Shouldice Hospital Essay

1120 Words Jan 20th, 2012 5 Pages
1. How successful is the Shouldice Hospital? Generate a P&L statement using available information from the case. Treat each of the two operations—hospital and the surgery—separately.

Hospital:
Revenues (4 days X $111/day x 6,850 patients/year) 3,041,400
Cost 2,800,000
Profit: 241,400

Clinic:
Revenues ((($450 + 60 + 75) X 0.20) X 6,850 patients/year)) 3,596,250
Cost 2,000,000
Profit 1,596,250

Total Profit 1,837,650

2. How do you account for its successful performance?

The following factors account for the success of Shouldice hospital:
• Unique and pioneering surgical technique for Hernia operation which reduced the suffering of the patients and led to rapid
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• It only performs 33 operations per day, so the bottleneck between these 2 processes is the number of operations being performed per day.
• Shouldice performs 33 operations per day, which generate daily bed demand of 116 on Wednesday and Thursday, and 99 on Tuesday, all exceeding the current bedding capacity of 89. So between these 2 processes, the number of available beds is the bottleneck.
• Overall, the bottleneck for Shouldice is the number of available beds.
• The hospital has to increase its bed capacity by 30% [(116-89)/(89)] to simply meet its current operation schedule.
4. Do a detailed analysis of potential on-site capacity expansion alternatives (on a per week basis). Assume an average of 3.5 days stay at the hospital for each patient, including surgery, and Sunday admits. This means that half the patients spend three days while the other half spend four days.

Alternatives to be considered:
An assumption must be made, due to limited information in the case, that the expansion alternatives being considered are to meet an unmet market demand and is not driven by addition profit or other reasons.
1. Add an additional day by operating on Saturday
• Use 89 + 14 rooms (3.5 average stay)
• Total number of patents per week = 180
• 137 current throughput/148 theoretical = x / 180 theoretical
• New throughput = 180 x (137/148)= 167 patients / week
• Additional patients per

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