Service Management of Shouldice Hospital Limited - Case Study Example

Case study: Shouldice Hospital Limited Case study: Shouldice Hospital Limited Overview James Heskett a at Harvard University carried out a case study and showcased Shouldice Hospital as a model of business excellence. The hospital is specialized in hernia repair. The hospital began in 1945 (James & Mona, 2006). The pioneer was Dr. Earl Shouldice. The location of the hospital is Thorn hill, about 15 miles north of Toronto. At the beginning, the hospital had a nursing home with a capacity of six rooms (James & Mona, 2006). The bed capacity later increased from 36 to 89. Dr. Shouldice died in 1965, and the facility was taken over by Dr. Nicholas Obney. Dr. Obney became the chairman and the surgeon-in-chief of the institution. Under the leadership of Dr. Obney the hospital started to operate both hospital facilities and clinical facilities. The hospital generally follows the business model of focus on a single standardized service (James & Mona, 2006). This enables the hospital to have a narrow target of clients. Quick, convenient, and reliable cure for external types of abdominal hernias is the main operation line for the hospital. The institution uses its own technique of enabling a relatively short period of recovering after undergoing an operation (James & Mona, 2006). This technique is called the Shouldice method. The basis of this technique was the incorporation of operative and posts operative processes, for instance, using local anesthetics, the nature of the operation process, the design of a facility to enable comfortable movement, and design and communication of the regimen by the medical staff. This communication enabled early ambulation. This whole process has cut down number of days a patient would stay in hospital. To the patients this was the most affordable option (James & Mona, 2006). The success of Shouldice Hospital has been largely contributed by oral publicity from patients who have once had the experience of the hospital. The hospital has a reputation of offering the cheapest hernia surgery (James & Mona, 2006). Strategy of operation and efficiency Uniqueness Shouldice Hospital has been in operation for over half a century. The team of staff at Shouldice has some specialized training making the hospital unique. More than 300,000 patients have been operated by the surgeons at the hospital. The success rate of operation at the hospital has been more than 99%. Operations of primary inguinal indirect hernia by the surgeons at the hospital are almost 100% (Heskett, 1987). Experience of the Doctors The hospital boosts of twelve surgeons who work on a full time basis. There are eight assistant surgeons working on a part time basis. The operations are carried in teams (Heskett, 2009). Each operation team comprises of four members. These are a senior surgeon, an assistant surgeon, a scrub nurse, and a circulating nurse. Experience of the nurses According to Heskett (2009), total of thirty four nurses are usually on duty at the hospital in a period of 24 hours. The number of nurses available in the facilities during the periods when no operation is in progress is six. These usually carry out counseling to the patients. Work distribution The number of operations carried out in a single day ranges between thirty patients to thirty-six patients (Heskett, 2009). The number of patients that a surgeon can operate in a day is three or four at most. A surgeon on day shift ends his or her day at 4 p.m. Hospital facilities The institution operates two facilities namely hospital and clinic in one building. The compound at the institution is divided into three levels. Level one comprises of the kitchen facilities and the dining room. The second level is composed of lounge area, an office for admission, and rooms for patients. The third level in the compound consists of additional rooms for patients and recreational areas (Heskett, 1987). How the hospital operates. The facility deals with two kinds of patients. These are local patients and patients coming from outside the town. The local patients are diagnosed on the basis of walk-in while out of town patients are diagnosed by mail. The results of the diagnosis always determine the progress of the next stage. If the results show that no operation is required, then the patient is rejected. A patient whose results have shown a need for an operation is usually taken to the next stage, which is an admission into the hospital. After the admission stage, the patient is taken for surgery after which he or she is put under post operation care for two days and then dischared on the fourth day (Heskett, 2009).. Booking services Personal check up is carried out on clients living within a radius of 100 km from the hospital. Examination hours are 9:30 am to 3:30 pm from Monday to Friday. During these five days there is no appointment needed for walk-in-clinic. On Saturday, examination is done on appointment only from 10 am to 12 pm. For patients who live far (beyond 100 km radius) from the hospital and wish to undergo all the processes (examination, admission and operation) in one visit, they fill in two questionnaires and send them to the hospital. The hospital staff then replies the questionnaires via mail. The contents of the reply are usually a surgeon’s review on the information and details of appointment given to the patient (Aguayo, 1991). Admission process before operation. The patient undergoes examination by the surgeons for a period of between 15-20 minutes. The patient meets admitting personnel in the accounting office. This can take around 5 to 10 minutes. The receptionist deals with the patients queries. The patients visits the nurses’ stations for hemoglobin check up. This takes around 5 to 10 minutes. Finally, discussions are done on what the patient should expect type of drugs to be administered, and the post operation routine orientation. On the Day of operation The patient’s comfort during the operation is monitored by the circulating nurse. To boast the morale of the patients, patients are requested to get off the operating table and walk to the post operation room immediately after operation. The patients receive talks throughout the day from the nurses and the housekeepers. This kind of talk is aimed at encouraging the patients to exercise. After the operation. The hospital staff encourages patients to explore the premises, befriend people and talk to them. Service differentiation The services of Shouldice are different from those offered by other competitors due to the following features: 1. Shouldice offers unique a technique for surgical Hernia operation. This has reduced the pain that the patients are likely to experience and cut down the period of recovery. The recovery period for patients who undergo surgery at Shouldice is 1-4 weeks compared to 2-8 weeks expected for patients who are operated in other hospitals for the same condition (James& Jerry, 1994). 2. Surgeons at Shouldice are able to carry out many operations annually compared to their counterpart in other hospitals. This is made possible by standardization of the procedure of operation. 3. The recruitment of doctors and nurses is carefully carried out. This is done in order to stick to the Shouldice technique. 4. These techniques have made Shouldice to create “Un-hospital ” like experience (Heskett, 1983): The hospital has good smell from its carpeting. Patients are encouraged to interact and participate in recreational facilities. The assignment of patients in specific rooms is done in such a way that roommates are matched depending on their background and scheduling of their treatment. This is an illustration of care provided to create an environment that is friendly. A friendly environment leads to faster recuperation (Skinner, 1974). The patients are made to feel to be part of the hospital community. 5. The unique recovering techniques have enabled the hospital to maintain a low nurse to patient ratio which has resulted into minimization of operating costs for the hospital. 6. The hospital offers the most affordable option for hernia treatment in the region. 7. The hospital is highly reliable as far as hernia operation is concerned. The recurrence rate in the hospital is around 0.8%. Other hospitals especially in the United States are 10%. 8. The hospital management encourages its staff by offering them higher salaries than their counter parts in other hospitals. The hospital also has a system of sharing profits with its staff in form of bonuses. The workload in this hospital is small compared to other hospitals (James & Jerry, 1994). 9. The encouragement that is given to the staff enables cohesiveness of workers. This cohesiveness then results into a mechanism of coordination that eventually leads to high efficiency. These are factors, which have led to a credibility that is remarkable for the Shouldice Hospital. This remarkable credibility has put the company ahead of other companies in their area of operation. From this, it is clear that service delivery at Shouldice follows Deming’s 14-point model (Aguayo, 1991) and the Deming wheel. The Deming wheel can also be referred to as “Plan to Do Check Act cycle” (PDCA). The hospital also uses the model of waiting line analysis as an operational strategy (Davis & Maggard, 1990). This has in the long run resulted into improvement of service delivery. Challenges faced by the hospital The hospital faces the challenge of high demand and it is feared that it might not be able to cope up with this demand in the near future. This fact has led the management to be very much involved in considering expansion of the capacity of the hospital since the hospital is current working at its maximum capacity (Skinner, 1974). The other challenge facing the hospital is piracy. This happens in the sense that certain doctors who have no association with Shouldice are trying use the Shouldice method which has proved successful. Assumptions made in this case study: The company is operating at the optimum level. This can be supported by the fact that the hospital is efficiently run and clients are satisfied with their services. In addition to this, we have found that the staff are also contented with the work schedule in operation and are not expecting any change to the same. The staff will be demoralized incase the work schedule is tightened in the sense that the number of working days are increased (Davis & Maggard, 1990). It can also be assumed that the market will certainly fill the demand in case the Hospital fails to carry out expansion of its facilities. Another assumption that can be made in this case is that since the operating procedures have been there for quite a long period, the Hospital’s competitors know them. Finally, it can be assumed that the hospital will consider expansion to take care of the unmet demand, but not for profit maximization (Davis & Maggard, 1990). Recommendations 1. The first recommendation to the company is for it to consider remaining the way it is. This is because the system in existence coupled with reputation places the hospital on higher level in competition than its competitors (James & Porras, 1994). It is not clear whether the management is satisfied with the current set up with reference to operating metrics and profits. However, if the management is satisfied with all these, then we can comfortably say that there is no threat of losing patient share of Shouldice Hospital to competitors. 1. Extend normal operations beyond Friday. This will result into a 20% increase in the number of clients served in one week. All the same, it will not be clear whether this will be able to cater for the unmet demand. However, this extension will have to be carried out with a lot of caution due to several reasons. Extension in hours may result in degradation of quality which may have a negative impact on the hospital. This extension in hours may also violate the implied contract in place; the hospital may need to hire additional staff. Finally, there will have to be added expenditure for training and time cost for the expanding staff in order to maintain the efficiency curve (Aguayo, 1991). 2. Expanding the premises in order to expand bed capacity by half. This may not be the best course of action to take since it will mean that during the expansion period there will be interruption of the normal program such as disruption of the hospital’s country club atmosphere. The expansion will also need large capital investment and ample time. The available doctors will have to be scheduled to full capacity in five days in a week. This will also exert more pressure on other support departments which include laundry, housekeeping, accounting and kitchen. The expansion of the hospital capacity will also need to go with expansion of areas such as the dining facilities, failure to which meal hours will be prolonged (Skinner, 1974). 3. Opening a new branch in Canada or in US. Since many clients are from Canada and US it may be viable to open a new facility in these countries. The new facility will be of great benefit since it will present new opportunities to the existing personnel, as well as improving the competitive position of Shouldice. This option also has a challenge in that it will require a significant investment. There will also be the challenge of monitoring quality as well as replicating the same services offered in the parent branch. 4. Using external sources to met the unmet market demand. Shouldice may opt to team up with other facilities that resemble their own in order to train them in Shouldice processes. This will help increase the company’s profits as well as keeping the competition out of market. During this period Shouldice may operate as a silent partner until the new facility reaches a point of offering the quality services that may not negate the image of their original facility. References Aguayo, R. (1991). Dr. Deming: the American who taught the Japanese about quality. Fireside. pp. 40–41. Davis, M. M., & Maggard, M. J. (1990). An analysis of customer satisfaction with waiting times in a two-stage service process. Journal of operations management, vol 9, issue no. 3, pp. 324–34. Heskett, L.J. ( You +1d this publicly. Undo 2009). Chapter one developing a strategic service vision. USA: Harvard Press, p. 6-8. Heskett, L.J. (1983). Shouldice hospital limited, case no. 9-683-068. Boston: HBS Publishing, Inc. Heskett, L.J. (1987). Lessons in the Service Sector, Harvard business review, vol.9, issue5, pp. 118–126. James, C. C. & Jerry, I. P, (1994). Built to last. New York: Harper Business, pp. 140–168. James, A.F & Mona, J.F. (2006). Service management: operations, strategy, information technology, 7th Edition. New York: McGraw-Hill/Irwin. Skinner, C.W. (1974). The focused factory. Harvard business review, vol. 6, issue2, pp. 113– 121. Read More