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History Dr.

Edward Earle Shouldice Performed his first

postmorterm of cow at age of 12 graduated from the
University of Toronto in 1916. During World War II, he
pioneered in pernicious anemia, intestinal obstruction,
hydrocephalic cases etc. July 1945: First hospital was
formed on request of civilians who wanted to get their
hernias operated 6 room nursing home Later grew to
130 acre estate, at Thornhill. Dr. Nicholas Obney
Surgeon in chief and chairman of board of Shouldice
hospital after death of Dr. Shouldice (1965)
4. Market Served focus on a narrow segment of potential
patients who have hernia they are predominantly male,
older in age, essentially in good health large market
potential: 600,000 operations in US in 1979
5. Focus SegmentResponsiveness Shouldice high
operations frontier One general facility World-class
General low Hospital Low High Variety
6. Service at ShouldiceWhat is the service concept of the
hospital? To the patient: Peace of mind A holiday
experience New friends a fraternity You are special
but treatment is standard To the employee: A direct
professional contribution A team and a place in the team
7. Process Structure: Potential Patients REJECTS REJECTS
ROOM Questionaire Diagnosis Waiting List Waiting Room
30 days max. wait Billing Waiting Room 20 min
Examinations 5/10 minutes Less than 10 min. ROOM
Orientation Dinner Tea & cookie Socialization7
8. Service success at ShouldiceEvidence of service
success: The reunion The recommendation to others
The extended orderbook The position of potential
expansion The profitability of the hospital The value to
patients The motivation of the employees
9. Profitabilityat ShouldiceEvidence of profitability For the
Hospital: Revenues: 4 days x $111 x 6850 patients =
$3,040,000 Costs (pg.10) = $2,800,000 Profit = $
240,000 For the Clinic: Revenues: $510 x 6850 + 20%
anaesthetic ($75 x 6850) = $3,596,000 Cost (pg.10) =
$2,000,000 Profit = $1,596,000
10. Cost to patient at Shouldice Shouldice Other
hospitalsOperating cost (pg.13) $95 $2000
4000Transportation 200 600Time lost from work at
Hospital 5 days 10 days(pg. 07)Time lost from work

recovering 5 days 10 daysValue @ 50 to 500 / day $1,600

- $6050 $2,250 - $11,500Recurrence 0.8% 10%Weighted
cost $15 20 $275 $1,150Total all costs $1,615 - $6,100
$3,025 - $12,650
11. Operating Concept Shouldicce achieves outstanding
results as a low price and at a high profit because:
Everything done by the hospital is designed to maximize
the difference between perceived quality and the value of
the service provided patients on one hand and the cost
of providing the service on the other.
12. Service delivery system at Shouldice Standardisation:
screening of patients Participation: patients do much of
the work Work environment: staff freed from usual
disagreeable work Economics: sharing of expensive
services Best practice: interaction of surgeons
Motivation: all employees interface with the
customerFacilities for patients: Avoidance of hospital
atmosphere Use of TVs, phones The Schedule and
Programme (keep moving!) Stairways Operating rooms
in semi-circle
13. Explaining Service success of Shouldice Every
employee has a role Every employee interfaces with
customer Control of customer input Necessary
flexibility to keep to schedule Small enough to work; big
enough to be known
14. Future expansion options Capacity at present: 6850
operations/50 weeks = 137 patients/week Examination
Room 270 patients / week Admitting Procedure 240
patients / week Nurses Station 240 patients / week
Operating Room 188 patients / week Doctors 178
patients / week Rooms 89 = 134 patients / week 103 =
148 patients / week Bottleneck: number of rooms
15. Future expansion options Add a floor (45 more beds)
29% increase, $930,000/year, i.e. 45% return on
investment Add a Saturday shift 148 to 177
patients/week = $627,000 /year Develop another
facility Replicate Shouldice on new specialty BUT: when
will service system break down? for patients for
individual employees for team and concept