Case Report : Shouldice Hospital Limited

1. Problem faced by the firm

 Hospital had limited capacity with 89 beds and 5 operating rooms.
Peak number of operations per week was 165 in September and
decline in numbers by mid January to 145 operations per week.
 Increasing backlog of scheduled operations, amounting to 1200
patients January 1982.
 To maintain service quality standard while expanding the capacity.
 Use of Shouldice’s name by competitors and other doctors who
copied the method and technique.
 Whether to increase the capacity in the current facility or setup
another facility elsewhere. An investment of $2 million will be
required to add another floor of rooms.
 Difficulty in getting the required surgeon and staff support if hospital
decides to increase capacity by having Saturday operations.
 Government intervention in the operations of the hospital
 Lack of succession plan for the next chief surgeon.

2. Recommendations

 Short term plan: Increase hospital’s capacity by adding Saturday

Operation. This will also increase the hospital utilization rate.
 Review the possibility introducing weekend allowance to overcome
staff’s reluctance to work on Saturday.
 Long term plan: Conduct study on return of investment ($2 million) for
additional capacity increase. From the backlog information, the risk of
over capacity is low.
 Increasing hospital bed capacity by 50%. Detail capacity planning is
required to determine surgeon and staff schedules and additional
resources required.
 Marketing plans required to create awareness and protect the
hospital’s reputation.
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3. Rationale for recommendations

 Additional Saturday operation would increase utilization rate without

requiring major additional investment.
 Additional weekend allowance would incentivize surgeons and staff to
work on Saturdays.
 Return of investment study to ensure that the additional spending and
operational expenses required to support the increase capacity is
profitable.
 Increasing bed capacity by 50% would also increase each operating
room’s utilization from 6 hours per day to 9 hours per day. This will
translate to longer hours per surgeon in the operating room. Based on
the capacity study result, additional surgeon may need to be added to
ensure the quality standard is maintained.

4. List of tools and techniques that can be applied

for the situation
 Capacity Planning, including determining effective capacity
 Queuing Theory
 Workforce and resource scheduling
 Break-even analysis
 Decision trees to evaluate capacity alternatives
 Capacity utilization versus service quality – zone of service at utilization
of less than 70%.