Shuling He

Shouldice Hospital’s success is reflected in their performance of high quality hernia repair surgery services for many years. Right now they have only 90-bed capacity for their patients who is going to stay at their hospital for the three-day surgery process. It has averaged 7,000 operations annually with these 90 beds, and they only perform five days a week. Therefore, there is a demand problem coming out: More and more people are willing to do the hernia surgery but the capacity of bed is limited.

According to the analysis following, we will find out the two options are: add a second floor for increasing capacity by 50% (45 capacities) or adding one more operating day (Saturday) the hospital’s schedule, which is more acceptable. Basically look at the data it gave in this case, we can recognize that balance the management in their quantitative decision can help the hospital to expend their scale and provide higher quality services.

Also, we must include the economic factor in our consideration and decisions. Adding one more operating day which means their 12 surgeons have to work 6 days a week and the five operating rooms are on performance also six days a week; adding a second floor which means the hospital has 45 more beds for patients but surgeons still work five days a week.

And combing the table it gave in this case, we can find out that: bed required(ONE MORE DAY) bed required(SECOND FLOOR) check-in M T W T H F S A S U check- in M T W T H F S A S U M 3 0 3 0 3 0 M 4 54545 T 3 0 3 0 3 0T454545 W 3 0 3 0 3 0 W 45 45 4 5 TH 3 0 3 0 3 0 TH 45 4 5 4 5 F 3 0 3 0 3 0F SASA SU 3 0 3 0 3 0 SU 4 545 4 5 TOTAL 6 0 9 0 9 0 9 0 9 0 6 0 6 0 TOTAL 9 0 13 5 13 5 13 5 9 0 4 5 4 5 ORIGIN AL 6 0 9 0 9 0 9 0 6 0 3 0 3 0 ORIGIN AL 6 0 90 90 90 6 0 3 0 3 0.

These numbers show clearly the differences between adding one more operating day and second floor with the original operation model. Even though adding one floor is costing additional $100,000 per bed, but its profit is higher than adding one more operating day as it is a long term strategy.

According to the financial data of this hospital and we knew that each operation charged $1,300 and pay $600 to surgeon. Incremental revenue is $52,500. So based on these data we have numbers that add one more operating day will have additional cost estimate to $600*12 surgeons*4operations per additional operating day, so we have estimate cost at one year is : $ 600*12*4*6*52weeks=$8,985,600. Payback=$8985600/$52500=171weeks Then, based on the additional cost of adding one more floor, we have cost of each bed $100,000.

So we have estimate cost at one year is: 45*$100,000=$450,000. Payback=$450,000/$52,500=85. 7weeks Therefore, when comparing to the cost of these two options, we can estimate that add a floor is more profitable than adding an additional operation day. SWOT analysis: Strengths: Shouldice hospital is specializing at its hernia surgery. They offer high quality surgeries and services to satisfy their patients and take care of their health after surgery well. Their pricing is also competitive and they have rich experiences and historical advantages in this area.

Weakness: Shouldice Hospital has limited capacities to manage their demand, so they have to lose some of customers. And not all the surgeons are full time employees in this hospital which influenced their capacities. And their location is at where cold weather in winter and which is inconvenience for patients travel. Opportunities: The hospital can exactly expand their business to the nearly area like the USA. The USA has enough space for constructing their hospital and has equipments for their operations. Threats: The hospital only offers a specific kind of surgery and service, which is hard to reduce their cost of their operating.

And the hospital should handle their quality well when increasing their capacities. My recommendation to Shouldice Hospital is based on their profit profile; they can choose to add a second floor for 45 more beds for their patients. In terms of what it mentioned in the case, they need to maintain their quality while making some changes. So increasing their capacities is become unrealistic because surgeons need to work six days a week, especially not all the surgeons are full time employee in this hospital. So add a second floor to provide more available beds to patients is more efficient.

1. ) How well is the hospital currently utilizing its bed? 90 beds x 7 days/ week = 630 beds available in a week 30 patients x 3 days x 5 days per week = 450 beds utilized 450 beds …

1. ) How well is the hospital currently utilizing its beds? The hospital stay cycles have been provided: | Mon Beds| Tue Beds| Wed Beds| Thu Beds| Fri Beds| Sat Beds| Sun Beds| Available Beds| 90| 90| 90| 90| 90| …

The total beds used if the hospital adds operations on Saturday: 540 beds The utilization rate = 540/650 = 85.71%. So with the addition of one more day operation will increase the utilization of bed capacity. With this rate of …

While reading this case study, one problem can obviously been observed- paradox of change. Shouldice is operating at its “best operating level”(as we can see from the case), a specialized work force but it is failing to meet all the …

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