Vikas Mani Tripathi – 658630820

Sri Likhita Movva –

Mufaddal Talwala
Assignment 4
Service Sector Operations

Q1. Describe the strategic service vision of Shouldice?

Answer:

Shouldice Hospital has a unique approach to patient care. Many tactics were employed to provide the
patient with a sociable, friendly, homely, and soothing environment. Both clinical and operational
facilities were available at the facility. The patients were treated using a particular procedure known as
the 'Shouldice Method.' Apart from that, numerous ways were used, such as no one being sacked,
parents being provided with free housing, doctors and nurses being well-trained for all responsibilities
and assisting one another. Hernia repair surgery was a specialization at the facility. The service vision of
Shouldice is:

 Target market segment

The hospital concentrated on a narrow segment of hernia patients who were primarily male, older
in age, of a healthy weight, and in good enough physical condition to undertake surgery. The
institution specialized in treating patients with solely external abdominal hernias, and Dr. Shouldice
devised a superior approach to treat them.

With around 10% of patients coming from outside of Ontario, the majority from the United States,
and 60% living outside of Toronto, the geographical region and prospective market for the hospital
is relatively wide. In the United States, it was estimated that 1,000,000 hernia surgeries were
performed in 2000. According to Dr. Shouldice, each time the hospital's capacity was increased, the
backlog of scheduled operations decreased for a period before rising again. This is one of the
reasons the hospital relied solely on word-of-mouth promotion; otherwise, demand would have
skyrocketed, and the hospital would have been unable to meet it. Another factor that drew patients
to Shouldice was the hospital's affordable fees for operations and lodging. Parents were provided
with free lodging. The alumni were also supplied with complimentary annual checks. There were
also reunions for all the patients.

 Service Concept

The hospital is focused on creating a healthy and social environment for its patients. A general
operation would require a patient to stay at the hospital for three days and socialize with other
patients in a peaceful and relaxing environment. This was more like a vacation for patients where
they would be operated on the very first day they arrived and utilize the next two days to exercise
and socialize. It was important for the hospital to make sure that patients were in a good and
healthy condition. The staff also helped patients walk to their rooms soon after the operation which
affected them psychologically to take responsibility for their health.

Shouldice's major competitors include doctors who consider such surgeries to be their "bread and
butter," as well as surgeons who have replicated the Shouldice approach and claimed to offer
Vikas Mani Tripathi – 658630820
Sri Likhita Movva –
Mufaddal Talwala
various variations of it without having received any training in it. Shouldice's doctors would have
little turnover and no competitive spirit because the company has a no-firing policy for its staff. The
majority of the Shouldice employees, including nurses and doctors, were educated to assist one
another. The hospital's employees had the option to self-select, and most of the young doctors who
joined would master the Shouldice approach and stay with the hospital for the rest of their careers.

Other areas for diversification for Shouldice, according to Dr. Shouldice, include eye surgery,
varicose veins, and diagnostic services. It's crucial for him to see how the program works and if the
new doctors are following the Shouldice technique without experimenting. One of the reasons Dr.
Degani objected to the Saturday operating plan was that he would be unable to maintain sufficient
control.

 Operating Strategy

At a very cheap cost of operation and a lower relative patient cost, outstanding results are attained.
A daily charge of $320 was imposed for a four-day stay in the hospital, with a total price of $650 for
the initial hernia surgery. If local anesthetic was utilized, there was a $300 surcharge. The hospital's
operational costs were near to $8.5 million in 2004, and the clinic's were close to $3.5 million. The
administration has a profit-sharing plan that differs from that of the doctors. Each surgeon
performed 3-4 surgeries each day and spent the rest of the day assessing arriving patients, resulting
in 30 to 36 operations per day. The nurse-to-patient ratio at Shouldice was 1:5. Shouldice urged
doctors to assist and teach one another, increasing collective effort, rather of having a hierarchy
chart with discrete job assignments. Rotational duties were assigned to surgeons and helpers.
Surgeons received 15% more in total compensation than a typical surgeon in the Ontario area.
Parents were allowed to stay for free, which helped to reduce the expense of nursing care for the
patients. The cost of outfitting the operating room was projected to be around $30000. These are
the following reasons for which the operating costs were low:

1) Patients with an internal hernia or who were overweight were not admitted to the hospital. It
was critical that the patients' health was in good condition.
2) Patients did some of the work themselves which included filling out applications with all
pertinent information by mail, checking in, shaving for surgery, walking to their rooms after
surgery, training with other patients, and feeding and entertaining themselves. As a result,
nursing, housekeeping, and laundry costs have decreased significantly.
3) Shouldice was able to save money and cut costs as a result of this, allowing him to pay higher
compensation to his employees. They kept hospital personnel levels low and daily costs low. The
hospital roles were restructured to include more counseling and pleasant interactions between
patients and staff.
4) They believed in generating highly effective surgeons with shorter and more consistent work
hours and the ability to learn from and train other surgeons. Their pay was higher than that of
surgeons in the Ontario area.
5) Shouldice prioritized providing patients with a healthy, social, and pleasant environment. All
staff members ate their meals in the same room as the patients, and doctors were expected to
get their meals from the kitchen as well. All staff were able to interact in a healthy way because
of this.
Vikas Mani Tripathi – 658630820
Sri Likhita Movva –
Mufaddal Talwala

 Service Delivery

These were the following actions/decisions which contributed to the success of Shouldice:

1) Patients with non-complicated cases were admitted to the program.

2) Patients were encouraged to take charge of their own health by performing chores that were
often performed by hospital staff in other hospitals. They were also encouraged to engage in
light exercise and pleasant social engagement with other patients as well.
3) The patient's three-day stay at the hospital included a lot of socializing and relaxation. The
hospital was built on three levels, with a clinic, dining rooms, patient rooms, and a recreation
area on the top level. The facility had many acres of grounds for patients to walk and exercise
on. The staff was friendly and worked hard to create a country club ambience where patients
could relax after their procedures. Patients were grouped together in rooms with others from
similar backgrounds. Cookie time, teatime, and socialization time were all scheduled. Doctors
and staff shared a dining room and were required to select their meals from the kitchen.
4) The facility was designed to give patients as much mobility as possible. The stairs in the staircase
were built to be shorter to make it easier for people who had surgery to move around. The
primary hospital was on the bottom level, while the other three levels were created to instill a
good image in the minds of patients, encouraging them to exercise and socialize to speed up
their recuperation. Instead of being placed in patients' rooms, televisions and telephones were
placed in common areas.
5) Another feature is capacity planning, which ensures efficient productivity by doctors and well-
managed patient flow with no patient waiting time. Doctors had short and regular work hours,
and staff members helped each other during high activity hours, ensuring efficient productivity
by doctors and well-managed patient flow with no patient waiting time.
6) Patients could also save time by scheduling surgery over mail and completing an application
with all the details from home.

Q3) Which of the 5 different types of customer variabilities discussed in class does Shouldice
reduce/accommodate and how?

Answers: The provision of a single sector service that followed a standard treating method known as the
Shouldice method is one of the key reasons why variability is decreased in Shouldice. Following
numerous approaches to limit the variability in Shouldice led to reduction in waiting time and better
quality. There is a quick, even flow that assists them in dealing with the problem of variability while also
cutting operational costs. Variabilities that were reduced by Shouldice are :-

 Patient Arrival Rate

Patients may schedule appointments, yet they may not show up. This could have an impact on
resource allocation and use. Patients are needed to arrive at the location one day before to their
surgery and are explained the hospital processes. Arrival variability is nearly non-existent
because the procedures are planned in such a way.

 Process time variability / Effort Variability

Vikas Mani Tripathi – 658630820
Sri Likhita Movva –
Mufaddal Talwala
Patients may have to wait longer or spend more time in the hospital in order to meet all
requirements and undertake pre-surgery examinations. Shouldice efficiently deals with this by
asking patients to come to the hospital if they live nearby or to fill out a medical questionnaire
that could be utilized for evaluation. Before joining Shouldice, patients must be at a healthy
weight and are given a diet plan to follow to lose weight before the surgery. Patients are given a
weight check as soon as they come to verify, they are in excellent health, and then they are
scheduled for surgery, following which they can relax and engage in light exercise. There is no
reliance on nurses or staff because many chores such as preparing for surgery and fetching food
are done by patients themselves. This also ensured that the doctor's time was maximized. This
allows you to effectively control process time and work in a timely and consistent manner.
Shouldice has a single-sector strategy in place to reduce the amount of variation in the methods
they utilize.
 Patient demand rate / Request Variability
If there is a high demand for a limited number of beds, patients will have to wait a long period.
To deal with this scenario, Shouldice focuses on 'word of mouth' promotion. As a result, they do
not experience an increase in customer demand. Because the hospital works at a reduced cost,
it can focus more on service excellence and, as a result, is more productive in meeting consumer
demand. Patients were also chosen only if they had an uncomplicated external hernia that
would require the same advocation as the rest of the group. This also decreased the
requirement for excess capacity and inventory.

 Differences in preferences of the patient / subjective preference variability

In a medical environment, many people may have diverse preferences and may feel
uncomfortable or scared. Shouldice decreases this unpredictability by encouraging patients to
take on duties from the start, such as planning for surgery. Patients also eat in the same dining
room as the employees and doctors. This allows them to relate to other patients on a more
personal basis, allowing them to mingle more. Discussing their operation and condition with
other patients may help them maintain a positive attitude and push them to exercise on a daily
basis. The facility is meant to make patients feel as though they are on vacation during their
stay. In fact, even for the preparation of in-house meal, doctors and staff members had to pick
from the kitchen to ensure proper quality control.

 Variability due to resource availability / Capability variability

Shouldice was highly concerned with keeping operating costs low and employing a small
number of people. Patients have less reliance on doctors and staff workers because some of the
major tasks are undertaken by them. Another strategy to reduce variability in this area is for
doctors and staff to encourage collaborative effort. There is no hierarchy in place, and all the
employees are taught to do all of the jobs. As a result, during periods of heavy activity or when a
member is unavailable, other members and doctors can assist one another and take over
pending duties to guarantee that they are completed on time. Doctors are encouraged to learn
from one another and to teach new doctors how to use the Shouldice approach. In truth, staff
members were chosen based on their ability, expertise, and willingness to stay with Shouldice
for an extended period. They also performed staff rotation throughout surgical teams.
Vikas Mani Tripathi – 658630820
Sri Likhita Movva –
Mufaddal Talwala

Q4) As Dr. Burns Shouldice, what actions, if any, would you take to expand the hospital’s capacity?
How would you implement the changes you propose?

Answer: Here are few proposals/recommendations we can take to expand hospital’s capacity:

 Another floor could be constructed to the facility to handle more backlogged patients. This
would also increase the number of beds available, and the number of patients admitted daily.
Advantages:
1) +50% beds – New capacity: 193 patients/week
2) Average Throughput increase to 179 patients/week (193 x (137/148))
3) +2100 Patients per year ((179-137) x 50)
4) + $1,102,500 revenue per year (2100 x (450+60+75 x .2))
5) Easy to control & maintain quality of service - Most likely retain culture

Disadvantages
1) New bottleneck as doctors are required to work at capacity
2) Increases workloads for all staff & possibility in increase in number of staff.
3) Construction issues (logistic & patient experience)

 On Saturdays, operations can also be carried out. A patient who arrives on Fridays or Thursdays
is likely to spend more than three days in the hospital. Patients might be operated on Saturdays
as well, allowing elderly patients to be released earlier and allowing resources to be better
utilized to boost hospital capacity. This would not necessitate any additional resources and
would ensure that quality is maintained.
Advantages:
1) New Bed Capacity: 180 patients/week
2) Average throughputs increase to 167 patients/week (180 x (137/148))
3) +1450 patients per year ((167-137) x 50)
4) + $761,250 revenue per year (1450 X (450+60+75 X 0.2))
5) No significant investment needed

Disadvantages:
1) Multiple surgeons & additional other staff must work Saturdays.
2) Upset employees
3) Possibly disrupt current culture & patient experience.

 The hospital can consider diversifying in the United States, which is a possible target market
because 1,000,000 cases were estimated in the United States in 2000. In a year, the hospital will
be able to serve more patients. Shouldice would be able to function in a less constrained
environment, enhance profits, and stimulate knowledge transfer and training in other facilities
because of this. Shouldice will also be able to attract resources in the United States because it
pays its staff and surgeons more than other hospitals, but also looks for employees who will stay
and work with Shouldice for a long time. Shouldice will be able to attract resources in the United
States because it will provide stable income with no firing policy to many Americans.
Vikas Mani Tripathi – 658630820
Sri Likhita Movva –
Mufaddal Talwala

Advantages:
1) New location & market (USA) - Improve market position & increase profits.
2) New opportunities for existing employees.
3) Expansion of knowledge and aid to other regions

Disadvantages:

1) Requires a large investment and time.

2) Can lose control of quality & culture.
3) Potential competitors in new region.
4) May need to spend money on marketing for new location

 Other ways include patenting the Shouldice Method to reduce the replication or to use booklets
to advertise. This would significantly increase demand, although it might be managed if extra
facilities or levels were built to the hospital.