SHOULDICE HOSPITAL: CASE

ANALYSIS

The report presents a case analysis on the success of Shouldice Hospital as a

service organization. It details the reasons behind high patient and employee
engagement. The analysis also evaluates the options for Shouldice growth
strategy and makes a recommendation

Group 3
Deepesh Gupta (1511319)
Jitendra Kumar Singh (1511325)
Smruti Ranjan Panda (1511362)
Soumya Ranjan Sahoo (1511364)
Rakshith K N (1511346)
Soumya Ranjan Sahoo
1. INTRODUCTION
Shouldice Hospital Limited is a healthcare facility located in the suburbs of Toronto, Canada. The
17,000 square foot facility is housed on a sprawling 130 acre estate and specializes in repairing
external abdominal hernias. It has 89 beds and 6,850 operations are performed on patients (in
year 1982) from all across the United States and Canada. Founded by Dr. Earle Shouldice in 1940,
the organization enjoys a reputation for effectively using a unique surgical technique to repair
external hernias that is considered superior to all others. The procedure includes early
ambulation following surgery for rapid and effective recovery. The organization takes great pride
in its “patient as boss” philosophy of service.

2. BUSINESS PERFORMANCE
Shouldice hospital has been successful in different aspects ranging from employee satisfaction to
customer satisfaction to efficiency and quality of service offerings. One can gauge the success of
the business by looking at the oversubscription rate in spite of lack of advertisement. The
performance can be measured quantitatively (in terms of profit margins, capacity utilization etc.)
as well as qualitatively (in terms of patients and physician satisfaction).

2.1 Qualitative performance measurement

For any service business, such as Shouldice hospital is, it must get below four elements right to
deliver service excellence consistently:

 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 was able to establish short treatment regime at a high quality level. Patients were able
to returns to their job within 1-2 weeks as compared to 2-8 weeks in other hospitals.
2.1.1.1 Quality control

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 patient’s 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 other’s 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 patient’s 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
e. The questionnaires sent to the patients for initial diagnosis also reduced the initial
check-up costs. The patients were instructed to reduce the weight in case they
were overweight

2.1.2 Employee management

As Shouldice hospital is focussed on a niche services (i.e. providing operations for external
hernia), it has been imperative for the hospital to maintain high level of expertise. Hence,
Shouldice hospital has focussed on its employee related strategies in order to retain the talent
and maintain its point of differentiation.
The excellence in employee management is reflected in the extremely low employee turnover as
compared to the other hospitals. This is due to multiple employee friendly policies.
 1. Nobody is fired. This allows employee the freedom at the work place and gives more
sense of responsibility
2. Shouldice maintain higher pay scale for its staff than the union pay scale for comparable
jobs in the area
3. Profits are shared among physicians and staff. For example, surgeons received a bonus of
$500,000 in the recent years and staff received $65,000 as the employee dividends
4. Shouldice allow a good work-life balance for the surgeons. Surgeons day gets over at 4
pm after which they can spend time with their family
5. Surgeons are provided opportunity to learn by allocating the patients with Hernia
recurrences to the same doctor who treated the patient earlier
6. Shouldice encourage group learning. Collaboration is encouraged
7. The workload of surgeons is moderate with 3-4 operations per day as compared to the
schedule of surgeons in other hospitals

Although surgeons tend to do similar kind of operation throughout their life, the recruitment
policy is made such that the doctors recruited are fine with this kind of environment. Doctors
with families are recruited which would like to have work-life balance rather than more ambitious
doctors.

2.1.3 Customer management

Shouldice Hospital has excelled in providing patients with ‘home-like’ environment with a
collaborative culture and intentionally avoided to provide ‘hospital-like’ feel to the patients. This
is due to the culture Shouldice has decided to build in the hospital.
Patients are encouraged to interact and socialize among each other. This way of treatment has
been so successful that patients demand for one extra day 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.

2.2 Quantitative performance measurement

The quantitative performance of Shouldice can be measure in terms of profile margin, capacity
utilization and comparison with other hospitals.
2.2.1 Profit Margin
The annual profit margin is elaborately calculated in the below table.

Total income from surgeries per year (USD)

Activity Details Calculations Total ($)

Hospital stay 4 days @ $111/Day 111*4 444

Surgical fee $450 per surgery 450*1 450

Assistant Surgeon fee $60 fee 60 60

Total normal operation charges 954

Anaesthetic charges (special case) $75 per surgery 75*1 75

Normal charges +
Total charges for critical operation 1029
anaesthetic

Average no. of operations/day Average of 30 to 36 0.5*(30+36) 33

Assume5 % of total
No. of critical operations per day 0.05*33 1.65
operations

95% of total
No. of regular operations per day 0.95*33 31.35
operations

weighted avg. 954*1.65 +

AVERAGE TOTAL INCOME PER DAY 33,833.25
regular and critical 1029*31.35

5 days/week
No of Working Days Per Month 5*4 20
currently

Daily income*Total
TOTAL YEARLY REVENUE 33833.25*20*12 8.12 Million
days
 Total salaries paid per year (USD)

Employee Details Calculations Total ($)

Full Time Surgeons 12 @ $50k salary + 500k bonus pool 12*50k+500k 1,100,000

51% of $60/surgery; 33
Part Time Surgeons operations/day; 20 days/month, 12 0.51*60*33*20*12 242,352
months/year

Nurses 40 nurses @20k salary (average) 40*20k 800,000

Anesthetic Charge $300/day 20days/month 12 month 300*20*12 72,000

Bonuses Distributed 65k 65,000

TOTAL 2.28Mn

ANNUAL OPERATING EXPENSES (USD)

Hospital 2.8Mn

Clinic 2Mn

Total 4.8Mn

Current annual operating profit = 8.12 - 4.8 = 3.32Mn………………………………………………….(A)

From the above analysis, it can be said that the hospital is having good profit.
2.2.2 Capacity Utilization
We will calculate capacity utilization of full time surgeons and operation theatre
2.2.2.1 Full time surgeons

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= 45/96 = 46.87%............................................................... (B)
2.2.2.2 Operation theatre:

No of operations that can be performed at full capacity= No of operation theatres * (No of

working hours/Duration of each operation) = 5*(8/1) = 40
Capacity utilization of operation theatres = 33/40 = 82.5%...............................................(C)

2.2.3 Comparison of Shouldice vs. other hospitals

Focussed approach of Shouldice hospital has been one of reasons behind its success. It has not
expanded its focus to other operations/surgeries even if external hernia is the one of the easy
surgeries to perform. Its strategy has been to focus on the niche with limited capacity (and not
expand, till now). Below elements substantiates how narrow focus has allowed Shouldice to
achieve better efficiency and quality.

1. The narrow focus on operating external Hernia has allowed Shouldice to gain expertise in
that area and focus on holistic care of the patients.
2. They train the incoming physicians to follow a specific approach to operate external
Hernias
3. Theory of swift even flow suggests that the productivity for any process—be it labor
productivity, machine productivity, materials productivity, or total factor productivity—
rises with the speed by which materials (or information) flow through the process, and it
falls with increases in the variability associated with the flow, be that variability associated
with quality, quantities, or timing. This is applicable for Shouldice hospital as it focus on
niche strategy (with less variability) and quality, hence its process flow is efficient.

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. Scenario 1: Expand with additional floor and one operating theatre

2. Scenario 2: Possibility of introducing 3 days treatment for patients
3. Scenario 3: Make Saturday a working day
4. Scenario 4: Opening a new facility in different location, in US
5. Scenario 5: Diversifying services

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

 One new operation theatre

 Operating theatre to be included in the new floor built without reducing the increase in
number of beds

In this solution, the capacity utilization of Shouldice hospital has been considered. There are
many resources used in Shouldice hospital which comprises of a fixed cost and variable cost. The
resources responsible for variable cost are doctors, assistant doctors, anaesthetist, nurses, house
keepers, other employees etc. The total operating cost of the hospital in year 1983 was 4.8 million
collectively for both hospital and clinic.

As from our earlier analysis, from (B) and (C), we know that the capacity utilization of working
hours of full time surgeons and operating theatre is 46.87% and 82.5% respectively.
The profit margin as calculated in (A) is $3.32 million.
Proposed solution:
The number of beds in the hospital currently is 89. Approximating the number to 90 ( for
calculation ease), and considering the fact that every patient is discharged on 4th day morning, at
any given time the maximum bed occupied will be 90 if, every day at an average 30 patients are
operated.
With increasing in the number of beds by 50%, total number of beds will be = 90*1.5 = 145
Additional fixed cost incurred= $2000000 (1)
No of patients to be operated on daily basis = 145/3 = 48.33 = approximately 48
Hence there has to be increase in no of operating theatre by 1 number, making it total of 6
theatres operating 8 hours a day, hence total no of operations = 48
In case of any emergency or issue in any operation theatre, and additional operation theatre can
be built to share the operating load.
Therefore, increase in fixed cost due to 2 additional operation theatre = 2*$30000
= $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

1) Bed capacity increased by 50% 1) Assistant surgeon over burdened

2) Surgeons may be overburdened

2) No requirement of Saturday working compared to current work load
3) During morning registration of patients,
3) No additional surgeon required. Very things might get messy due to
less increase in annual variable coat discharging of patients in the morning

4) If the demand doesn’t increase, the

4) High profit margin hospital might incur a loss due to low
revenue

2.4.2 Scenario 2: Possibility of introducing 3 days treatment for patients

As mentioned in the previous cases that Shouldice hospital is not utilising its full capacity. The
main reason of this is that the beds available are limited i.e. 89 in numbers. Hence in the present
scenario, we can’t accommodate more than 89 patient. To increase the number of the patient
being treated we can increase the number of beds available for the treatment, or we can reduce
the process cycle by one day.
It is mentioned in the case that many patients come to the hospital for treatment from the
different regions of the world, especially from U.S.A. However, there are a large number of
patients who come from the nearby regions. If we can target those patients, then we can reduce
the cycle time by one day. Some patients are well aware of the process. They know what to do
and how to do. Even if they don’t know anything about the procedure, we can provide them
necessary information on our website with the help of few tutorial videos. So we don’t have to
provide them that amount of the training which we are giving to the patient right now.
As it is mentioned earlier that usually a patient comes in between 1 pm to 3 pm. Then after long
formalities like checking the current medical condition of the patient, his blood sample, insurance
papers, etc., we provide them accommodation. Then in the evening nurse gives them instruction
regarding the operation procedure. She also tells them about the important does and don’t
things. Then at night they take their dinner and finally they have tea-snacks with the patients
who have already undergone the operation procedure. After that, they go to the bed.
Now, in this scenario patients are occupying the bed, even when on the first day they are not
undergoing any major medical treatment. We are also aware of the fact that currently the
doctors are underutilized. So we can use them to examine the patients who have the willingness
to arrive in the morning. As they are well aware of the procedure, hence they will take essential
precaution in their home itself. Moreover, it is mentioned in the due to the anxiety many of the
patients who arrived at 1 pm at 3 pm, don’t remember the procedure told by the nurse.
The same standard procedure can be performed in the morning session in between 8 am to 10
pm. So all the medical and administrative work can be completed before the lunch. In the
afternoon, these patients can go to operation theatre, where all the operations will be
performed. In this way, we can save one productive day, which can cause tremendous economic
benefit to the organisation and as well as to the patient. Here we are making an assumption that
it is medically feasible and viable. As there will be no need to stay in the hospital for four days, it
will be economical to the patients and 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

Let’s 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 Monday Tuesday Wednesday Thursday Friday Saturday Sunday

Monday 20 20 20

Tuesday 20 20 20

Wednesday 20 20 20

Thursday 20 20 20
 Friday

Saturday

Sunday 20 20 20

Total 40 60 60 60 60 20 0

Bed Used for 2 days by patient

Check in Monday Tuesday Wednesday Thursday Friday Saturday Sunday

Monday 15 15

Tuesday 15 15

Wednesday 15 15

Thursday 15 15

Friday 15 15

Saturday

Sunday

Total 15 30 30 30 30 15 0

Grant 55 90 90 90 90 35 0

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 = 2800000
Profit = 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
1. It can increase the scale of
operations by 16.67%. So the
revenue will also increase.
1. Patient can go home in 3 days.
Hence there will be huge demand of
the service.
2. Maximum utilization of the beds
Cons
1) It can increase the work load to the
doctors
2) It unconventional to the existing work
culture of the hospital. Hence it may
affect the perception of the patients
about the hospital.
3) Maintaining the schedule of the doctors
will be difficult.

3. As the capacity of the hospital

increases, hence less patients will go
to other inefficient hospitals, and
image of the hospital will improve.
2.4.3 Scenario 3: Make Saturday a working day
As from our earlier analysis, from (B) and (C), we know that the capacity utilization of working
hours of full time surgeons and operating theatre is 46.87% and 82.5% respectively.
The profit margin as calculated in (A) is $3.32 million.
Adding one more working day will increase capacity by 20%.
Thus surgery income increases by 20%
Total income from surgery with Saturday as working day = 1.2*8.12 = 9.744Mn
This will also lead to increase in salaries and operating expense. We assume that 50% of the non-
salary cost is variable and varies linearly with expansion.
Current non-salary expense = Total Operating expense – Salaries
= 4.8 – 2.28 = 2.52Mn
Current variable cost = 2.52*0.5 = 1.26Mn
With 20% expansion this 1.26Mn increases to 1.512Mn (1.26*1.2). And non-salary expense
increases to 1.26+1.512 = 2.772Mn
Salary expense also increases by 20%
New salary expense = 2.28*1.2 = 2.736Mn
Total operating expense (with Saturday as working day) = Salary + Non-salary expense
Total operating expense (with Saturday as working day) = 2.736 + 2.772 = 5.508Mn
Annual operating profit (with Saturday as working day) = 9.744 – 5.508 =
4.236Mn……………………(D)
From (A) and (D) we conclude that with Saturday as a working day our net operating profit
increase from 3.32Mn to 4.236Mn i.e. profit increased by 27.59%
Thus we can observe that adding one more working day in the week, we achieve capacity expansion by
20% and profit increases by 27.59%. The advantages of this solution is that no immediate investment or
government approval is required. We achieve capacity expansion (thus reduced waitlist) without building
new floors or hiring new people. This translates to better control and management. However the major
disadvantage of this method is that surgeons and all other employees will be required to work one more
day. Although they will all receive an immediate increment of 20%, this won’t be enough to compensate
current surgeons who prefer spending more time with their family and kids.
2.4.4 Scenario 4: Opening a new facility in different location, in US
Impacts:

1. 42% of current Shouldice patients are from USA.

Total patients = No of working days * Average operations per day
No operations on Saturday and Sunday. Hospital is closed for 2 weeks in late December.
No of working days = 365 – (52 * 2) – (5 * 2) = 251days
Average operations per day = 32 (30-35 operations)
 Total patients = 250 * 32 = 8000
 Hence, US patients = 0.42 * 8000 = 3360
Thus, Shouldice hospital can expand its availability of service to 3360 additional Canadian
patients at its Toronto facility per year.

2. Reduction in travel expense.

Net travel expense = Round trip fare * No of patients from US
Round trip fare = $200 to $600 => Average fare = $400

Net Travel Expense = 400 * 3360 = 1,344,000 ~ $1.35 million.

PROS
 The new establishment requires
 Nearer to patients’ location in USA,
travel to Canada just for Hernia
operation can be avoided.
 With reduction in 42% of patients from
US, it can serve more patients (~3360
patients) in Canada, and can start 
advertising. Thus can avoid misuse of
Shouldice name (Shouldice operation
technique) by its competitors.
 Expanding their unique service to larger 
section of people, at lower cost than
their competitors in US, as Shouldice
Hospital work on non-profit basis.
 Reduces travel expense around
$1.35million, thus service is available at
a much lower cost for US patients.
 As, travel to Toronto in mid-winter
season is often discouraged, patients
seeking immediate medical attention
can be treated in US only.
CONS
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 establish a
similar atmosphere and culture in US.
Thus the patient’s experience would not
be as good as at Toronto facility.
  This will be a new opportunity for
existing personnel to work with new
experts at US and can benefit from the
transfer of knowledge and culture. Also
can improve on the existing successful
procedure.

Sl no Designation No of employees Total Salary of all employees per annum

1 Full time 12 $600000

surgeons

2 Assistant 7 $209610 (51% of $60 fee for 6850

surgeons operations

3 Operating Nurse 17 (Exhibit 2) $340000

4 Anaesthetist 1 $75000( $300 per day for 50 weeks)

Total salary $1,221,610

Solution 5: Diversifying services.

Proposal: To diversify and extend the services to Eye surgery, Varicose veins, Haemorrhoids etc.

Pros
 Serve more people, and provide
additional facilities at one place on
non-profit basis, which is a great social
contribution.
 Increases profits.
Cons
 Difficult to maintain proper control over
quality of individual services and
administration becomes more complex,
as Shouldice’s expertise is limited to
Hernia operations.
 Requires new specialist surgeons, to
drive new services. Thus, it is difficult to
hire new experts who would render
their service for non-profitable cause.
 Requires new investment for setting up
facilities and promotional activities.
Advertisements are needed to bring
awareness about the additional services
available at Shouldice.
 The existing staff has limited flexibility,
hence surgeons may not show interest
to be cross trained in new
specializations.
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 won’t reduce the service
quality level.

We don’t recommend to adopt scenario 3 i.e converting Saturday into a working day, as surgeons don’t
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 don’t have enough
expertise in these fields.