Académique Documents
Professionnel Documents
Culture Documents
Group 3
Deepesh Gupta
Jitendra Kumar Singh
Smruti Ranjan Panda
Soumya Ranjan Sahoo
(1511319)
(1511325)
(1511362)
(1511364)
Rakshith K N (1511346)
1.
INTRODUCTION
2.
BUSINESS PERFORMANCE
Service offerings
Employee management
Customer management
Each of the above elements have been evaluated in detail in the below
sections.
2.1.1 Service offerings
For product based companies, the focus is on the characteristics of the
product that customer will value. However, for service based companies, the
focus is on customer experience. The companies cannot fair well in every
aspect of business, there is always a trade-off involved and the trick lies in
the choice to perform badly in some minor aspects of business in order to
excel at other things.
Shouldice Hospital has managed to maintain high quality in its operation and
post-operations activities. Some of the quality control is reflected in the
below scenarios.
1) The recruitment process is rigorous in order to make sure Shouldice
hire experience physicians who are flexible i.e. ready to adopt
Shouldice method of operation. One of the important parameters is to
understand the motivation of the physician to work at Shouldice.
Generally, physicians value work-life balance (as they are married )
and are relatively less ambitious
2) There is a low recurrent rate of external Hernia based on the Shouldice
operations method. This is an indication of the high quality of operation
by highly skilled surgeons
3) The food is prepared in house to ensure the quality control. The control
on the quality is internal and there is no dependency on the external
contractor
Hence with high quality control, Shouldice has been able to improve patients
experience as well as control the costs.
2.1.1.2 Efficient and cost effective process flow
Apart from quality control, there has been other initiatives that Shouldice has
undertaken to reduce the overall cost for the patients and maintain an
efficient flow for operations.
1. Each secretary is trained to do others work in case of an emergency
situation
2. The productivity is high due to highly trained physicians. Their
recruitment policies are related to the focused strategy of Shouldice
3. There is a low nurse to patient ratio as compared to typical hospital.
This is because
a. The estimated cost to furnish an operating room is less than
$30,000
b. Shouldice allowed parents to accompany the children as the
nursing costs were higher than the patients room and board.
c. Skilled surgeons at Shouldice led to a reduced operational cost
as there were no mistakes/quality issue while operations
d. Since Shouldice focused on exercise and patient care, hence the
resources required to take care of the patients are relatively less
of stay at the hospital. The facilities in the hospital are not traditional
hospital like but given a very friendly feel with addition of lounges and
recreational areas. Every square foot area in the hospital is carpeted to
reduce hospital like feeling. Below are specific behaviors encouraged by
Shouldice that has led to the prevalent culture.
1. Patients are encouraged to talk to the already operated patients in
order to listen to their experience that could potentially lead to
reduction of anxiety
2. Parents accompanying the children are allowed to stay for free. Apart
from reducing the nursing cost, this makes both child and parent
happier as they are always near each other
3. After operations, patients were encouraged to walk to the wheel chair,
they can start exercising the same day, even climb stairs. All these
were done to reduce the feeling of patient and instill the feeling that
patients have control over his life and is not control of the disease. This
shaped patients attitude
Shouldice also hosts alumni dinners for patients operated at Shouldice. Most
of the patients in the alumni reunion seems to be mention that Shouldice
experience did not feel like a hospital. This is an evidence for a great patient
friendly hospital that has led to its success. Patients have been very willing
to refer other patients to Shouldice and this has in turn made the marketing
redundant.
Details
Calculations
Total ($)
Hospital stay
4 days @
$111/Day
111*4
444
Surgical fee
$450 per
surgery
450*1
450
$60 fee
60
60
954
Anaesthetic charges
(special case)
Normal charges
+ anaesthetic
Average no. of
operations/day
Average of 30
to 36
75*1
75
1029
0.5*(30+36)
33
Assume5 % of
total operations
0.05*33
1.65
95% of total
operations
0.95*33
31.35
weighted avg.
regular and
critical
954*1.65 +
1029*31.35
33,833.25
5 days/week
currently
5*4
20
Daily
income*Total
days
33833.25*20*
12
8.12 Million
Details
Calculations
Total
($)
Full Time
Surgeons
12*50k+500k
1,100,00
0
Part Time
Surgeons
51% of $60/surgery; 33
operations/day; 20
days/month, 12 months/year
0.51*60*33*20
*12
242,352
Nurses
40*20k
800,000
Anesthetic
$300/day 20days/month 12
300*20*12
72,000
Charge
month
Bonuses
Distributed
65k
TOTAL
65,000
2.28Mn
2.8Mn
Clinic
2Mn
Total
4.8Mn
No of hours the full time surgeons are available for service/day = 12*8 = 96
No of usable hours of full time surgeons/day = Operating hours per day +
Consulting hours/day*no of surgeons
= (33*1) + (6*2)
= 45 hours
(assumed 30 operations per day, duration of 1 operation considered 1 hr as
given in case; assumed 6 doctors consulting from 1 pm to 3 pm every day,
total usable hours for consultancy is 12 hours)
Capacity
utilization
of
doctors=
46.87%............................................................... (B)
45/96
Capacity
utilization
of
operation
82.5%...............................................(C)
theatres
33/40
2.3 Challenges
In the current scenario, the main problem of Shouldice hospital is whether to
increase its capacity or not. And if yes, which way should it do. It has
following five options to expand the capacity:
1.
2.
3.
4.
5.
Scenario
Scenario
Scenario
Scenario
Scenario
1:
2:
3:
4:
5:
The analysis for all the four scenarios has been done below and a final
recommendation is provided for the growth strategy of the Shouldice.
2.4 Analysis
2.4.1 Scenario 1: Expand with an additional floor
Assumption
= $60000
(2)
Increase in salary of employees for the new set up:
No of surgeries per day= 48
Total no of surgeries per year in 50 weeks = (48*5*50) = 12000
Taking average number of surgeries as per previous capacity per day = 33
Total no of surgeries per year as per previous set up in full capacity =
33*5*50 = 8250
Patient registration on 1st day:
With the new set up, the maximum number of patient registration has to be
increased from 36 to 48, i.e further increase in (12*(20/60)) hours of usable
time of full time surgeons. i.e 3.6 hours
(Assumption: The increase in no of registration is accommodated by shifting
some of the patient registration to morning shift without incurring any
additional cost)
Full time surgeons:
There is no requirement of increasing no of full time surgeons. Total usable
time of full time surgeons = no of operating hours * no of consulting hours
48 + (no of patients*consulting time in hours)
= 48 + (48*(20/60) hours) = 64 hours
Capacity utilization of full time surgeons = 64/96 = 66.67 %
With a total of 7 assistant surgeons and 6 operating theatres, at any given
time, there is an assistant surgeon available for surgery. Capacity utilization
of assistant surgeons =
No. of operating hours/ no of hours of availability
= 48/56
= 85.71%
As assistant surgeons are paid according to number of surgeries done,
increase in cost incurred by the hospital to accommodate their salary =
(12000-8250)*$60*0.51= 11475
(3)
No of nurses at present = 17, no additional nurses required with increase in 1
operating theatre.
(Assumption: The same anesthetist is able to supply at the same price per
day)
Profitability calculations:
Additional Cost incurred per year:
Additional Fixed Cost = $2000000 + $ 60000 = $ 2060000 (Assumption:
depreciated with zero residual value over 20 years)
Depreciating the fixed cost over 5 years, cost incurred in 1 year =
$2060000/5= $ 412000
Additional variable cost per year for assistant surgeons = $ 114750
Total cost= $ 526750
Additional revenue incurred per year:
Increase in number of surgeries per year= (48-33)*50*5= 3750
Revenue from additional 3750 surgeries= (3750/8250)*8120000= $
3690000
Net additional profit = $3690000-526750 = $3163250
Profit increases by almost 100%.
Hence this solution is profitable, and the fixed cost can be recovered within 1
year of operation.
Pros and Cons of the solution:
PROS
CONS
2) No requirement of Saturday
working
3) No additional surgeon
required. Very less increase in
annual variable coat
they can go to their work one day early. So it will create an enormous
demand of the service among the patient. Hence we have to run two shift of
6 doctors each.
7:30 am-12:30
pm
1:00-4:00
pm
Shift A
Operation
Consulting
Shift B
Consulting
Operation
Lets check the feasibility of the option. Suppose there are around 15
patients per day who are willing to choose the option. Then we can arrange
the patient in such a way that we can maximise the utilisation of the beds.
For example, if on Friday the total patients who have undergone treatment is
55 and for we are taking admission of 20 new patients for regular treatment.
Then the number of patients which can be accommodated for two days
treatment will be 15. Similarly, based on the maximisation of the admission,
we have prepared a timetable as shown below.
Bed Used for 3 days by patient
Check in
Mond
ay
Monday
Tuesd
ay
20
Tuesday
Wednes
day
Thurs
day
Frid
ay
Satur
day
20
20
20
20
20
20
20
20
20
20
20
60
20
Wednesd
ay
Thursday
Sund
ay
Friday
Saturday
Sunday
20
20
20
Total
40
60
60
60
Mon
Tues
Wedne
Thurs
Frid Satur
Sun
in
day
Monday
15
Tuesday
day
sday
day
ay
day
day
15
15
Wednes
day
15
15
Thursda
y
15
15
Friday
15
15
15
Saturda
y
Sunday
Total
15
30
30
30
30
15
Grant
55
90
90
90
90
35
In this way, we can accommodate 195 patients per week, which is 30% more
than the current patients. The calculation of the increased revenue is as
follows
Hospital
Revenue
For 4 days accommodation (4x111x5200 per year) = 2308800
For 3 days accommodation (3x111x3900 per year) = 1298700
Cost
Profit
= 2800000
= 807500
Clinic
Revenue (450+60+75x0.2) x 9100
= 4777500
Cost
= 2800000
Profit
= 2777500
Net Profit
= 3585000
So it has enormous potential to expand our services. But one may argue that
the first day can help the patient to become comfortable with the procedure.
As they interact with other patients who have been already undergone the
operation. So reducing the first day may decrease their comfort. However,
we can also arrange the interaction between the patients during the day
itself. When the new patients are waiting for their sequence, then they can
interact with the other patients. So we can take care of this factor also.
There is possibility that it will be difficult to schedule the doctors as per their
patients. For example, if we change the shift of the doctors then it will be
difficult for them to follow up with their patients. However, it can be
minimized by increasing interaction between the doctors. So that they can
know about their patient in case of shift change. Also, we can change their
shift in a phased manner. Like if there are 6 doctors in the shift A, then in
next week we can shift 2 doctors from shift B to A and vice-versa.
Pros and Cons:
Pros
Cons
the doctors
2) It unconventional to the existing
beds
3. As the capacity of the
PROS
CONS
The new establishment requires
significant capital. This requires
site of about 17000-square foot,
to bring up new facility.
Remunerations for doctors and
nurses would amount to $1.23
million.
Quality
of
The
Shouldice
method of operating Hernia
may be hampered. Monitoring
and controlling its quality would
be highly challenging.
It would be really difficult to
Sl
no
Designation
No of
employees
Full time
surgeons
12
$600000
Assistant
surgeons
Operating
Nurse
17 (Exhibit 2)
$340000
Anaesthetist
Total salary
$1,221,610
Pros
Cons
Recommendation:
Based on the above analysis, it is recommended that Shouldice hospital can either
go with Scenario 1 or Scenario 2 for expansion. In scenario 1, though there is a huge
capital investment, the money can be recovered within 1 year with an approximate
additional 100% profit without reducing quality of services. In scenario 2, the
service can be expanded without any additional resource requirement. Though in
this case there may be an issue with the quality of service as the number of days for
treatment is proposed to reduce by 1 day. In this case we have assumed that
reduction in number of days wont reduce the service quality level.
We dont recommend to adopt scenario 3 i.e converting Saturday into a working
day, as surgeons dont seem to be interested in this proposal. Implementing it
might affect the performance of the surgeons and thus the quality of services
provided will get degraded.
Scenario 4 is discarded as huge amount of capital cost is required. Secondly,
maintaining the same work culture and service level at a far off place will be a big
challenge.
Scenario 5 is not recommended as with increase in the number of health services,
there is a greater chance that the quality of service will reduce as Shouldice hospital
staffs and surgeons dont have enough expertise in these fields.