1. Model Shouldice Hospital as a processing operation with products, attributes, and resources. A. Process Structure: a. Input: Approved patient entering the clinic the day before operation b. Output: Successful patient leaving the facility c. Flow Unit: The patient going through the surgery process d. Network of activities and buffers (not sure? ): The whole process with its wait times. Waiting room (20min wait time), examination (15-20min), waiting room for accounting office (5-15min), accounting office (10min), nurse station for blood check (5-10min), surgery (45min), recovery (3days).
B. Product: a. This hospital can be characterized as a service sector as the tangible product is its patient coupled with its intangible product the exemplary service provided for patient to tell others (Shouldice business is based on word of mouth of its existing patients vs. marketing).
C. Product Attributes: a. Cost: The Shouldice hospital cost for a patient is ~$1,029 ($444 stay fee, $450 surgery fee, $60 assistant surgeon fee, $75 optional general anesthetic fee) vs. $2,000 – $4,000 at other Hospitals. b. Delivery Time: Shouldice patient can return to less strenuous work in a week or 4 weeks if strenuous vs. hospital patients return to less strenuous work in two weeks or 8 weeks if strenuous work.
c. Variety: Patients only with external abdominal hernia can have surgery and that are fit vs. hospitals can do both external and internal and no requirement on weight. d. Quality: The quality of Shouldice is very high as evidencied by these factors: 1. Shouldice primarily marketing is by its existing patients’ word of mouth, 2. the recurrence rate of its operations is 0. 8% vs. United States recurrence rate of 10% indicating the reliability is high, and 3.
Shouldice gives free check ups to its alumni and offer free stay to parents and children of the patient indicating serviceability is high. D. Process Attributes: a. Cost: Based on the 1983 budget, costs for the hospital and clinic were $2. 8 million and $2 million, respectively. These costs are made up of meal costs ($1. 10 per meal), staff payroll, bonus pool, and furnishing an operating room. b. Flow: The total expected time the patient enters and leaves the hospital is 4 days but patients sometimes request to stay longer since it feels like a vacation. c. Flexibility: Shouldice knows when patients are expected to come and go given its strict process.
In addition, they have flexibility to let someone go earlier than expected if patient is feeling fine d. Quality: The quality is deemed high given its recurrence rate of 0. 8% vs. United States recurrence rate of 10%. E. Resources: a. Land: The hospital is built on a 130 acre estate. They currently have capacity of 89 beds. b. Labor: The hospital has 12 full-time surgeons, 7 part-time assistant surgeons, 1 anesthetist, 22 full-time nurses and 18 part-time nurses, c. Knowledge: The Shouldice technique has been try to been copied but the results show the technique cannot be copied. 2. What are its competitive priorities?
A. Cost: The Shouldice hospital cost for a patient is ~$1,029 ($444 stay fee, $450 surgery fee, $60 assistant surgeon fee, $75 optional general anesthetic fee) vs. $2,000 – $4,000 at other Hospitals. B. Atmosphere: Once the surgery is done, the patient can move out and about with very little limitation. In fact, post surgery, the doctor recommends the patient walk to the operating room with the surgeon. As a result, for the next 3 days, the patients are interacting with stuff and other patients and it is more of a vacation atmosphere vs being in an hospital augmented by the relative economical cost.
In addition, a very friendly staff (as the Hospital cares about its employees) means happy patients. C. Recovery Time: Shouldice patient can return to less strenuous work in a week or 4 weeks if strenuous vs. hospital patients return to less strenuous work in two weeks or 8 weeks if strenuous work. D. Surgeon Selection: In addition to education and work experience, Shouldice looks for insight on the surgeon’s domestic situation and personal interests. Furthermore, Shouldice looks for surgeons who do what they are told vs trying to do it their way. E. Low Recurrence: Shouldice recurrence rate of 0.
8% is very low compared to the United States recurrence rate of 10%. 3. What kind of market has it chosen to focus on? a. The Shouldice Hospital focuses on a very specializing service: external abdominal hernia operations. In 1982, 82% of the procedures conducted were on first time patients. The rest involved patients operated somewhere else suffering from a recurrence. Furthermore, the hospital requires the patient to not be overweight. 4. How does its operations strategy support its business strategy? 5. We use Shouldice first as an application of the process view. Discuss its strategic fit.