could increase

productivity, it could also threaten the quality of the procedure due to a strain on its human capital.

The patient’s experience is the other critical component of Shouldice’s success. Patients travel

great distances to receive surgical treatment at this hospital based on Shouldice’s reputation built by

patient recommendations. The positive overall patient experience is the primary driver of demand for

Shouldice’s services, and adverse changes could negatively influence demand in the future. Therefore,

any changes made to the process should be reviewed to ensure that the patient continues to see the same

quality of care that they have grown to expect. For instance, Shouldice allows patients to stay at the

hospital for four nights to recover from their surgery. Their recovery includes a healthy balance of

exercise, meals, and other social activities. This method is unique to Shouldice and is one of the primary

reasons people are willing to be placed on a waiting list for its services.

Even with the long waiting list and obvious demand, Shouldice has charged lower rates than other

hospitals that perform hernia operations. Shouldice patients can expect a bill for under $2,500, while

other hospitals could charge up to double this amount for the same operation. Although increasing prices

for international patients is a justifiable option, it should bear in mind that raising prices could have an

inverse relationship with demand for their services. Patient experience is also crucial because their

positive experiences translate into free word of mouth marketing for Shouldice. The business continues to

thrive because of these customer referrals.

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The Current Process

The current process has three phases. The first phase consists of activities that prepare the patient

for the operation. Secondly, the nurses prepare the patient for the operation, and the surgeons perform the

operation. Upon successful completion, the patient enters the recovery phase until he or she can be

discharged. See Appendices B – F for the Current Process Flow Chart.

Pre-operation procedures can begin before the patient arrives at the hospital. Long distance

patients who request an operation are sent a medical information questionnaire that helps the surgeons

decide in advance if that person is a surgical candidate. Although many patients are accepted using this

method, some are denied service because of existing medical conditions that could pose procedural risk.

Local patients can bypass the questionnaire step and visit Shouldice’s walk-in clinic, where they can be

examined in person. On the afternoon prior to the scheduled surgery, all patients (regardless of locale)

arrive at the hospital and gather in a waiting room. After checking in, they are given a preliminary exam

by a surgeon that takes approximately 20 minutes to complete. Similar to the medical questionnaire

procedure, surgeons use the preliminary exam to identify individuals who are too risky to operate on, or

are not surgical candidates. Following the preliminary exam, patients cleared for surgery are shown to

their room, and are instructed to unpack and shave the area that will be operated on. Once all of the newly

admitted patients have settled in, they gather to listen to the orientation information provided by the

nurses. Patients are then served dinner, and are encouraged to participate in activities and tea and cookies

before returning to their room to sleep (Hallowell, 2005).

The surgery procedure begins with a nurse waking up the patient and administering a pre-op

sedation. The nurse then takes the patient to the pre-operating room and another nurse gives the patient an

analgesic. Meanwhile, the surgeon scrubs in for surgery and also administers Novocain when the patient

arrives in the operating room. Shortly after, the surgery team performs the operation, which typically

takes 45 minutes to complete. Upon completion, the surgeon helps the patient walk to a post-operating

room.

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 After the operation, patients spend their remaining time at Shouldice recovering through a

balance of exercise, meals, rest, socialization, and other activities. During this time, nurses are able to

monitor the condition of these patients, and encourage them to be active. On the fourth morning, patients

are discharged. They pack their belongings, check out of the hospital, and return home (Hallowell, 2005).

IDENTIFICATION OF THE ISSUES

Shouldice Hospital excels at its ability to perform hernia surgeries and has proven its dedication

to its customers by placing an emphasis on the quality of the patient’s experience. These positive

attributes have created high demand for the services it provides. This excess demand provides an

opportunity for Shouldice to increase the annual amount of patients admitted by modifying its existing

process to improve efficiency. Patients whose needs are not met because of Shouldice’s lack of capacity

will inevitably seek services from surrounding competitors, and may even inspire entrepreneurs to form

new hospitals. Both possibilities could threaten Shouldice’s future market share, so it should attempt to

retain these extra patients if at all possible.

Although Shouldice has compelling incentives to increase its operating capacity and profitability,

there are a plethora of issues that limit the way it can grow. Government regulation prevents it from

adding additional beds to the facility and caps the reimbursement rate for procedures on Canadian patients

(Eckhert, 2012). Therefore, any improvements must be made to the operational process since key capacity

boundaries are fixed. These limiting factors also arise from internal constraints. As discussed earlier,

Shouldice manages its employees in a way that promotes quality but sacrifices potential productivity.

Surgeons in particular are not expected to perform surgeries during the evenings or on weekends, which

negatively impacts how many surgeries can be performed in any given week.

Shouldice accepts both local and long distance patients. The long distance patients pose a higher

risk to Shouldice because there is a chance that these patients scheduled for an operation will not meet the

surgery qualifications during the exam completed upon arrival the first afternoon. Patients can be turned

away due to weight problems, health risks, or misdiagnosis. An article in Ontario’s Windsor Star cites a

surgeon at Shouldice who noted that not all hernia’s need to be repaired, especially if the patient is elderly
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and is not experiencing any related discomfort (Jones, 2011). Regardless of the specific reason, a

profitable opportunity to perform surgery is lost each time one of these patients is turned away after the

result of their preliminary examination. Shouldice would benefit greatly from minimizing this risk.

Integration Issues:

Shouldice Hospital has been very successful in its 65 years of servicing patients, so successful

that the demand is outweighing the possible surgical capacity of the hospital. Any potential changes to its

current process will have an impact upstream and downstream for the organization. As mentioned

previously, specialization in hernia operations is a key factor to Shouldice’s success. Adding additional

surgical procedures for other medical conditions would possibly provide increased profitability, but the

hospital is still constrained by the number of beds. Therefore, adding more surgical treatment options

only exacerbates the current capacity issues with hernia surgeries.

Another change that was discussed earlier was the suggestion of expanding operations to include

surgical procedures on Saturdays. This modification could increase profitability and allow Shouldice to

address the excess demand of patients on the waiting list, therefore possibly deterring competitors from

entering the market. However, the culture and work-life balance at Shouldice are extremely important to

the employees. Adding an additional day of surgery will require the current staff to work overtime or will

require additional staff to be hired. Either option would be costly to Shouldice, and the employee

satisfaction level might decrease due to the increased workload making it more difficult to retain high

quality surgeons and staff.

Another change to Shouldice’s process requires an examination of the patient’s four-night stay to

recover from his or her operation, which includes a healthy balance of exercise, meals, and other social

activities. Shortening the patients’ stay, thereby decreasing the recovery time at the hospital, would allow

Shouldice to perform more surgeries by having more available beds. Shouldice already has a shorter

recovery time than the average hospital, which is about two weeks. There could be a possible impact on

the quality outcomes of the surgical procedure if it shortens the recovery time even further.

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 One last integration issue relates to the screening process when a person is trying to become a

Shouldice patient. Long distance patients must submit a medical questionnaire by mail that is then

reviewed by the surgeon to diagnosis the hernia. Local patients can arrive at the walk-in clinic for their

diagnosis. Once the person is established as having a possible hernia, he is scheduled for surgery. Upon

arriving for the scheduled surgery, the patient is examined to ensure he indeed has the correct type of

hernia. If local, the patient is also examined again to ensure he has lost the required amount of weight

and hasn’t developed other medical conditions. Any patients that don’t meet the requirements are sent

home without surgery.

Making changes to these processes has the potential to make the screening process more efficient

and profitable for the hospital. Shouldice could require that any patient scheduled for surgery be seen by

his primary care physician prior to arrival to ensure patients will not be denied due to medical conditions,

weight problems, or the wrong type of hernia. The patients that are turned away daily are a lost

opportunity to perform a surgery. The possible risk is that Shouldice might lose some of the patients who

see their primary care physician and talk the patient into letting him perform the surgery instead of

coming to Shouldice.

QUALITY

Performance

The surgery process itself is highly efficient. Patients do not have to undergo heavy anesthesia,

and when combined with the Shouldice Method, recover much more quickly than most hernia patients.

However, the long patient waitlist and chance that a patient may be turned away upon check-in due to

health or weight compliance issues likely diminishes the patients’ perception of the efficiency of the

overall process. A great amount of consideration is given when new surgeons are hired at Shouldice. The

hospital seeks intelligence, experience, and personal qualities that ensure new hires are a good fit with the

hospital’s culture. Everyone on the staff is treated with a great deal of respect and care. In addition,

everyone is paid above market wages (Hallowell, 2005). This exceptional treatment of the workforce

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greatly adds to the level of quality patients receive and enhances the performance of everyone on the

team.

Features

Several distinct features attract patients and enhance the operational experience at Shouldice

Hospital. The patients are given semi-private rooms and assigned roommates by the hospital staff based

on similarities such as jobs, interests, and backgrounds. This makes the patient feel comfortable and more

relaxed in this temporary environment, an especially important factor during this anxious pre-surgery

time. The tea and cookies event that is hosted nightly allows the new patients to socialize with patients

who have had their surgeries earlier that day and others still recovering. This not only allows the patients

whom are scheduled for surgery the next morning to ask questions or discuss concerns they may have

with those who have just undergone the procedure, but also allows them to form a camaraderie and

support system while staying at Shouldice Hospital. There are also annual alumni patient reunions during

which prior patients reunite with their old friends from their time at Shouldice Hospital (Hallowell, 2005).

Reliability/Durability

The Shouldice method for hernia surgeries is arguably one of the best in the world. While most

general surgeons perform anywhere from 25-50 hernia surgeries per year, Shouldice surgeons perform

over 750 operations per year (Hallowell, 2005). Patients feel comforted by the fact that these surgeons are

highly specialized in the exact operation they are going to undergo and are confident that the results will

be positive. The Shouldice methodology of hernia surgery is at the forefront of industry methods and

more intricately realigns the abdominal muscle wall. This reinforces the muscles and helps protect

against a possible recurrence or other problem in the future.

Serviceability

The Shouldice Hospital is extremely accessible to patients. Potential patients can be seen by

Shouldice staff to determine if the operation is necessary, or if they are not close by, they can fill out a

simple Medical Information Questionnaire and submit to the hospital. Annual checkups are provided
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indefinitely to all “alumni” patients free of charge. Customers feel as though their future well-being is of

the utmost importance to Shouldice Hospital. They do not have to fear the unknown such as possibly

having another hernia due to the inability to afford the expense of regular doctor visits. These annual

checkups are also offered during the annual patient reunion making it highly convenient for those alumni

patients.

Aesthetics

Shouldice Hospital is a large main house with an additional wing on a grand 130-acre lot

(Hospital, 1996). After the surgery, many patients feel that they are on a weekend getaway and request to

stay an extra day. The hospital was carefully designed by architects under the supervision of Dr.

Shouldice in order to encourage patients to be mobile. Aesthetically, it is rather relaxing since there are

no phones or televisions in the patients’ rooms. The beautiful common areas and freedom to move about

the hospital as one pleases makes the patient feel very welcome and relaxed.

Perceived Quality

Shouldice Hospital and the surgical method used are widely recognized as the industry leader. Several

patients call Shouldice themselves to arrange their surgeries simply because of its outstanding reputation

and cost value. Also, other hospitals try to compete and market themselves by making comparisons or

false affiliations with the Shouldice method. This, along with the ever-growing waiting list, shows how

high general consumer awareness and demand are of Shouldice Hospital.

Costs of Quality

Appraisal Costs

Appraisal costs are the costs of inspecting, testing, and thoroughly vetting that a process or

product is acceptable. The main appraisal cost in the Shouldice method occurs when the patients are seen

at the hospital in order to diagnose if the person is a surgical candidate. For those that do not live in close

proximity to the hospital, the doctors review the information from the Medical Information Questionnaire

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to determine if a hernia exists and if so what type. The questionnaire also allows the doctor to decide

whether or not a patient is eligible for the surgery based on other health issues such as a heart condition or

being overweight. If patients arrive for scheduled surgery and it cannot be performed due to weight, they

are turned away and have to reschedule for another time. This is a huge opportunity cost for the hospital

since they lose the revenue for that surgery and the ability to replace that patient with one that is eligible.

Prevention Costs

Prevention costs are the costs associated with preventing defects. Shouldice Hospital incurs

several prevention costs in order to maintain its high quality performance. Doctors are trained in the

Shouldice method for several months creating a high cost of training new doctors. The scheduling of the

surgeons is also a high prevention cost to Shouldice since Chief Surgeon Degani develops this schedule

himself on a daily basis. It is done this way in order to ensure surgeons and assistants are rotated every

few days, and to assign doctors non-routine cases in order to decrease monotony. It also allows Shouldice

to assign the more complex operations to the more experienced surgeons and assistants. This prevents the

surgeons from becoming complacent possibly resulting in mistakes carelessness during the operations.

Internal Failure Costs

Internal failure costs are the costs for defects incurred during the process. For Shouldice, this is

the cost of problems or complications that may occur during a patient’s stay. While most hernia

operations are relatively straightforward, some surgeries can become much more difficult than expected

and a patient could have serious complications while undergoing the procedure. The cost of bringing in

all highly qualified surgeons to help this one patient with complications can be very high and could mean

other patients’ operations may have to be delayed until the next day.

External Failure Costs

External failure costs are the costs for defects that occur after the process has been completed.

For Shouldice, this is the cost of problems or complications experienced by an alumni patient after he has

had the operation and been discharged from Shouldice Hospital. The best example of an external failure
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cost for Shouldice is its indefinite free annual checkups for its past patients. This is a very time intensive

process and rather costly to Shouldice. However, it is done in order to allow Shouldice to detect any

possible issues in a patient and correct the problem before it causes any undue harm or discomfort to the

patient. The annual check-ups reduce the potential of complaints and help maintain the high quality

relationship with the patient, even when there may be a complication from the surgery.

Poka-yokes

One of the main threats to the overall quality of the Shouldice method is the number of patients

who are turned away upon their arrival for surgery due to not meeting their weight goal or for other

various health problems. To guarantee that almost all scheduled surgeries take place, a new policy will

require patients to be examined by their primary care physician or by a physician at a walk-in clinic three

days before their scheduled surgery to ensure they have met all of the required Shouldice guidelines and

instructions given prior to surgery. This will improve the patients’ overall Shouldice experience and allow

Shouldice to increase the volume of operations being performed.

The other high cost of quality is the time Dr. Degani spends each day scheduling surgeons to

specific patient operations. Since all scheduling is done manually, and not with scheduling software, the

opportunities for the possibility of human error in matching appropriate surgeons with patients is

relatively high. Since the proposed changes to the scheduling of surgeries makes this process even more

detailed, sophisticated, automatic scheduling software should be purchased and implemented quickly.

This system will allow Dr. Degani to focus on his numerous other responsibilities, while scheduling with

little to no error. This software will be sophisticated enough to match the experienced surgeons to the

difficult cases as well the ability to continue to rotate staff in order to promote variety to the surgeons’

schedules.

GOALS AND OBJECTIVES

Shouldice is a successful hospital already but we think through revision of its current process, it

can achieve the four main goals listed below. First, Shouldice should increase the number of surgeries

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thereby decreasing the excess demand on the waiting list. Shouldice should strive to increase the number

of surgeries by 20 percent each week. The goal of 20 percent (40 percent of the initial goal) was

established to try to compensate for the 50 percent increase Shouldice hoped to achieve with the addition

of a new hospital wing. This increase can be achieved by making improvements to the surgeons’ daily

schedules in order to better utilize the current business hours and allow for more surgeries to be

performed each week. Once the hospital is able to increase the number of operations, a reduction in the

length and time of the waiting list will soon follow (Levy, Sobolev, Hayden, Kiely, FitzGerald, and

Schechter, 2005).

Reducing patients’ throughput time is another goal that could decrease the length of time a patient

is on the waiting list. Due to the high demand for the procedures performed at Shouldice Hospital, and

the relatively low number of surgical professionals and bed capacity available, there will always be a

waiting list. However, by decreasing the time it takes for patients to pass through the entire process,

Shouldice will be able to service those on the waiting list at an increased rate. With any changes,

Shouldice must ensure that its rate of recurring surgeries is maintained at less than 1 percent or lowered

even closer to 0. No sacrifice of quality should be made to increase the rate at which patients are

discharged. The best way to measure this is to compare the rate of recurrences after changes to decrease

the throughput time have been implemented.

Another goal is an increase in the efficiency of the screening process. An improved screening

process will allow for a reduction in the number of individuals who come through the process but end up

not being eligible for the procedure. This will increase the rate at which those who are eligible for

surgery make it through the process. After researching, it was discovered that Shouldice estimates that 10

percent of the daily scheduled surgeries will not be performed due to the patient not meeting weight

requirements, medical conditions that prevent surgery, or no hernia present at all (Eckhert, 2012). We

would like to see Shouldice significantly reduce this number to 1 percent or less weekly. There should be

a 99.9 percent chance that all patient surgeries are performed as scheduled. Improvements in the

screening process will help Shouldice to achieve this.

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 The final goal to be achieved through revision of the current process is to maintain the current

culture and core competencies. From the information presented in the case, both the culture and core

competencies at Shouldice Hospital play vital roles in the success the hospital has achieved thus far, and

any changes made to these areas could negatively impact the continuation of that success. It is important

for the turnover rate to remain at zero unless something egregious occurs and it can’t be avoided. This is a

great indicator that Shouldice is maintaining a culture vital for retaining the talented individuals on its

workforce.

RECOMMENDATIONS

The inability to meet demand due to capacity limitations is a major hindrance for Shouldice

Hospital. It is limited to 89 patient beds, and there is an urgent need to increase the number of patients

that can be admitted. This urgency is vital to Shouldice’s ability to grow and hold its current market share,

reduce the growing number of patients on the waiting list, and preserve the integrity of the method by

warding off doctors who attempt to replicate the method (Hallowell, 2005). Below are the

recommendations that will allow Shouldice to make significant progress in its current bed limitations.

There are also some steps that can be taken to improve Shouldice’s process flow and decrease the

hospital’s exposure to potential negative marketing upon refusal to perform surgery – for any reason – on

a patient once they have traveled to the hospital.

Shorten Patient Stay

The hospital is contemplating the addition of a separate wing in an attempt to increase capacity

by 50%. This will require an investment of $4,000,000. While this is probably the most logical solution to

the problem, government regulations regarding private hospitals restrict the number of beds, making it

impossible for Shouldice to expand. Therefore, it is vital for the hospital to make the best use of its

current facility and resources to maximize utilization (Eckhert, 2012). “Under this Act, the number of

patients shall not increase as a result of any alteration or renovation of the house used as a private

hospital” (Private Hospitals Act, 1990). As a result, our first recommendation is that Shouldice look at its

techniques, procedures, and equipment used when performing surgeries, evaluate areas of improvement,
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and make use of new technology or techniques that accelerate the recovery process. This will make it

possible to reduce the length of time a patient needs to stay at the hospital after surgery.

Decreasing the throughput time by eliminating an entire day’s stay for local patients would

immediately increase the number of patients admitted each week. This would only be recommended after

the patients have been observed and thoroughly examined after surgery. Once this process has been

thoroughly tested on local patients and results provide reinforcement of this decision to the surgeons and

board of directors, the implementation can be applied for all patients. Eliminating an entire night’s stay,

without changing anything about the current process, will increase the number of surgeries performed

during the week by 27% (See Appendix G).

This new 3-night stay would require evaluation on a case-by-case basis to ensure that each patient

is approved for early discharge. The hospital doesn’t want its quality of surgical outcomes to decrease so

it would have to assess and confirm that this pilot group of patients stayed within current guidelines

before implementing this practice as a standard operating procedure. It is very important to protect the

quality of the procedure. The hospital must also consider the method of travel and distances for patients

coming from outside of Ontario to have surgery. The initial length of stay was set as such for a reason, but

if the reason was to provide caution and few problems have occurred on the patients’ last full day at the

hospital, there is no reason why releasing the patients a day early cannot be explored.

Dr. Degani has been resistant to changes in the procedure, but as technology changes, the hospital

would be at a disadvantage to not follow suit and use any efficiencies that can be achieved by shaving

time off of the patients’ stay. Dr. Degani is close to retirement, and Dr. Byrnes Shouldice is looking

forward to making improvements (Hallowell, 2005). The administration will have to convince Dr. Degani

that these changes are a necessity for the future well-being and mission of the hospital. He will have to be

directly involved in supervising the new procedure as he brings an abundance of experience and wisdom

vital to Shouldice’s success. There may be some push back from the other staff/surgeons as well because

everyone has become comfortable with the current method and process and a new one will have to be

learned. This will result in added costs as well. The new method will need to be explained to patients as

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the new method is being tested and going forward after the new process is fully implemented. It is already

protocol for the procedure to be explained to patients, so the most challenge may come from who are

operated on during the initial periods. Getting everyone on board could prove to be challenging.

Shouldice’s mission supports this change because the hospital wants to help as many patients as possible.

For Shouldice, it has nothing or little to do with money and more about returning people to a better

quality of life. Once that is reiterated, it will be easier to get all stakeholders on board.

This recommendation of decreasing the throughput time by eliminating an entire day’s stay was

chosen first because upon satisfactory testing of the new procedure, it will be the most cost efficient and

least disruptive option to the current Shouldice atmosphere. As a result of this new implementation, the

flexibility of the hospital will increase by allowing more patient surgeries to occur which will reduce the

waiting list that is continuously growing. It would also decrease the hospital’s costs, as it would realize

the same result in less time. The patients would require one day less of any resources they currently use

during a hospital stay. Shortening the stay would also allow the patient to get back to a normal routine and

begin to gain confidence in their ability to function normally and independently without the supervision

of hospital staff.

It will require a significant amount of time and dedication from everyone to design and

implement this new process. The surgeons may have to examine patients again at some point before

releasing them, and nurses may be required to do more as well. Initially, this process may be a little tough

as everyone acclimates to a new way of doing things. It may be beneficial for the hospital to consider

hiring a few more nurses to help with the extra workload the new process will add to deter burnout in the

nurses. Although Shouldice has a higher patient-to-nurse ratio than other hospitals, the current process

appears to be fine, and the workload is not as strenuous as it is in other hospitals because Shouldice’s

patients do more for themselves.

Scheduling Improvements: Increase Surgeries

Our second recommendation to Shouldice Hospital’s management team is to increase the number

of surgeries that can be performed per day. We recommend adjusting the scheduling so that all standard
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hernia surgeries are performed on Mondays, Tuesdays, Thursdays, and Fridays. In conjunction with

shaving off a day of the patient’s hospital stay and scheduling only standard hernia operations on the days

mentioned above, the hospital could perform 40 surgeries per day yielding 169 surgeries for the week

producing a 39% increase in number of surgeries per week (See Appendix H). The hospital would then

use Wednesdays to schedule only recurrent or complex surgeries each week. On Wednesdays, the hospital

will be able to perform the fewest number of surgeries due to reaching the maximum number of available

beds. These surgeries require double the amount of time which allows the surgeons to perform more

normal surgeries on every other day surgeries are performed during the week (See Appendix I & J).

In addition to Wednesdays being utilized for recurring surgeries, this will be a busy day for

checking in 40 new patients for surgery on Thursday. This new scheduling on Wednesday allows the

surgeons to be finished with surgeries by 11:00 AM. In fact, new patients can start arriving as early as

9:15 to get their examination because one of the operating rooms will be free at 9:15. Everyone’s day and

activities can get started a little earlier. There can be a few more orientation sessions throughout the day.

The hospital can take advantage of its ability to schedule new patients’ arrival times. Also, the 40 people

who arrived on Monday will be around and most likely be checking out of their rooms. This will allow

patients to talk to more people and get assurance in the procedure and care provided at the hospital.

The hospital’s flexibility will increase but at a cost to the surgeons. However, we do not believe

this will have a lasting negative effect. The waiting list will decline more rapidly, and Shouldice will be

able to retain patients who get impatient and allow other doctors to perform their surgeries. This also

benefits Shouldice because it may not have as many repeat patients who need to have previous surgeries

corrected. By combining the first recommendation with this one, Shouldice’s number of surgeries would

improve significantly. As mentioned before, the number of surgeries performed will increase by 39%.

That is a significant improvement for the hospital as they currently book patients out three and four

months in advance for surgeries. The opportunity costs of losing patients who are not interested in waiting

will decrease as well. As a result of seeing a larger number of patients, Shouldice will be able to realize

more revenue and ensure its position as the market leader for hernia surgeries.

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 Implement Saturday Surgeries

The third recommendation to Shouldice Hospital also impacts the number of surgeries that can be

performed at the hospital during the week. This option is ranked third because it involves implementing

Saturday surgeries. This was not the first recommendation because it is very important to keep the culture

and relationships at Shouldice intact. Saturday surgeries have been a big topic of discussion amongst

employees, and it is not an option every surgeon agrees with or wants to see executed. However, we

wanted to explore the option to see what benefits could be realized if it were to occur.

If the hospital changes nothing else from its current state but adds Saturday surgeries, the number

of surgeries performed would increase by 19% (See Appendix K). Sixty-six patients would already be at

the hospital (33 check in on Sundays and 33 would remain from Thursday admissions), 23 patients could

be admitted on Friday, have surgery on Saturday, and check out on Tuesday morning. The number of

surgeries per week would increase to 145 from 122 from this change alone.

Having evaluated other options, should Shouldice choose to implement Saturday surgeries, it

should do so in conjunction with the first two recommendations. The hospital would realize a 46%

increase in the number of surgeries per week. This is very close to the 50% estimate and goal hoped to be

attained by adding an additional wing to the hospital. This option would allow the hospital to significantly

increase the number of surgeries it can perform. It increases the flexibility and delivery of the hospital and

the service sought by the patients. The hospital can keep its market share and meet customer demand.

While this option yields the most increase of patient surgeries, it is also the option that could cause the

most dissension at the hospital.

While there are advantages to implementing this, there are also disadvantages. The surgeons lose

some of their flexibility with the implementation of Saturday surgeries. The hospital’s overhead costs

would increase with this change. More staff would be required during the weekend, and they would have

to be compensated for the extra day of work. The hospital would have to consider if there is money in the

budget to fund this since the Ministry controls the operating fees charged to Canadian patients. There

would only be nine surgeries performed on Saturday, so it is not likely that the revenues earned would
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make up for the additional costs. The hospital could schedule patients from the U.S. on Saturdays and

charge them more for services. Currently, Shouldice’s practice charges non-Canadian patients more than

those who reside in Ontario (Eckhert, 2012). The addition of a Saturday surgery day adds more wear and

tear to the hospital’s infrastructure. The weekends are usually lighter. By changing this, we have to

consider the building’s ability to handle more traffic.

Improve Screening and Maintain Core Competencies

Lastly, we recommend some smaller changes that could make a great difference in improving

Shouldice’s processes and increasing its efficiency. The medical information questionnaire, used for

patients outside of Ontario and Toronto, could be updated and maintained electronically. This would save

on the time it takes for patients to receive the questionnaire and return it. These forms could be filled out

and submitted via Shouldice’s website. We also recommend that each patient who utilizes the mail-in

form sees his or her primary care physician to confirm a hernia diagnosis before he or she travels to the

hospital for surgery. Shouldice should also require the patient see a healthcare professional to verify the

patient’s weight is within the acceptable range three days before the surgery date if the patient was given

instructions to lose weight prior to surgery. This recommendation is not last because it is of least

importance, but because it is probably going to impact the number of patient surgeries the least.

Currently, patients can arrive for scheduled surgery and be refused surgery. Not only does this

leave the hospital open to a lawsuit if a patient travels far distances and is prevented from receiving the

surgery, but also the current procedure prevents the hospital from being able to perform surgeries on

100% of the patients who arrive because the possibility exists that they are not good candidates. It also

damages the free marketing and goodwill Shouldice receives from its patients’ recommendations. No

patient should arrive at the hospital and not be a candidate for surgery. In addition to a pre-surgery

certification, Shouldice should also require a patient obtain and submit a copy of their medical records to

confirm there are no serious health problems that would prevent the surgery from occurring. These are

safeguards for the hospital’s interest.

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 By implementing these steps, Shouldice increases its quality and efficiency. The hospital is better

able to meet demand by improving its patient intake process and only scheduling surgeries for patients

who are good candidates. See Appendices L – P for the improved process flow chart. Shouldice is also

doing more due diligence in obtaining medical records for long-distance patients. A sophisticated

scheduling system would be a great resource to help improve Shouldice’s current method of scheduling

surgeries and assigning patients with specific surgeons.

We recommend an A and B grouping for surgeons. On days that 40 surgeries occur, groups A and

B will rotate the morning and afternoon surgery shifts. While one group is performing surgery, the other

group can exam incoming patients and vice versa. The most experienced surgeons in groups A and B can

rotate weeks on Wednesdays and also check in/examine arriving patients when surgeries have been

completed. There is no need to have more than 5 surgeons at the hospital on Wednesdays. With the

suggested changes in receiving patient information sheets, someone would be responsible for looking at

the medical records and receiving/confirming preliminary results from a physician prior to surgery, but

this can be done by a nurse at some point during the day. Surgeons can sign off on the files once the

updated information has been added. This adds extra tasks for the nurses and surgeons, but the current

process allows idle time to exist. This idle time can be used to incorporate some of these smaller

improvements that will make a huge impact in improving Shouldice’s current process efficiency.

We also believe that Shouldice should continue to foster the culture that currently exists at the

hospital because it is an integral part of its success. It says a great deal to have a hospital with no turnover

and nurses lining up to join the team. Management fosters an “open door policy” and everyone on staff

knows they are valued. The work-life balance is highly encouraged, and this is what keeps everyone who

works at Shouldice motivated and dedicated to the hospital’s mission.

COURSE OF ACTION

We believe Shouldice should combine recommendations one, two, and four, which include

decreasing throughput time by eliminating one night’s stay, increasing the number of surgeries by

adjusting the scheduling of standard and complex cases, and improving the efficiency of the screening
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process by requiring the patient to verify diagnosis and compliance with pre-surgery instructions. This

combination helps the hospital achieve its goal of increasing the number of patient surgeries given the

restriction on the number of beds available. It also allows the culture to remain relatively unchanged by

keeping what’s good and working well, but also improving some areas that make the hospital more

efficient and its techniques more modern. The Shouldice method was invented in the 1930’s and 1940’s,

and a lot has changed that could make the method significantly better. A combination of two things should

happen. First, recommendations four, the screening process changes along with maintaining the current

culture, and one, the elimination of one night’s stay, should be evaluated and plans to implement them

should begin immediately.

Shouldice has to improve its patient intake and scheduling as well as maintain the current

company culture and core competencies before any of the other recommendations will work efficiently.

While the number of patients refused for surgery is not astronomical, any amount of refusal does not help

the hospital maximize its utilization of surgeons, nurses, beds, and other resources. In addition, if the

culture is negatively affected, that will directly impact the hospital’s success. One of the main reasons

Shouldice is the market leader in performing hernia surgeries is the exceptional way in which everyone on

staff performs. This is a result of the appreciation the staff receives at Shouldice which is a direct result of

the way management considers them and compensates them for their dedication. Without this important

aspect, Shouldice would not be what it is.

The hospital should aim to have the new patient intake procedures in place within six to nine

months. We believe that is ample time to get this new process going and have the nurses trained in the

new procedure to receive the information and update patient files which surgeons can evaluate three days

prior to the scheduled surgery if necessary. Maybe a follow up call at that time can be made to confirm

the patient’s intention to have surgery. If for some reason a patient canceled, a local patient would

immediately fill the cancellation.

As the screening process is being improved, the surgeons can be planning and designing the

process for a three night stay at the hospital instead of four nights. As mentioned previously, it will take a

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lot of testing and evaluation of different updated techniques, instruments, and supplies to see what works

best to update the current method. Researching new surgical procedures and making updates to the

current method will require the most time and consideration. We recommend the hospital try to have this

implemented in two to three years, but that is only a recommendation. Should it require more time for

assurance in the new procedure, that time should absolutely be taken. No rush decisions should be made

in this very delicate process change from four nights to a three night stay.

Upon certifying the new process, the hospital should have the 40 surgeries per weekday (except

Wednesday) implemented within three months of the three night stay becoming standard for all patients.

The goal of each change is to increase the hospital’s flexibility and through-put by allowing more

surgeries to occur each week while carefully preserving the quality and taking advantage of areas to

achieve cost efficiencies. We anticipate a period of time when all of these changes are being tested and

occurring before everything is fully implemented, and we encourage the hospital management to keep the

staff motivated and looking toward the long-term goals these changes will accomplish.

RESULTS AND OUTCOMES

The bottom line starts with results and outcomes of the process. With the help of common

measurement techniques we could measure results through productivity, linear programming, process

performance metrics, capacity utilization and forecasting.

Productivity ranges from efficiency to effectiveness, rates or turnover and absenteeism, to output

measures, customer satisfaction, and intangibles such as morale, loyalty and job satisfaction. Specifically,

we can use productivity measurements to measure both technical and managerial sides of the business.

Through productivity measurements, we can measure the efficiency of our production and how well our

resources are being used. For instance, we can look at the number of surgeons and nurses being used per

surgery patient. This will help hospital staff to determine whether or not they are best utilizing the

surgeons and nursing staff at Shouldice.

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 Linear programming is the chosen method for determining a way to achieve the best outcome

given the constraints. This method can be used to further look at aggregate sales and operations planning

as well as for scheduling of surgeons, nurses and patients. Linear programming can be used for inventory

control, predicting how much of each surgical tool / kit to have onsite each day. When looking at linear

programming, we can request a level strategy, which seeks to produce an aggregate plan that maintains a

steady production and employment level (Inman, 2012). In order to satisfy changes in demand, the

hospital must hire or fire surgeons and nurses in anticipation of increased or decreased levels of

forecasting demand. The hospital can also maintain a level workforce and steady rate of output when the

demand is somewhat low. We believe this will keep morale high and efficiency intact.

Process performance metrics can also be used to measure our successes. We will be able to look

at the throughput time (average time it takes a patient to move through the system), and determine if this

can be decreased or improved. The first step in developing the performance metrics is to involve the

people who are responsible for the work, to be measured. This ensures the process, because the

employees are the most knowledgeable about the work. Once these people are identified and involved, it

is necessary to: identify critical work processes and customer requirements, identify critical results

desired, develop measurements for critical work processes or results, and finally, establish performance

goals, standards, or benchmarks. We will also use the SMART test to provide a quick reference along the

way to determine the quality of a particular performance metric.

Capacity Utilization, another measurement technique can be applied to measure the actual outputs

used to the potential that could be produced. With this method we can measure the number of beds we are

actually using compared to the total number of beds available at Shouldice. Shouldice currently has a ten

percent deny/ no-show rate each day; therefore we can use this measurement to find the best operating

level for the hospital. Forecasting and exponential smoothing can also be used to forecast the number of

patient visits, number of staff needed and quantities of supplies.

By implementing these changes, Shouldice can ensure its continued success and position as the

market leader for hernia operations, while at the same time significantly increasing the number of

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operations it can perform and decreasing the threat of other hospitals stealing its “waitlisted” patients.

Perhaps most importantly, this can all be done while maintaining the excellent corporate culture which

has led to high job satisfaction amongst its employees due to the wonderful work-life balance it allows,

ensuring the continued high quality of service Shouldice patients receive.

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Works Cited

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p24/latest/rso-1990-c-p24.html. Retrieved Month 7, 2012, from www.canlil.org:
http://www.canlil.org/en/on/laws/stat/rso-1990-c-p24/latest/rso-1990-c-p24.html
2. Eckhert, D. (2012, March 1). Shouldice Hospital Administrator. (K. Groga, Interviewer)
3. F. Robert Jacobs, R. B. (2011). Operations and Supply Chain Management (Vol. 13th). New York, New
York: McGraw-Hill/Irwin.
4. Hallowell, J. H. (2005, January 21). Shouldice Hospital Limited (Abridged). Harvard Business School
Case . Ontario, Ontario, Canada: Harvard Business Reveiw Publishing.
5. Hospital, S. (1996, January 1). Retrieved March 10, 2012, from www.Shouldice.com:
www.shouldice.com
6. Inman, R. A. (2012, January 1). Reference for Business. Retrieved March 3, 2012, from Reference for
Business Encyclopedia of Business, 2nd ed.: http://www.referenceforbusiness.com/management/A-
Bud/Aggregate-Planning.html#b
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