Shouldice Hospital's capacity expansion and operational challenges

Shouldice Hospital's Activity

Description of the Company and its Environment

Under the name of the doctor who invented a new type of hernia operation, the Shouldice Hospital was one the best in this domain. Its management was assured by the board of directors composed by Dr. Nicholas Obney (Chairman), Dr. Byrnes Shouldice (the son of Earle Shouldice, the discoverer) and his wife, Mrs. W. Urquhart (the sister of Mr. Byrnes) and her husband, Mrs. C. Martin and Mr. Jack Mackay. They kept control over the entire activity of the hospital which was focused only on treating external types of abdominal hernia. First time repairs, also called primaries, accounted for 82% of all operations performed in 1982, the rest of 18% involved patients suffering recurrences from previous reparations made elsewhere.

Because of the good results that were being achieved, the hospital had no reason to begin any advertising campaign, its fame was spread by former patients, by the means of "word of mouth." However, despite the results of utmost quality, the fees charged were low in comparison with other hospitals inside the similar medical sphere.

Recommendations and their Implementation

The main problem is the fact that the hospital lacked in the means of covering the existent demand. Because of this aspect, the institution couldn't even begin a marketing program for fear that they might encounter a demand much too high in opposition to what they could offer. The initiative to have operations on Saturdays was badly received by four older doctors, and embraced by the younger ones. However, their taking of opposite sides was a reason of concern. It might have led to dissensions between the doctors.

The Shouldice hospital is very successful among the persons suffering of hernia problems. This is due to the proficiency of the doctors which work there, the high standards that they respect. The surgeons are employed only after a close interview with Dr. Obney. When selecting them, he takes into consideration the following aspects: they should have experience and a good education. They should develop a pace and a touch; they should be aware of the moments when speed is necessary, or when it is better to go slow. The most important issue is that they repair exactly as told and they ask for help whenever something unusual occurs. On account of their skills, the surgeons perform about 600 hernia operations per year, comparatively with others which complete 25 to 50. Other employees are also important for the service because they establish relationships with the patients, enabling them to communicate and, thus, overcome the situation easier.

The owners know what the patients need and, therefore, they struggle to offer them the best conditions. There is a relationship of friendship between the employees and the patients and even between the owners and patients. They visit them and even have discussions about the way they are treated within the facility.

The customers come because they find out about the exceptional results from former patients. Even though outside doctors do not recommend the facility, many times people have their problem diagnosed by personal physicians and then take the initiative to contact Shouldice. The major difference between Shouldice and its competitors consists of the fact that patients are advised to get off the operation table and take a walk to the post-operating room with the help of their surgeons. They can return to work within a week after the operation if they have a job involving light exercise (opposed to two weeks after an operation performed in a different facility) or within four weeks for a more strenuous job (compared to eight weeks when going to a different facility).

When making suggestions, we should take into consideration the total capacity of the hospital which is of 89 beds. If another floor was added, then the hospital would reach about 134 beds. However, if the surgeons started operating on Saturdays, the capacity would reach 107 patients. I would recommend both of these two approaches on a short-term basis. Even if some doctors do not agree with Saturdays, they can be put on duty only during the former working days, assigning the Saturdays to the employees who are willing to accept. I believe that this is a good approach because the control over the quality can be maintained (by using the same employees or eventually adding only one or two more).

As for the long-term plans, by franchising, the hospital could lose control over the method of practice. Any person could buy the franchise and perform it in a wrong manner, therefore ruining the fame that it relies on. Many unskilled doctors could franchise, leading to the loss of control over the quality of the services provided. However, I don't believe there is too much risk involved in opening another unit. Dr. Shouldice could supply training programs only to the employees selected under his surveillance. He could supervise their activity and make sure of their appliance of the proper methods and their maintaining of the standards.