CASE ANALYSIS: SHOULDICE HOSPI

CASE ANALYSIS: SHOULDICE HOSPITAL LIMITEDExecutiveSummary:TheShouldice Hospital, Ontario, Cana
da is a pioneer in the field of treating patients suffering from external abdominal hernia. The spee
dy ambulation coupled with its reasonable price rates leads to satisfied patients publicizing the ho
spital by word of mouth.The issues that confront the hospital management are:·Deciding on ways to
meet the backlog of operations, by expanding the hospital’s capacity, while still maintaining contro
l over the overall quality of service delivered.·Handling piracy and bad mouthing due to piracy.·S
election of the next chief surgeon after Dr.Obney.After analyzing various plans of actions, it is
proposed that the capacity of the hospital be increased by scheduling the operations on Saturdays al
so. At the same time a successor to Dr. Obney must also be selected. This solution seems like the mo
st feasible in terms of cost and time and also leverages the existing strength of the hospital in pr
oviding quality services to the patients.To implement the solution discussed above, first of all,
awareness must be created among all the employees by means of workshops etc., about the urgent need
for such a step to expand capacity. The selection of the new chief surgeon must be done by carefully
scrutinizing all the surgeons in the hospital as well as interviewing new candidates for the same.
The administrative processes in the hospital must be made computerized to improve their efficiency.
Proper training for using them must also be imparted to the employees.If it is not possible to inc
rease capacity beyond a certain limit due to the above plan and the backlog list continues to expand
, then opening an additional facility in some other geographical location, such as the US of A may b
econsidered.Situational Analysis and Problem Definition:TheShouldice Hospital, Ontario, Canada
is a pioneer in the field of treating patients suffering from external abdominal hernia. With its cu
rrent capacity, it can treat 6850 patients annually.The patients are treated using the operated up
on using the Shouldice Method, and on an average each patient has to spend four days in the hospital
recuperating. The USP of the Shouldice Hospital is its distinct surgical procedure. The speedy ambu
lation coupled with its reasonable price rates leads to satisfied patients publicizing the hospital
by word of mouth.The hospital is having a successful run as a niche player catering to the demand
for treatment of hernia patients. In spite of this, there is a huge backlog that the hospital needs
to meet. Because of an increasing backlog, patients tend to go to other doctors for operations.The
issues that confront the hospital management can be primarily listed as follows:·Deciding on ways
to meet the backlog of operations, by expanding the hospital’s capacity, while still maintaining con
trol over the overall quality of service delivered. The primary issue here is deciding on the manner
in which the capacity should be increased without diluting the quality of service rendered.·The i
ssue of piracy and bad mouthing due to piracy are also important concerns for the hospital. Many cli
nics or doctors claim to use the Shouldice technique or the Canadian method and in the eventuality o
f the operation performed by them being unsuccessful it brings a bad name to the Shouldice Hospital.
·The next chief surgeon after Dr.Obney, who is due to retire soon, has to be selected. At the same
time, retaining the existing talent pool of doctors and attracting newer doctors willing to learn t
he specialized hernia operations skill is also a primary issue.Long Term and Short Term Objectives
:Short term:-To clear the backlog by increasing capacity of the hospital services.-To select a su
ccessor for Dr. Obney, the chief surgeon who is to retire soon.Long term:-To sustain quality in t
heir services, ensuring good patient experience.-To remain the leader in the medical field of herni
a operations.-To maintain the brand equity associated with the specialized technique of Shouldice M
ethod for performing hernia operations.-To ensure working towards goal of profitability while at th
e same time serving the society by passing on the proper knowledge of the Shouldice technique to oth
ersurgeons.Evaluation Criteria:-Whatever step is taken, it must ensure that there is no dilutio
n in the quality of the services rendered by the hospital.-The action plan implemented must adhere
to the government regulations regarding the profitability of hospitals.-The solution implemented mu
st be economically viable. Hence any step taken must be cost effective.-There is an atmosphere of c
oncern for the employees in the hospital. The decision with regard to the issues at hand must ensure
that the employees are receptive in accepting that decision.-The existing strengths of the hospita
l setup must be leveraged in any decision taken.-Also because of the increasing wait lists of patie
nts to be attended to, it must be ensured that the plans be implemented as swiftly as possible.Alt
ernatives:1.Capacity of the hospital could be expanded by scheduling operations on Saturdays also,
leading to a 20% increase in existing capacity.2.An additional floor of rooms could be added to th
e hospital, with an investment of $2 million and permission from the provincial government. This wou
ld expand the number of beds by 50% and result in scheduling the operation rooms more heavily.3.Exp
ansion into other geographical locations such as the United States could be undertaken. For having a
quality level in the new facility equivalent to that as in the current Hospital facility at Canada,
one option maybe to transfer 6 of the 12 specialized surgeons to the new facility. Also diversifica
tion into other related medical fields of surgery such as eye surgery, varicose veins, and hemorrhoi
ds is possible.4.Another alternative could be scheduling operations at other times during the day t
oo, by utilizing the capacity of the operation theatres to the optimum level. This can be implemente
d by having doctors and other medical staff to work in shifts.5.The successor to Dr. Obney as Chief
Surgeon has to be selected. The selection of such a candidate should preferably be done among the e
xisting doctors in the hospital. In case a specialized doctor from outside is appointed, proper indu
ction to acquaint the existing surgeons must be carried out.6.Currently the hospital’s services are
not being marketed. Plans to adequately market them in order to create awareness of the genuine Sho
uldice method of surgery should be undertaken. This would also aid in protecting against privacy to
anextent.Evaluation of alternatives:1.Increasing the capacity by scheduling Saturday operatio
ns is a swift and cost effective solution (See exhibit 2 and 3). No additional capital expenditures
need to be incurred to carry out this plan. It does not violate any government regulations and at th
e same time also leverages the existing strength of the hospital in rendering high quality services
to the patients. However, some employees seem to have some reservations about operations on Saturday
.2.This plan involves an additional capital expenditure of $ 2 million. While this would lead to an
increase in capacity of the number of beds by 50%, but it would also require additional well qualif
ied surgeons who will be able to carry on the quality tradition at the Shouldice Hospital. Also this
solution would take some time to implement.3.The plan of expanding the capacity by moving into ano
ther geographical segment such as the United States, involves extensive capital expenditure in setti
ng up a new facility. Also by dividing half of the specialized staff into the two respective facilit
ies, the quality levels may not remain same for the initial span of time. Since we are looking at th
e United States as an alternate the government regulations of Canada would not be applicable. This p
lan would be beneficial in meeting the demand in the US of A of the 42% American patients of the Sho
uldice Hospital. By diversifying into other medical fields of surgery, the low cost and high quality
advantage, which the Shouldice Hospital currently enjoys, will be diluted. Currently the patients a
re made to become self sufficient soon after the operation.4.By implementing the shift system, the
existing strengths of the hospital will be leveraged. This is similar to the plan 1 in terms of the
expenditure involved and the time frame being talked of. However, under the given case facts, the em
ployees might resent this move of working in extra shifts during the day.5.The selection of a succe
ssor to Dr. Obney is a step that must be taken soon, in conjunction with any of the above plans chos
en.6.Marketing the services of the hospital, though would lead to an increased awareness of the aut
henticity of the Shouldice method, while exposing the piracy in the method, but at the same time it
will also lead to an increased number of patients wanting to come to the hospital. The backlog list
would continue to increase.RecommendedSolution:After analyzing all the alternatives I would prop
ose a combination of plans 1 and 5 to be implemented. The operations should be scheduled on Saturday
s also (see Exhibit 1). At the same time a successor to Dr. Obney must also be selected. This soluti
on seems like the most feasible in terms of cost (see Exhibit 2 and 3) and time and also leverages t
he existing strength of the hospital in providing quality services to the patients.Plan of Action:
To implement the solution discussed above, first of all, awareness must be created among all the em
ployees about the urgent need for such a step to expand capacity. Workshops for the same will help d
ispel any fears in the minds of the existing staff. The selection of the new chief surgeon must be d
one by carefully scrutinizing all the surgeons in the hospital as well as interviewing new candidate
s for the same. The administrative processes in the hospital must be made computerized to improve th
eir efficiency. Proper training for using them must also be imparted to the employees.Contingency
Plan:If it is not possible to increase capacity beyond a certain limit due to the above plan and th
e backlog list continues to expand, then plan 3 may be considered. This would need some capital expe
nditure but at the same time will help us expand our capacity into another geographical location, i.
e., the USA.Information Adequacy Issues:There is insufficient amount of information given in the
case about the internal dynamics of the hospital vis a vis the issue of the successor to Dr. Obney.
Also no information is forthcoming about the market status of other hospitals, that is whether they
are open on Saturdays or not. This bit of information is likely to hasten our decision making proces
s.EXHIBITSExhibit1 : Average Cost borne by patientCharges for 4 day hospital stay= $111 per da
ySurgical fee = $450Fees for Assistant Surgeon = $60Fees for Anesthetic= $75(assuming all patien
ts use anesthetic)Total cost excluding hospital stay = 450+60+75= $585Total Cost borne by patien
t per day = 585/4 + 111= $257.25Total Cost borne by patient over four days = $1029(assuming patie
nt takes our days for recovery)Exhibit 2 : Average Cost per patient borne by the ShouldiceHospit
alBudget for operating costsFor hospital= $ 2.8 millionFor clinic = $ 2 millionTotal budget fo
r operating costs= $ 4.8 millionTotal number of operations performed in 1982 = 6850Hence Average
Cost per patient borne by the hospital = $ 4.8 million / 6850 = $ 701Exhibit 3 : Net profit increa
se using proposed solutionNet profit per patient = 1029 – 701= $328By working on Saturdays we
are increasing the working days by 52.No of operations per year = 6850No of working days per year
= 261Hence, number of operations per day= 6850/261= 27Hence net profit increase per year = 328 *
27 * 52= $ 0.46 millioncase analysis shouldice hospital limited executive summary shouldice hos
pitalontariocanada pioneer field treating patients suffering from external abdominal hernia speedy
ambulation coupled with reasonable price rates leads satisfied patients publicizing hospital word m
outh issues that confront management deciding ways meet backlog operations expanding capacity while
still maintaining control over overall quality service delivered handling piracy mouthing piracy sel
ection next chief surgeon after obney after analyzing various plans actions proposed that capacity i
ncreased scheduling operations saturdays also same time successor obney must also selected this solu
tion seems like most feasible terms cost time also leverages existing strength providing quality ser
vices patients implement solution discussed above first awareness must created among employees means
workshops about urgent need such step expand capacity selection chief surgeon must done carefully s
crutinizing surgeons well interviewing candidates same administrative processes made computerized im
prove their efficiency proper training using them imparted employees possible increase beyond certai
n limit above plan backlog list continues expand then opening additional facility some other geograp
hical location such considered situational analysis problem definition shouldiceontariocanada pion
eer field treating suffering from external abdominal hernia with current treat annually treated usin
g operated upon using method average each patient spend four days recuperating distinct surgical pro
cedure speedy ambulation coupled with reasonable price rates leads satisfied publicizing word mouth
having successful niche player catering demand treatment hernia spite this there huge backlog that n
eeds meet because increasing tend other doctors operations issues confront management primarily list
ed follows deciding ways meet expanding while still maintaining control over overall quality service
delivered primary issue here deciding manner which should increased without diluting service render
ed issue piracy mouthing important concerns many clinics doctors claim technique canadian method eve
ntuality operation performed them being unsuccessful brings name next chief surgeon after obneyreti
re soon selected same time retaining existing talent pool doctors attracting newer willing learn spe
cialized skill primary issue long term short term objectives short term clear increasing services se
lect successor retire soon long sustain their services ensuring good patient experience remain leade
r medical field maintain brand equity associated specialized technique method performing ensure work
ing towards goal profitability while serving society passing proper knowledge technique other surgeo
ns evaluation criteria whatever step taken ensure there dilution rendered action plan implemented ad
here government regulations regarding profitability hospitals solution implemented economically viab
le hence step taken cost effective there atmosphere concern employees decision regard issues hand en
sure receptive accepting decision existing strengths setup leveraged decision taken because increasi
ng wait lists attended ensured plans implemented swiftly possible alternatives could expanded schedu
lingsaturdays leading increase additional floor rooms could added investment million permission fro
m provincial government this would expand number beds result scheduling operation rooms more heavily
expansion into geographical locations such united states could undertaken having level facility equ
ivalent current facility canada option maybe transfer specialized surgeons diversification into rela
ted medical fields surgery surgery varicose veins hemorrhoids possible another alternative times dur
ing utilizing operation theatres optimum level having medical staff work shifts successor selected s
election candidate should preferably done among case doctor outside appointed proper induction acqua
int carried currently being marketed plans adequately market them order create awareness genuine sur
gery should undertaken would protecting against privacy extent evaluation alternatives saturdayswif
t cost effective exhibit additional capital expenditures need incurred carry plan does violate gover
nment regulations leverages strength rendering high however some seem have some reservations about s
aturday involves capital expenditure million would lead increase number beds require well qualified
will able carry tradition take implement expanding moving into another geographical segment united s
tates involves extensive capital expenditure setting dividing half staff respective facilities level
s remain initial span since looking united states alternate regulations applicable beneficial meetin
g demand american diversifying fields high advantage which currently enjoys will diluted currently m
ade become self sufficient soon implementing shift system strengths will leveraged similar terms exp
enditure involved frame being talked however under given case facts might resent move working extra
shifts during conjunction above chosen marketing though lead increased awareness authenticity exposi
ng lead number wanting come list continue recommended analyzing alternatives propose combination sch
eduledsaturdays exhibit seems like most feasible terms exhibit leverages strength providing action
implement discussed first created among about urgent need workshops help dispel fears minds staff do
ne carefully scrutinizing well interviewing candidates administrative processes made computerized im
prove their efficiency training imparted contingency beyond certain limit list continues then consid
ered help another location information adequacy insufficient amount information given internal dynam
ics information forthcoming market status hospitals whether they open likely hasten making process e
xhibits average borne patient charges stay surgical fees assistant fees anesthetic assuming anesthet
ic total excluding stay total borne total borne over four days assuming takes days recovery average
budget operating costs million clinic budget operating costs performed hence profit proposed profit
working year year hence profit yearEssay, essays, termpaper, term paper, termpapers, term papers, bo
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help, download essay, download term papers

– 1501 –
IMPROVING HOSPITAL OPERATIONAL EFFICIENCY BY APPROPRIATE
CAPACITY COMPARISON
Sanjeev K Bordoloi
Associate Professor of Operations Management
Opus College of Business
University of St. Thomas
1000 LaSalle Ave.
Minneapolis, MN 55426
Ph: 651/962-4132
sbordoloi@stthomas.edu
ABSTRACT
Healthcare executives and managers are always searching for better ways to improve production
capacity for medical treatment and thereby improving operational efficiency. This paper offers
an effective technique to compare capacities of different types of resources within a single
hospital system so that appropriate system capacity can be derived in order to improve system
efficiencies in healthcare systems and add value of care provided. It identifies the bottleneck
resources that are not very obvious in traditional methods. It also offers managerial insights to
this common situation in many hospitals that always scramble to find more capacity.
Key words: capacity, bottleneck, optimization, demand management, healthcare.
INTRODUCTION
Service capacity is a perishable commodity. Once an event is over, the revenue generating
capability is lost forever. For example, a hospital with vacant beds loses the opportunity of
generating revenue from admitting the potential additional patients for a specific day, even
though the same beds may be utilized the next day. Contrary to this, physical products can be
stored in a warehouse for future consumption. Service is an intangible personal experience that
cannot be transferred from one person to the other. Service is produced and consumed
simultaneously. Thus, whenever demand for a service drops below capacity to offer the service,
it results in idle servers and facilities. Variability in service demand is quite unpredictable.
These variations of service demand create periods when the servers are idle and, on other times,
consumers have to wait.
Because of some of these reasons, it is more challenging to plan for capacity in services than in
manufacturing. Healthcare executives and managers are always searching for better ways to
improve production capacity for medical treatment and thereby, improving operational
efficiency. Many times, capacity in a health care organization is a vague, hard-to-measure
concept which varies over time and with local economic conditions. In any hospital, resources
are limited and they are mostly dissimilar in nature. This dissimilarity nature of capacity for
different forms of resources makes the comparison of capacities very important to determine the
exact capacity of the system taken as a whole. Inappropriate capacity comparison would lead to
inaccurate system capacity, resulting in inefficiencies in the system – observed in excessive
– 1502 –
waiting, poor capacity utilization across different resources and poor bottleneck management.
Consequently, when capacity management is done properly, it could lead to lean service models
in healthcare by minimizing all the wastage and inefficiencies mentioned above.
This paper addresses this issue of dissimilar resources and offers methods to compare capacities
of different types of resources within a single system so that appropriate system capacity can be
derived. This would help improve system efficiencies in healthcare systems and add value of
care provided.
Objectives:
The objectives of this paper are two-fold:
1) Considering the limited resources, find an optimal way to treat the maximum number of
patients in order to maximize efficiency.
2) Explore operating strategies that can increase overall capacity utilization by better
matching supply and demand for services.
Managing Capacity:
The healthcare industry has been investigating different strategies to manage capacity with a
view to enhance efficiency and productivity, which can add value of the service provided. Some
of the common methods that generic service companies apply can also be applied by the
healthcare industry (Fitzsimmons and Fitzsimmons 2006). These methods include daily work
shift scheduling (for doctors and nurses), increasing customer participation (patients’ share of
responsibilities), creating adjustable capacity (adjustable physical resources such as rooms and
beds), sharing capacity (with other services), cross-training employees (nurses and staff), parttime
employees (floating staff), etc.
Some of these methods have found varied degrees of success. These capacity management
strategies can be reasonably successful when handled one resource at a time. But when a facility
is operating with multiple bottleneck or near-bottleneck resources, the capacity management
becomes increasingly complex. This paper addresses this complex issue of capacity
management with multiple critical resources in a hospital.
Managing Demand:
While it is common to attempt to manage capacity, which is internal to a service provider
(supply side) with the thinking that demand is external and therefore not controllable by the
provider, increasing number of service firms today are also addressing the demand side of the
equation. These demand management strategies attempt to influence the consumer behavior in a
way so as to suit the desired operations of the service firm. Some of the demand management
strategies include, demand partitioning (walk-in vs. appointments), offering price incentives (two
for the price of one), promoting off-peak demand (off-season surgery discounts), developing
complementary services (keeping customer flow going), overbooking and “no-show
management”.
– 1503 –
This paper would address primarily the supply side of the capacity management issues directly
and address the demand side only indirectly, while acknowledging the importance of both. This
paper aims at exploring operating strategies that can increase overall capacity utilization by
better matching of supply and demand for services.
CAPACITY MANAGEMENT IN HEALTH CARE
Healthcare executives and managers are always searching for better ways to improve hospital
operational efficiency and the subsequent value of care to patients. Treatment capacity in a
health care organization does not have a clear, universal definition. The term “capacity” is
generally used to refer to the sustainable maximum output that is produced in an organization,
depending on factors such as labor and technology availability.
The health and social care systems have become more streamlined and have been operating
closer to capacity; thus, coping effectively with seasonal pressures presents an increasingly
difficult challenge. Pressure put on the availability of acute beds caused by rises in emergency
admissions can result in the refusal of emergency admissions, the premature discharge of
existing patients, the cancellation of elective admissions and operations and hence potential rises
in hospital waiting lists and times.
In any hospital, resources are generally limited. Considering the limited resources, it is essential
to find the optimal way to admit patients in order to maximize efficiency and productivity, and
thereby, patient throughput. This could directly affect the bottom line – maximizing revenue or
profit.
Typically the resources in any hospital are: doctors, nurses, operating rooms, waiting rooms,
number of beds, laboratory, etc.
The variables that are also critical in defining the capacity of these resources are
1. Number of surgeries per doctor per day that can be performed
2. Hours of operations in a day
3. Average stay of a patient
4. Days of the week for operations
Most of these resources are expensive for a hospital to maintain and one of the major problems is
to be able to maximize the utilization of each of these resources. One of problems commonly
faced while trying to maximize utilization and throughput is the difficulty in comparing
capacities of different types of resources and identifying the bottleneck. When any single
resource’s capacity is increased, the bottleneck seems to shift to another resource. Similarly, if
we increase the capacity of this bottleneck resource now, a brand new bottleneck may appear
elsewhere. It is very difficult to find a balance in the resources where each one of them is
performing to maximum capacity and thus the resources as a whole generate the maximum
throughput for the entire system.
PROBLEM STATEMENT IN OUR SITUATION
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The situation taken up in this paper is a conceptual case, but has been carefully created after
studying several hospitals across the nation for comparable operations. In an academic setup,
some parallelism can also be drawn with the Shouldice Hospital case (Haskett 2003). We define
our base case as follows:
• number of doctors = 12
• number of surgeries/doctor/day = 3
• operating rooms = 4
• operating room (OR) hours/day = 9
• beds available = 100
• average length of stay per patient = 3 days
• five days of surgery per week operating schedule
In a “state” formulation, we define any operating state as:
[# doctors, # surgeries/doctor/day, # OR, OR hours/day, # beds, average length of stay, # days
/week surgery is done];
The base case, then, can be written as:
[12, 3, 4, 9, 100, 3, 5]
We would take the performance measurement for our analysis as the weekly throughput, which
is defined as the average number of patients treated in a week. Attempts will be made to
maximize this performance measurement, without sacrificing quality of care.
In the first cut, we observe some interesting results that would establish that the problem needs to
be studied in greater detail.
In order to explain the current hospital capacity management issue in greater detail, let us assign
the following notations to the resources and variables:
Cb: Weekly capacity of beds; Cd: Weekly capacity of doctors; Co: Weekly capacity of operating
rooms
cb: Daily capacity of beds; cd: Daily capacity of doctors; co: Daily capacity of operating rooms
Then,
Cb= p*cb; Cd = p*cd; Co = p*co
where p = number of days operated in a week
The lowest of the above three numbers will represent the bottleneck for the system, and the
system capacity for the week can be represented by,
Min [ Cb, Cd , Co]
For the base case whose state was depicted earlier as [12, 3, 4, 9, 100, 3, 5], let us try to calculate
the weekly capacity of the entire system.
– 1505 –
Weekly capacity of doctors = 12 * 3 = 36/day; 36 * 5 = 180/week
Weekly capacity of OR = 4 * 9 = 36/day; 36 * 5 = 180/week
Weekly capacity of beds = 100 * 5 / 3 = 167/week
Therefore, the calculation of Min [180, 180, 167] would result in a weekly system capacity of
167 patients and beds will be marked as the bottleneck.
This is too simplistic. Several questions can be raised about the validity of the above method:
1) Are the three capacities really comparable as directly as the above method?
2) Is the calculation for bed capacity accurate?
3) What assumptions are implicitly made in this calculation?
4) What other flexibility in scheduling has not been considered?
CALCULATING THE TRUE CAPACITY OF BEDS
Calculation of weekly capacity of beds in this situation is not trivial. For a given 100 beds, five
days a week surgery and an average patient stay of three days, the calculation of 100*5/3 = 167
is, in fact, not the correct method to determine the weekly capacity of the beds. This calculation
is true only if patients are admitted uniformly across the five days of the week. But in reality,
there is no need to impose that constraint to the patient admittance policy. Next comes the real
bottleneck questions – Are the beds the true bottleneck? What is the true capacity of the beds?
To answer these questions, let us consider beds as an independent resource that is unaffected by
other resources. We would like to maximize the weekly capacity (thereby throughput) of the
beds. The only constraints will be: (1) daily available beds of 100, and (2) admittance of Sunday
through Thursday, since there is no surgery during the weekend.
The simple linear programming maximization formulation can be written as:
[P1] Maximize S
=
Thu
n Sun
X n (1)
Subject to,
Daily beds occupied: Bn= Bn-1 + Xn- Dn= 100 (2)
Daily discharges: Dn= Xn-3 (3)
No admittance: XFri= XSat= 0 (4)
where, the decision variables are:
Xn= patients admitted on a given day, with n = day of the week
Dn= patients discharged on a given day, with n = day of the week
Bn= beds occupied on a given day, with n = day of the week
Solving this simple linear programming formulation, we get very interesting results. The
optimal solution would admit 50 patients on Sunday, Monday, Wednesday and Thursday, and
zero patient on Tuesday – for a weekly capacity of 200. This weekly capacity of 200 patients is
– 1506 –
higher than the weekly capacity of doctor and OR at 180 patients. Should we then report that the
beds are not indeed the bottleneck?
Therein lies the central theme of this paper – how do we compare capacities of dissimilar
resources? This question is further complicated in our above case since surgeries are not
performed during the weekend, but patients are allowed to recover through the weekend (e.g.
those who were operated on Fridays, will arrive on Thursdays, stay through the weekend and be
released on Sundays).
In a more detailed report of this research, we have address the above issue in much more depth,
using state consideration, a simulation study, a stochastic formulation and a mean-variance
model. Those results are not reported here due to space limitation.
CONCLUSIONS AND FUTURE RESEARCH
Conceptually, the contributions of this paper are several:
• It offers a general model that can be applied to multiple resource capacity management
situations
• It identifies the bottleneck resources that are not very obvious, going by traditional
methods
• It offers managerial insights to this common situation in many hospitals that always
scramble to find more capacity
• It offers a stochastic extension to capture variability in some of the process parameters
• It provides a platform for developing metrics for performance evaluation of different
types of resources in healthcare
• It also provides the domain to perform simulation studies if an analytical model cannot be
derived
We kept the model developed in this paper at the basic level with the objective being a generic
application. When applied to specific situations, the basic model will be extended to more
complex models to suit a hospital’s specific policies and needs. Overall, the techniques
presented in this paper would help hospitals to increase efficiency of healthcare delivery
(increase throughput) and reduce waste (underutilization of resources), while not compromising
with quality of care, safety and access.
The academic domain of this paper covers the contributions of capacity analysis in the following
four broad categories: (1) Improved operational efficiency – in minimizing excess capacity and
in achieving a smoother utilization of capacities across a service enterprise; (2) Enhanced service
operations strategy – in leveraging capacity utilization in obtaining a higher level of patient
throughput for a given set of resources; (3) Better capacity and demand management – in
aligning capacity allocation with demand pattern of patient arrivals; and (4) Leaner service
delivery process – in minimizing system wastage arising out of poor use of capacities of different
resources across the system.
References available from SanjeevBordoloi at sbordoloi@stthomas.edu
==============================================================================Shouldice Hernia Centre is a hospital in Thornhill, Ontario, Canada, that is known for its specialization in external abdominal hernia operations. Shouldice uses a natural tissue, tension free, technique developed during World War II by Dr. Edward Earle Shouldice. Their ten full-time surgeons perform over 7500 hemiorrhapies each year. The facility, includes an administrative building which looks much like a southern mansion and a hospital wing designed specifically to meet the needs of hernia patients, is purposely comfortable, featuring a 23-acre (9.3 ha) property. Shouldice is a green facility with hot water and cooling systems powered by solar energy. The centre is owned by Shouldice Hospital Limited.
The facility was subject of a 1983 business case by the Harvard Business School. Written by professorJames Heskett, the report is currently the school’s fourth-best-selling business case, selling nearly 260,000 copies. Twenty thousand students at 500 universities worldwide read about the centre annually, as part of their curriculum.
Shouldice launched a website in 1995. Over 300,000 visit the site each year; each year, over 2000 operations are scheduled online, and close to 10,000 emails requesting information are received.
Contents
* 1The process
o 1.1Pre-surgery
o 1.2Surgery
o 1.3Recovery
o 1.4Follow-up
* 2Primary staff
* 3Notable patients
* 4Trivia
* 5Further reading
* 6Notes
* 7External links [edit]The process
[edit]Pre-surgery
Shouldice requires patients to be at an acceptable weight appropriate to their height. Prospective patients who are overweight must bring down their weight to a level appropriate for the surgery. Shouldice states that it improves outcomes and has a full-time dietician on staff to help patients achieve their weight goals with guidance and special diets.
Patients enter the hospital the day before surgery and are given a briefing about the procedures to be followed the next day. The night before the operation is also intended as an opportunity for patients to come to know each other: Shouldice encourages patients to work together to promote recovery.
Doctors from other institutes constitute a disproportionately higher percentage of patients ( doctors from the US needing surgery disproportionately go to Shouldice).[citation needed]
[edit]Surgery
Shouldice doctors normally take 35-40 min. Local anesthesia is used in most surgeries, instead of general anesthesia, as the second is unnecessary in most types of hernia surgeries, and the first is both safer and less expensive. General anesthesia is used when necessary in certain specially scheduled cases. The procedure most commonly used at Shouldice uses no artificial, surgical mesh.
Most surgeries at Shouldice involve re establishing natural anatomic integrity by sewing muscle layers together in an overlapping fashion to repair the hernia defect. The specific technique is often referred to as the Shouldice operation or the Canadian operation.[citation needed]Shouldice states that their complication rates (0.5%) are lower than rates achieved in general hospitals, described in The New England Journal of Medicine, April 2004 Vol. 350, No. 18, 33.4% for open mesh repairs and 39.0% for laparoscopic repairs of hernias.
[edit]Recovery
Unlike many hospitals, Shouldice does not have a “fleet of wheelchairs and gurneys, armies of aides to push them, and banks of wide elevators.”[1] Instead, carpeted floors, low-rise stairs and beautiful grounds are available, encouraging activity. The Shouldice property comprises 23 acres (93,000 m2), with a greenhouse, putting green, sunrooms, pool table, stables, and dining hall. The hospital focuses on patient care, without compromising on speedy recovery.
The landscaped grounds, pool table, and putting green are all intended to encourage patients to be mobile following surgery: to take walks in the grounds and to stretch and bend while playing pool or practising putting. Similarly, there are no television sets or telephones in patients’ rooms and beds have to be adjusted manually. A daily exercise program is also provided. Patient participation in their own recovery program is a corner stone of the Shouldice philosophy.
Patients are scheduled stay in the hospital for two days and three nights following surgery, although those who recover faster may leave earlier, if discharged by a surgeon after examination. In other hospitals the sort of low-risk patients that Shouldice operates on are sent home the same day without overnight hospitalization.
All rooms are double occupancy, and regularly flow through patients. The patient rooms have “low capital investment”-with no phone, television, and minimal medical equipment. Patients are essentially healthy people with a physical defect, which Shouldice cures. Therefore they are not treated as “sick” people but more as clean surgical patients who benefit from professional post operative and specialized care. The double occupancy rooms also provide income to cover costs not covered by the ministry of health in the global hospital budget. These mandatory charges are not covered by public health insurance. Shouldice is not, however, an example of the upper tier of two-tier health care as no patient is turned away because of inability to pay.
[edit]Follow-up
Shouldice sends out a newsletter to all available patients every year. The newsletter includes a questionnaire for Shouldice’s post-operative follow-up program. The program is considered the world’s largest and longest-running follow-up program, having been in place for over 65 years with an average mailing of over 100.000 per year. The post-op is gradually transistioning to e-mail, as much as possible.
Shouldice reports that fewer than 1% of patients have a recurrence after hernia repair. This compares to the 10-15% in normal hospitals.[2] However, given that Shouldice does not perform surgery on patients weighing more than acceptable weight who are at greater risk of recurrence, meaningful comparison with other hospitals is not possible.
Studies carried out outside Shouldice generally show recurrence rates for “Shouldice repairs” (described above) which are higher than the recurrence rates reported by Shouldice, which demonstrates the importance of high volume experience in surgery. For example, a French study[3] of 1,706 repairs performed using the Shouldice, Bassini’s, and Cooper’s ligament repairs found that Shouldice repairs had the lowest recurrence rate, but that the rate was 6.1% after 8.5 years. However, the surgeons performing the repairs in these studies are almost certainly less experienced with this type of repair than Shouldice surgeons. For example, in the French study, fewer repairs were performed over six years than would be performed in about three months at Shouldice.
Shouldice held annual patient reunions for 50 years, which one year attracted 1500 former patients. Reunions have been temporarily discontinued.
[edit]Primary staff
* Byrnes Shouldice, co-owner, president, chairman, former surgeon at the facility
* Germaine Urquhart, co-owner, vice president
* Daryl Urquhart, director of business development and grandson of the founder
* Shelley Shouldice, program coordinator, grandaughter of the founder
* Dr. Cassim T. Degani, MB, BS, MS, FRCSC, FACS, * Dr. Claude Joseph Burul, MD
* Dr. Ram K. Singal, MB, BS, FRCSC
* Dr. Earle Byrnes Shouldice, MD
* Dr. Michael A. Alexander, MB, BS, FRCSC, FACS Chief Surgeon, Shouldice Hospital
* Dr. Chin K. Chan, BS(Hon), MD, CM, CSPQ, DABS, FRCSC
* Dr. Richard T. Sang, MD
* Dr. Keith Slater, MD
* Dr. Rasheed. A. Affifi, MB, ChB, FRCSC
* Dr. N. Ross, MD
* Dr. Dr. Ash Maharaj, MD
* Dr. Dr. Robert Palmer , MD, FRCSC
* Dr. Alberto de la Rocha, MD, FRCSC
* Dr. Peter Kalman, MD, FRCSC, FACS
* Dr. Claude Burul, MD, FRCSC, Assistant Chief Surgeon, Shouldice Hospital

The Shouldice Hospital, which performs only abdominal hernia operations, is so good at what it does, so successful in creating a social experience for its patients, and so relatively inexpensive, that former patients celebrate the repair of their hernias later.

Regina Herzlinger, Harvard Business School, Author “Market Driven Healthcare”
Doing a single procedure and repeating it with high frequency allows you to become a perfectionist.
Dr. M. Alexander, Chief Surgeon, Shouldice Hospital.
1. At Shouldice Hospital, we set high standards. Our surgeons are fully qualified and licensed to perform surgery by the appropriate Canadian authorities. Then they are required to spend up to 6 months of intensive training in the Shouldice Technique to perfect their skills before they are approved to lead a Shouldice surgical team. Only surgeons practicing at Shouldice Hospital receive this training. The Shouldice technique is very detailed and must be practiced in high volumes to ensure consistently superior results.
Most general surgeons will repair 20 to 30 hernias in a year. Shouldice surgeons average over 700 cases a year, which provides the highest level of practice and experience in the world. This is why Shouldicesurgeons are the world’s most experienced leaders in hernia repair.
Surgeons come from around the globe to observe the Shouldice technique. For two or three days, they can watch as the Shouldice repair is performed by Shouldice specialists. However, this is not training. Although many surgeons perform hernia repairs, we cannot offer a training program for them. As a result, we cannot guarantee the quality of any hernia repair said to be a Shouldice repair, when it is performed by doctors outside of our hospital.

* At a glance
*
* About Us
o Our History
o What Experts Say About Shouldice

*
* Hernia Explained
o What is a Hernia?
o How Do You Get a Hernia?
o Hernia Symptoms
o Types of Hernia (Video)
o The Shouldice Repair
o Why is My Weight Important?

*
* The Shouldice Experience
o Patient Stories
o Our Patient Care
o Patient Services
o Our People

*
* Become a Patient
o Arrange for an Examination or Operation
o What to Expect
o Directions
o For Family and Visitors

*
* Frequently Asked Questions
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* For Health care Professionals
*
* Contact Us
o Directions
o Employment

The Centre of Excellence for Hernia Repair
The global leader in external abdominal wall hernia surgery for over 65 years
Top of Form

Bottom of Form
Shouldice at a Glance
* About Us
* The Shouldice Experience
* Shouldice Hospital
* The Shouldice Repair
Shouldice Hospital runs like a very well-oiled machine. All of your medical staff are so polite, knowledgeable and respectful towards the patients and one another. My stay here was so very comfortable and I have every confidence that I was given the best possible care. Thank you so very much for taking such an interest in my recovery.
Ruth – Etobicoke
About Us

Founded in 1945, Shouldice Hospital is The global leader in hernia repair. Our 99.5% lifetime success rate for primary inguinal hernias sets the gold standard for medical professionals around the world.
Shouldice specializes in external abdominal wall hernias.
Successfully repairing over 7000 hernias every year results in a level of experience and expertise unequalled throughout the world.
Over 65 years of clinical evidence clearly demonstrates that the Shouldice surgical procedure is exceptionally safe and the repair is secure and reliable. Our rate of infection, complications and recurrence is less than 0.5% for primary inguinal hernia repairs. This is the lowest recorded rate in the world. walk-in clinic for your convenience. We always recommend that you come to the clinic for an examination, if at all possible. Our surgeons have years of specialized training and experience and are available during clinic hours to provide an expert diagnosis. Our walk-in clinic is available at no direct cost to our patients. If you live more than 1 hour (100 km/60 miles) away from Shouldice, you can submit a medical questionnaire for our surgeons to review.
BACK TO TOP
The Shouldice Experience
Nearly 80% of our patients come to Shouldice because of the positive comments and high level of satisfaction expressed by friends and family treated at our facility.
Hernia patients have travelled from 115 countries around the world to our unique and innovative facility. They know they can trust us to deliver the highest levels of medical and patient care.
Shouldice is located on 20 beautifully landscaped acres, just minutes away from downtown Toronto. The relaxing, resort-like setting helps patients enjoy a healthy recovery.
We offer a complete and holistic recovery program that promotes healing and a rapid return to normal activities.
If a Shouldice surgeon has recommended that you lose weight before your operation, we offer professional diet counselling provided by a registered dietitian. We also have a licensed massage therapist on staff for your comfort and convenience.
Many patients go back to work as soon as they are discharged from Shouldice. Most people return to normal activities within a week after their operation.

As part of our on-going commitment to our patients, we offer a lifetime of support through our annual follow-up program. You have the option of:
* visiting our walk-in clinic every year to have your repair checked by a surgeon,
* responding to our annual follow-up letter or
* visiting one of the travelling clinics we offer for Ontario patients living outside of the Toronto area.
BACK TO TOP
Shouldice Hospital
The facility is licensed by the Ontario Ministry of Health and complies with all requirements of the Local Health Integrated Network, Ontario, Canada.
Shouldice Hospital is equipped with 5 operating rooms and 89 hospital beds.
The 10 full-time surgeons at Shouldice specialize exclusively in treating hernias and are leaders in their field.
All our staff surgeons are licensed by the Ontario College of Physicians and Surgeons and some are also U.S. board certified.
We employ over 160 people at Shouldice. Our staff members enjoy working at Shouldice and it shows! The average length of employment in our hospital is 10 years.

The hospital was founded by Dr. Edward Earle Shouldice in 1945 and is still privately owned and operated. The founder’s descendants, Dr. Byrnes Shouldice and Mrs. W.H. Urquhart and their respective families, continue to take an active role in managing the hospital. Under their guidance, Shouldice has become an internationally respected centre of excellence for hernia repair.
Since 1983, Shouldice Hospital has been featured as an example of focused excellence in the Harvard Business School MBA program.
BACK TO TOP
The Shouldice Repair
The types of hernias repaired at Shouldice include: indirect and direct inguinal, femoral, epigastric, incisional, Spigelian and umbilical.
Almost all 95% of the operations at Shouldice are conducted using only a local anaesthetic, a light (sedative) and a pain pill (analgesic). Additional medication is provided when necessary. This reduces the risk of complications, shortens recovery time and helps make the experience more comfortable.
The chance of a hernia recurring after a repair at Shouldice is less than 0.5% for primary inguinal hernias, based on data collected from over 300,000 operations.

During the Shouldice repair, our surgeons overlap each layer of the abdominal wall, using a technique that puts no tension on the natural tissue. By overlapping these layers of muscle and tissue, we are able to strengthen and reinforce the weak spot where the hernia developed. This gives you a secure, reliable result that minimizes the risk of complications or recurrences.
Most importantly, every surgeon on the Shouldice team devotes all of their professional time, training and expertise to hernia repairs. Every one of our surgeons performs up to 700 hernia operations a year, giving them the experience and skills to expertly manage even the most complex hernia repair. In total, the Shouldice surgical team has performed well over 360,000 hernia operations to date. When it comes to successful hernia repairs, there is simply no substitute for experience.
Founded in 1945, Shouldice Hospital is the world’s leading centre of excellence in abdominal wall hernia repair . Designed exclusively to meet the needs of hernia patients, Shouldice is a fully licensed, 89-bed surgical hospital. Our specially trained surgical teams perform over 7,000 hernia repairs every year, with an unparalleled track record of success.
At Shouldice, we deliver a quality of care to hernia patients that cannot be found anywhere else in the world. Some call it excellence. Here it is called “The Shouldice Experience”.
http://210.212.115.113:81/AK.Dey/OperationsMgmt/OM_Cases/Case-Shouldice.pdf

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Original ScenarioMon Tues WedMonday
30 30 30
Tuesday
30 30
Wednesday
30
ThursdayFridaySaturdaySunday
30 30
Total
60 90 90
Upon adding 30 Operations on SaturdayMon Tues WedMonday
30 30 30
Tuesday
30 30
Wednesday
30
ThursdayFridaySaturdaySunday
30 30
Total
60 90 90
Upon increasing bed by 50%Mon Tues WedMonday
45 45 45
Tuesday
45 45
Wednesday
45
ThursdayFridaySaturdaySunday
45 45
Total
90 135 135
Q 3.b.Ans.
The operation is constraint by the number of operating rooms and the hospital will not be aHowever, if it is assumed that the hospital can perform 45 operations a day when the capathe bed utilization between the current operation and the operation with 50% increased be
Q 3.c.Ans.
The hospital will not be able to perform 45 operations a day.The hospital has a total of 12 surgeons who take 1 hour to prepare for and perform each oThe first operation start at 7:30 and takes about 1 hour. The surgeons day ends at 4 p.m.these fact, the total number of operations that each surgeon can perform per day is 8. Cur
each surgeon performs an average of 2.5 operations a day. If the capacity is increased byeach surgeon will perform an average of 3.75 operations a day, which is a surgeon-hour utapproximately 44%.However, the hospital only has 5 operating rooms. With each operation taking 1 hour to psurgeons being available for 8.5 hours a day, the maximum number of operations that canInorder to perform 45 operations a day, the hospital will need to add an operating room.
Q 4.d.
Ans. Total Cost of Expansion $4,500,000.00Revenue from each additional operation $1,300.00Cost of each additional operation $600.00Profit from each additional operation $700.00Total Additional Operations performed per week 75Assuming 45 operatioAdditional profit per week $52,500.00Payback Period in weeks
85.71wks
Payback Period in years
1.65yrs
Total Additional Operations performed per week 50Assuming 40 operatioAdditional profit per week $35,000.00Payback Period in weeks
128.57wks
Payback Period in years
2.47yrs
Thurs Fri Sat Sun PerWeekTotal Beds
9030
Total Operations
15030 30
Total Surgeons
1230 30 30
Total Bed Capacity (Bed Days)
630
Total Bed Days Used
450
Utilization
71.43%3090 60 30 30
Q 2.a.Thurs Fri Sat SunTotal Beds
9030
Total Operations
15030 30
Total Surgeons
1230 30 30
Total Bed Capacity (Bed Days)
63030 30 30
Total Bed Days Used
540
Utilization
85.71%30
Capacity is Sufficient for additional Patients
90 90 60 60
Thurs Fri Sat SunTotal Beds
13545
Total Operations
22545 45
Total Operations Per day
4545 45 45
Total Surgeons
12
Total Bed Capacity (Bed Days)
945
Total Bed Days Used
67545
Utilization
71.43%135 90 45 45
Capacity is Sufficient for additional Patients
ble to perform 45 operationscity is increased by 50% then-capacity is identical.peration.Givenrently,
50%ilization of rform, andbe performed each day is 40s a days a day
Q. 1Q 2. b.Q 2. c.Q 3. a.
Capacity Utilization and Bottleneck – Shouldice Hospital Case Solution