Pow Lo expand Lhe capaclLy?

W Alm lncrease capaclLy malnLaln conLrol

of servlce quallLy
W AlLernaLlves
Add SaLurday operaLlons
Add a new floor (43 more hosplLal beds)
LsLabllsh a new faclllLy for hernla
Lxpand Lo oLher Lypes of operaLlons
CLhers?
Pow Successful ls Shouldlce PosplLal?
W 140000 hlghly saLlsfled Alumnl"(pasL
paLlenLs)
W 1200 backlog of scheduled operaLlons
W uemand appears Lo expand wlLh supply
W Superlor quallLy Shouldlce MeLhod of
Pernla operaLlon lmlLaLed by compeLlLor
W Low recurrence raLe 080 vs 10
W Plgh degree of employee saLlsfacLlon
Cost Comparison:
ShouIdices vs. Other HospitaIs
Shouldice Others
Costs of typical operations $954 (p9) $2000-4000
Transportation $200-600 $0
Time Lost from work in Hospital 4 days 5 days
Time lost from work while
recovering 5 days 10 days
Value of time lost
(ranging from $50 to 500 per day)$450-4500 $750-7500
Total before Allowance
for recurrence $1604-6054 $2750-11500
Probability of Recurrence 0.80% 10.00%
Expected Cost of Recurrence $13-48 $275-1150
Total cost to patient, employee
and insurer $1,617-6,102 $3,025-12,650
How About the ProfitabiIity of
ShouIdice HospitaI?
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) X6,850) 3,596,250
Cost 2,000,000
Profit 1,596,250
Total Profit 1,837,650
1he uream World "
W Shoudlce ls offerlng
hlgh quallLy servlce aL low prlce
W Shodlce ls havlng
Plghly saLlsfled cusLomers
Pappy Lmployees
W Shouldlce ls also
maklng hlgh proflL
Pow ls all of Lhls achleved?
WhaL are Lhe ma[or reasons for Lhe success?
W Maxlmlzlng Lhe dlfference beLween
percelved quallLy and value Lo Lhe
paLlenL on one hand and Lhe cosL of
supplylng servlces on Lhe oLher
WhaL ls Lhe unlque Servlce ConcepL?
W WhaL does Shouldlce hosplLal offer Lo lLs
cusLomers?
W 1he hernla surgery (Lhe Shouldlce meLhod)
W eace of mlnd/low rlsk/Low 8ecurrence
W lndependence/ulgnlLy/ConLrol
W Soclal experlence fraLernlLy
W Lxcused absence from work wlLhouL gullL
W A vocaLlon
W MarkeL locus
focus on a narrow segmenL of poLenLlal paLlenLs who
have hernla and
Lhey are predomlnanLly male older ln age essenLlally
ln good healLh
large markeL poLenLlal 600000 operaLlons ln uS ln
1979
W lnLernal locus
uocLors uedlcaLed Lo quallLy of shoudlce meLhod
Lolerance for boredom famlly orlenLed
nurses people orlenLed asslsL paLlenLs
SLaff flexlble Leam orlenLed
A locus SLraLegy A locus SLraLegy
CperaLlng ConcepL
W Shouldlcce achleves ouLsLandlng resulLs as a
low prlce and aL a hlgh proflL because
LveryLhlng done by Lhe hosplLal ls deslgned Lo
maxlmlze Lhe dlfference beLween percelved
quallLy and Lhe value of Lhe servlce provlded
paLlenLs on one hand and
Lhe cosL of provldlng Lhe servlce on Lhe oLher
Pow dld Lhey do LhaL?
W aLlenLs are carefully screened
W aLlenLs are acLlve parLlclpanLs ln Lhe servlce
dellvery process
W 1he avoldance of general anesLhesLlcs allows a
wlde range of lnvolvemenL of paLlenLs
W SLaff ls freed from much dlsagreeable work
W 8educlng Lhe cosL of nurslng housekeeplng and
laundry
W SLrucLure hosplLal [obs LhaL lnvolves more
counsellng and poslLlve lnLeracLlon wlLh Lhe
paLlenLs
Pow dld Lhey do LhaL?
1he Cllnlc ls a focused facLory resulLlng ln
Plghly producLlve surgeon
W 300 hernla/yr vs 30 by less focused surgeon
Sharlng of expenslve servlces such as anesLheLlsL
ShorL and relaLlvely regular hours for surgeon
hlgh compensaLlon ($30000 + $40000)
CpporLunlLles for surgeons Lo observe and and advlse
one anoLher
eer group pressure LhaL leads Lo hlgher level of self
conLrol of quallLy
A consclous efforL ls made Lo make Shouldlce a
famlly"experlence
1he elemenLs ln Lhe servlce sysLem Lo supporL Lhe
servlce ConcepL (managerlal elemenLs)
W Servlce encounLer
uocLors and nurses are carefully recrulLed
Lmployees Lralned Lo help / counsel paLlenLs
Communal dlnnlng for docLors nurses sLaff and
paLlenLs
W CuallLy
adherence Lo Shouldlce meLhod
opporLunlLy for surgeon Lo observe advlse one
anoLher
1he elemenLs ln Lhe servlce sysLem Lo supporL Lhe
servlce ConcepL (managerlal elemenLs)
W Managlng capaclLy demand
Admlsslon by appolnLmenL scheduled servlce
Screenlng paLlenLs easler Lo esLlmaLe Lhe servlce Llme
walkln paLlenLs or local resldenLs on walLlng llsL Lo
make up cancelled reservaLlon
W lnformaLlon
Medlcal lnformaLlon quesLlonnalre
lree annual checkup unlque daLa base on Lhe resulL
of Lhe surgery
Annual reunlon Lo keep alumnl lnformed and gaLher
cusLomer feedbacks loyal cusLomer base effecLlve
wordofmouLh
1he elemenLs ln Lhe servlce sysLem Lo supporL Lhe
servlce ConcepL (sLrucLural elemenLs)
W uellvery sysLem
Maxlmum degree of cusLomer parLlclpaLlon
LfflclenL and low cosL
Avold a Lyplcal hosplLal aLmosphere
W laclllLy deslgn
Acres of gardens Lo encourage exerclse rapld recovery
mlnlmlze hosplLal feellng (carpeLlng and odorless dlslnfecLanL eLc)
SLalrways are deslgned for paLlenLs Lo use rlghL afLer operaLlons
no 1vs and 1elephones ln rooms Lo encourage walklng
CperaLlng rooms are locaLed ln semlclrcle Lo encourage docLors Lo
help each oLher and use Lhe same anesLheLlsL
1he elemenLs ln Lhe servlce sysLem Lo supporL Lhe
servlce ConcepL (sLrucLural elemenLs)
W LocaLlon
large clLy near alr porL access Lo worldwlde
markeL
large local populaLlon Lo flll up cancelled
booklngs
W CapaclLy plannlng
LlecLlve procedures scheduled operaLlons
8alanclng CapaclLy and lmprovlng capaclLy
uLlllzaLlon
needs Lo lncrease capaclLy
Add ln a new floor (43 beds)
W ulsadvanLages
8equlre Lo schedule docLors Lo Lhe full capaclLy of
flve days per week
lncrease work load on admlsslons klLchen
laundry housekeeplng and accounLlng
lurLher sLaggerlng of meal hours for paLlenLs (100
seaL dlnnlng room)
ulsrupLlon durlng consLrucLlon
W AdvanLages
Lasy Lo conLrol and malnLaln quallLy
8eLaln Lhe culLure and envlronmenL
Schedule SaLurday as an CperaLlng uay
W ulsadvanLages
8equlre Lo schedule 2323 operaLlons on SaLurday
Slx surgeons and a supervlslng surgeon have Lo work on
SaLurdays
AddlLlonal oLher personnel
vlolaLes Lhe lmplled conLracL LhaL Shouldlce has wlLh lLs
surgeons sLrong opposlLlon by Lhe senlor docLors
CperaLlng close Lhe Lhe LheoreLlcal capaclLy of Lhe faclllLy
W AdvanLages
no lnvesLmenL ls needed
Can sLlll malnLaln quallLy
A Second laclllLy for 1reaLlng Pernla
W AdvanLages
new locaLlon close Lo Lhe cusLomers say uSA
lmprove lLs compeLlLlve poslLlon and lncrease lLs proflLs
CperaLe ln a less resLrlcLlve envlronmenL
new CpporLunlLles for exlsLlng personnel
1ransfer of knowledge and experLlse Lo Lhe new faclllLles
W ulsadvanLages
8equlres a slgnlflcanL lnvesLmenL and ur Shoudlce's Llme
ConLrol of quallLy
lL ls dlfflculL Lo creaLe Lhe same culLure and aLmosphere
oLenLlal compeLlLlon wlLh Lhe exlsLlng faclllLy
A Second laclllLy for 1reaLlng Pernla
W AdvanLages
new locaLlon close Lo Lhe cusLomers say uSA
lmprove lLs compeLlLlve poslLlon and lncrease lLs proflLs
CperaLe ln a less resLrlcLlve envlronmenL
new CpporLunlLles for exlsLlng personnel
1ransfer of knowledge and experLlse Lo Lhe new faclllLles
W ulsadvanLages
8equlres a slgnlflcanL lnvesLmenL and ur Shoudlce's Llme
ConLrol of quallLy
lL ls dlfflculL Lo creaLe Lhe same culLure and aLmosphere
oLenLlal compeLlLlon wlLh Lhe exlsLlng faclllLy