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SHOULDICE HOSPITAL

LIMITED WRITE-UP

Bibhutesh Nayak
RSB1501008

Case Analysis
Alan ODell Hospitals Managing Director of Shouldice Hospital Limited. Hospital is
specialized in Hernias Surgery. Hospital is located in Toronto Suburb, Thornhill & it covers130
acre estate with 17,000 sqft main house. Availability of bed 89 Shouldice Hospital is formed
into operate in the hospital & the clinic. Hospital has all the modern enable facilities and
administration and support staff to look after it. Clinic has 5 operation rooms, a laboratory and
patient recovery room $30,000. Operating costs for hospital are close to $8.5 million and clinic
operating cost is $3.5 million.
Almost 7600 Operations are performed per year in the clinic. Its the hospital where the
stay and hospitality is taken care. 6 examination halls staffed by surgeon. Shouldice has 34 full
time equivalent nurses staffed and 6 full time equivalent for non-operative time. Ratio of nurses
to patients 1:4. Charges for hospital stay is $320 and $650 is surgical fee.
Shouldice has 10 full-time surgeons, 8 part time assistant surgeons and 2 anesthetists. To
carry an operation a surgeon, an assistant surgeon, ascrub nurse and a circulating nurse are
required. Roughly 30 to 36 operations are done per day. It means each surgeon performs three or
four operations each day.
Operation of Hernias takes 45 minutes if its for the first time, hernias is a repetitive
diseases and operation for it takes 90 minutes. Usually Shouldice ensures that is not reoccurring.
For the first time repair the hospital uses preoperative sedation (sleeping pill) and analgesic (pain
killer) with a local anesthetic with Novocain which is charged around $60.
70% Patients of Shouldice came beyond the location boundary. As more patient are from
out-station the patients are sent a Medical Information Questionnaire based on the analysis.
Process chart for the patient at the Shouldice for the 4 days:
Day 1
On Arrival the clinic i.e. between 1:00 P.M. 3:00 P.M. the patient is examined.
20 minutes of reexamination for the patients reassurance.
Check-in at the hospital, directed to a room with a wrist band (room number is mentioned).

Semi Private Room are assigned. Patient with familiar background was kept in the same room.
At 4:30 P.M. a nurse orientation program is conducted with pre-operative patients with postoperative patients.
Dinner and some more recreational activities followed by tea & cookies.
Day 2
5:30 A.M. roommates were taken for operation at the same time.
Local Anesthesia is given.
45 minutes surgery is done and the patients were invited to walk to post operating room with the
help surgeons.
Exercise and then dinner and followed by cookies & tea.
Day 3
Exercise followed by recreational activities. A typical recovery day.
Day 4
Ready for discharge.
Surgeons were paid $144,000 per month and additional bonus. Training to doctor and nurses in
Shouldice was an important because the procedure was unique.

Problem & Plan:


Issue is that there is a lot of patient backlog and to meet the backlog of 2400 the hospital have 4
plans i.e.
Work on Saturday and increase capacity by 20%.
Investment of $4 million and expanding new space, number of beds by 50%.
Change of location to United States
Diversifying into other opportunities.

Recommendation:
Operation per Year = 7600
Backlog = 2400
No. of Bed = 89
Market Rate for Hospital = $5240
No. of Stay in the hospital per patient = 4 days
Cost to stay in hospital = $320
Per Patient Cost = $320*4days = $1280
(+) Surgical fee = $650
(+) Local Anesthesia = $60
Cost at the hospital per patient = $1990
Required operation per day = 7600/208 (working days) = 36 patients
Backlog = 2400/208 days = 11 to 12 patients are operated a week.
Expansion is needed but it is beneficiary?
Revenue in Hospital
4 Days * $320 * 7600 = $9728000
(-) Deduct Cost = 8500000
Profit = 1228000
Clinics Revenue (operation)
$650 * 7600 + ($300 * 20/100 * 7600)
= 5396000
(-) Deduct Cost = $ 3500000 = 1896000 -> Profit

Let us take hypothetical value and assume if expanding is beneficial.


If 6 operating room each 500 Sqft
Each Sqft $250
$250 * 500 * 6 = $750000
The hospital can expand more clinics as investing on new operation theatre can be pulled
from the profits derived. The hospital is having a successful run as a niche player catering to the
demand for treatment of hernia patients so diversifying into other segment is not a good idea.
Shouldice is an expert in surgery of hernias and the hospital is also constructed to treat
the patient with hernias. The plan of expanding Shouldice to a new location like United States is
an intense process it might require heavy capital expenditure and funding for setting up new
facilities. It might be a problem to use local Canadian anesthesia in United States.

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