Shouldice Hospital Case Analysis
...Shouldice superior operational capabilities. Shouldice offers a simpler surgical procedure requiring fewer nurses and affording more reasonable working hours for surgeons. These benefits also result in reduced costs to Shouldice, which enables it to offer its service at lower cost. Focusing only on external type abdominal hernia patients enables Shouldice to maintain a lower operating cost than it would if it was to focus on more care-intensive operating procedures. Obviously it is easier to perform 137 of the same operations in a week as it would be to perform 137 varied operations. This is because the facility can be set up to be maximally efficient for a single type of operation. Furthermore, the predictability of time spent at each phase of the patients experience enables Shouldice to schedule with much tighter constraints while avoiding bottlenecks. By contrast a traditional hospital faces bottlenecks according to the “mix” of the surgery types. For example, several time-intensive operations will cause a bottleneck which stops throughput until the rooms are available. Finally, the early patient ambulation reduces the length of patient stays which increases throughput capacity while minimizing patient costs. The ability of Shouldice to identify its core business and build capabilities around it made it possible to attain its operational goal – increasing profit provided by performing hernia operations. This also allows the company to maintain an operational advantage over a typical hospital. 2) Compute the annual net profit of the clinic and hospital operations (separately). The clinic performs the operations and the hospital maintains the beds. Answer: Annual net profit assumes the following: • Operations per year = 6,850 (based on current load, and also 137 cap*50 weeks) • Hospital stay per patient in days =4 • 82% of operations are simple • 18% of operations are complex Clinic Net Sales $2,864,670 (6,850*510 (simple price) *.82) (6,850*585 (complex price) *.18) Cost based on budget $2,000,000 PBIT $ 864,670 Hospital Net Sales $3,041,400 ($111 per day *4 days *6,850 operations) Cost based on budget $2,800,000 PBIT $ 241,000 3.) Using Little’s Law, we compute the average number of beds: Answer: Assumptions: 6,850 operations per year, 4 days per operations, 365-14=351 days open 6,850 x 4 ≈ 78.06 average number of beds filled (87.7% of capacity) 351 4.) Develop a weekly schedule of admittances and discharges that achieves a weekly throughput of 137 patients per week without exceeding the capacities of any major resources. Answer: CHART 1 Admittances Discharges Max Census Monday 15 51 Tuesday 25 76 Wednesday 25 36 101 Thursday 36 15 101 Friday 25 86 Saturday 25 61 Sunday 36 36 72 Chart 1 above illustrates one possible admittance/discharge schedule th...