Reference no: EM131952453

Shouldice Hospital in Canada is widely known for one thing-hernia repair! In fact, that is the only operation it performs, and it performs a great many of them. Over the past two decades this small 90-bed hospital has averaged 7,000 operations annually.

Last year, it had a record year and performed nearly 7,500 operations. Patients' ties to Shouldice do not end when they leave the hospital. Every year the gala Hernia Reunion dinner (with complimentary hernia inspection) draws in excess of 1,000 former patients, some of whom have been attending the event for over 30 years.

A number of notable features in Shouldice's service delivery system contribute to its success. (1) Shouldice accepts only patients with the uncomplicated external hernias, and it uses a superior technique developed for this type of hernia by Dr. Shouldice during World War II. (2) Patients are subject to early ambulation, which promotes healing.

(Patients literally walk off the operating table and engage in light exercise throughout their stay, which lasts only three days.) (3) Its country club atmosphere, gregarious nursing staff, and built-in socializing make a surprisingly pleasant experience out of an inherently unpleasant medical problem. Regular times are set aside for tea, cookies, and socializing. All patients are paired up with a roommate with similar background and interests.

The Production System

The medical facilities at Shouldice consist of five operating rooms, a patient recovery room, a laboratory, and six examination rooms. Shouldice performs, on average, 150 operations per week, with patients generally staying at the hospital for three days. Although operations are performed only five days a week, the remainder of the hospital is in operation continuously to attend to recovering patients.

An operation at Shouldice Hospital is performed by one of the 12 full-time surgeons assisted by one of seven part-time assistant surgeons. Surgeons generally take about one hour to prepare for and perform each hernia operation, and they operate on four patients per day. The surgeons' day ends at 4 p.m., although they can expect to be on call every 14th night and every 10th weekend.

The Shouldice Experience

Each patient undergoes a screening exam prior to setting a date for his or her operation. Patients in the Toronto area are encouraged to walk in for the diagnosis.

Examinations are done between 9 a.m. and 3:30 p.m. Monday through Friday and between 10 a.m. and 2 p.m. on Saturday. Out-of-town patients are mailed a medical information questionnaire (also available over the Internet), which is used for the diagnosis.

A small percentage of the patients who are overweight or otherwise represent an undue medical risk are refused treatment. The remaining patients receive confirmation cards with the scheduled dates for their operations. A patient's folder is transferred to the reception desk once an arrival date is confirmed. Patients arrive at the clinic between 1 and 3 p.m. the day before their surgery. After a short wait, they receive a brief preoperative examination.

They are then sent to an admissions clerk to complete any necessary paperwork. Patients are next directed to one of the two nurses' stations for blood and urine tests and then are shown to their rooms. They spend the remaining time before orientation getting settled and acquainting themselves with their roommates. Orientation begins at 5 p.m., followed by dinner in the common dining room. Later in the evening, at 9 p.m., patients gather in the lounge area for tea and cookies. Here new patients can talk with patients who have already had their surgery. Bedtime is between 9:30 and 10 p.m.

On the day of the operation, patients with early operations are awakened at 5:30 a.m. for preoperative sedation. The first operations begin at 7:30 a.m. Shortly before an operation starts, the patient is administered a local anesthetic, leaving him or her alert and fully aware of the proceedings.

At the conclusion of the operation, the patient is invited to walk from the operating table to a nearby wheelchair, which is waiting to return the patient to his or her room. After a brief period of rest, the patient is encouraged to get up and start exercising. By 9 p.m. that day, he or she is in the lounge having cookies and tea and talking with new, incoming patients.

The skin clips holding the incision together are loosened, and some are removed, the next day. The remaining clips are removed the following morning, just before the patient is discharged.

When Shouldice Hospital started, the average hospital stay for hernia surgery was three weeks. Today, many institutions push "same-day surgery" for a variety of reasons. Shouldice Hospital firmly believes that this is not in the best interests of patients, and is committed to its three-day process. Shouldice's postoperative rehabilitation program is designed to enable the patient to resume normal activities with minimal interruption and discomfort. Shouldice patients frequently return to work in a few days; the average total time off is eight days.

"It is interesting to note that approximately 1 out of every 100 Shouldice patients is a medical doctor."

Future Plans

The management of Shouldice is thinking of expanding the hospital's capacity to serve considerable unsatisfied demand. To this effect, the vice president is seriously considering two options. The first involves adding one more day of operations (Saturday) to the existing five-day schedule, which would increase capacity by 20%. The second option is to add another floor of rooms to the hospital, increasing the number of beds by 50%. This would require more aggressive scheduling of the operating rooms. The administrator of the hospital, however, is concerned about maintaining control over the quality of the service delivered. He thinks the facility is already getting very good utilization. The doctors and the staff are happy with their jobs, and the patients are satisfied with the service. According to him, further expansion of capacity might make it hard to maintain the same kind of working relationships and attitudes.

Above is a room occupancy table for the existing system. Each row in the table follows the patients that checked in on a given day. The columns indicate the number of patients in the hospital on a given day. For example, the first row of the table shows that 30 people checked in on Monday and were in the hospital on Monday, Tuesday, and Wednesday. By summing the rows in the table for the Wednesday column, we see that there are 90 patients staying in the hospital that day.

1. Although financial data are sketchy, an estimate from a construction company indicates that adding bed capacity would cost about $100,000 per bed. In addition, the rate charged for the hernia surgery varies between about $900 and $2,000 (U.S. dollars), with an average rate of $1,300 per operation. The surgeons are paid a flat $600 per operation. Due to all the uncertainties in government health care legislation, Shouldice would like to justify any expansion within a five-year time period. How would you do that?

2. Assume that the administrators at Shouldice want to minimize inventory requirements. Calculate the net requirements and planned order releases (planned ordered cleanings) for operating rooms, beds, and medical kits. Assume lot-for-lot lot sizing is used. Please use the tables below.