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Shouldice Hospital Limited

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About The Author

James L. Heskett

Related work.

• July 2004 (Revised January 2005)
• Faculty Research

Shouldice Hospital Limited (Abridged)

• January 2013 (Revised February 2013)

Shouldice Hospital Limited (B)

• Shouldice Hospital Limited (Abridged)  By: James L. Heskett and Roger H. Hallowell
• Shouldice Hospital Limited (B)  By: James Heskett and Roger Hallowell

Shouldice Hospital from Interviews and Observations: The Well Managed Organization

• First Online: 25 July 2023

Cite this chapter

• Jon A. Chilingerian 4 , 5 ,
• Michael Reinhorn 6 &
• Samer Sbayi 7  

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This paper describes our observations, findings, and understanding of Shouldice Hospital, an 89-bed hospital with five operating rooms, specializing in the surgical repair of abdominal wall hernias and recurrent hernias. For more than 75 years, the hospital has been offering not only efficient and low-cost services for patients and payers but also high-quality hernia repair with a lifetime guarantee, outstanding patient experience and caregiver satisfaction. Our purpose is to explain a mystery: accounting for the success of Shouldice as a modern, well-managed health care organization able to achieve the quadruple performance problem.

The research focused on three broad questions (1) What are the important features of Shouldice Hospital as a care program and delivery system? (2) How does Shouldice create value for patients, caregivers, and the organization? (3) If Shouldice does outperform other outpatient, ambulatory surgery centers, and traditional hospitals, what are the key lessons that other health care organizations can learn?

The study design was a multi-method descriptive and explanatory case study with core qualitative components—care process observations and interviews with key informants. We identified three broad streams in the literature (1) the evolutionary history of hernia surgery; (2) studies comparing the Shouldice methods with other techniques; and (3) the literature on focused factories and well-managed organizations. Each stream is discussed and drawn together in this research study.

Several key findings and lessons are highlighted in this case study. First, a focused health care program that wants to offer the best surgical outcomes and best patient experience at the lowest prices must be supported by efficient care processes that reduce unproductive work. When the workflow is structured efficiently, caregivers and staff spend most of their time on patient care activities; reducing unproductive work creates a strong people proposition for employees. Shouldice has found a way to reduce the cost of administrative overhead and middle management, by combining standardization with enough autonomy and team interdependence to allow for the customization of patient services.

We also found that the clinical service line at Shouldice was supported by a patient-centered, self-directed, and team-based culture. Being patient-centered, they learned that one way to improve value in health care is by understanding each patient as an individual and creating a true partnership between the patients and the caregivers. Shouldice employees do not need to be managed; they manage themself. Finally, the leadership and the caregivers take time to explain the rationale behind important clinical, non-clinical, and staff decisions, which creates a perception of fairness in the workplace. When employees perceive fairness in the workplace they feel a sense of pride, they become more connected and attached to the patients and other employees, and more loyal to Shouldice.

These are powerful lessons in the repositioning of the primary clinical activities and the role of management in the formulation of care practices into a care process. The science of medicine and management aims to create simultaneously value for patients, value for caregivers and staff, and value for the health care organization, which has been called the quadruple performance problem. Shouldice story is about a well-managed health care organization, and, in many ways, it is an exemplar case of how the new science of medicine and management works in practice.

We are grateful to the Shouldice Family, especially Dr. E.B. Shouldice, Dr. Robert Bendavid, and Managing Director, Mr. John Hughes, for their generosity and hospitality. This research would not have been possible without their transparency and willingness to spend time with us. Our most heartfelt gratitude goes to John Hughes, whom we had the pleasure to interview. He was a source of many important stories and pieces of information. He not only shared his knowledge of the facts and key enterprise processes, but he also read a draft of the entire manuscript.

We would also like to pay our respects to two thought leaders in the field of hernia surgery who during our interviews and encounters shared their deep knowledge of the evolution of hernia surgery at Shouldice. The first is Dr. Bendavid, who passed away, in September 2019. Finally, we were sad to hear that Dr. E.B. Shouldice passed away in April 2022. He was a humanistic clinical leader, a talented and caring surgeon, and a role model for all of us.

Jon A. Chilingerian was deceased at the time of publication

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When an organ, tissue, or intestine finds a weakness in the abdominal wall and pushes through a tear in the muscle or tissue covering this area, it is diagnosed as a hernia. Often it is obvious to the patient because there is a noticeable bulge of soft tissue. Hernia rupture can become a serious health issue, such as causing an intestinal obstruction. Hernias can occur in the abdomen, belly button, upper thigh, and miscellaneous areas, and they most commonly occur in males. It is estimated that 75% occur in the inner groin, called inguinal hernias.

Although Shouldice fixes hernia failures from other non-Shouldice surgeons five days a week, they estimate that they redo only 50 of their own surgical failures each year.

Throughout this paper monetary references with a dollar sign ($) will be in Canadian dollars and cents. Otherwise, it will be noted as $ US dollars.

That would include the round-trip airfare from major cities in the US to Toronto, Canada.

In Canada hernia surgery is covered under provincial health care plans, as required under the Canada Health Act. There are no co-pays or deductibles, so prices to patients are not relevant. Physicians are paid on a fee-for-service basis by the Ontario Health Insurance Plan (OHIP) and the hospitals are paid a global budget rate.

One of the authors called a Toronto ambulatory care center and received a quote in writing that a laparoscopic hernia procedure was estimated to cost between $6500 and $9000.

In 1947 Dr. E.E. Shouldice was asked by a few patients to organize a “soiree” for himself and his patients. The patients wanted 2 things (1) to renew friendships with other patients; and (2) to stay close with the hospital. This became an annual event and Shouldice patients were encouraged to come back every year to have their hernias checked by surgeons who were in attendance as well. It was a huge event in the ballroom at the Royal York Hotel. During our visit in 2016, the managing director told us, “A few years ago, we stopped the patient reunion. It had to end—it just got too big. The demand was four thousand people every year and growing. We could not accommodate the demand, and it turned into a negative.”

General anesthesia is used for large ventral and recurrent hernias.

General anesthesia patients recover in the PACU.

The research for this chapter began in the late 1980s when the health care management professor and lead author started a longitudinal study of Shouldice hospital. He conducted follow up interviews in the 1990s and more research in the early 2000s. Over several years he combed the literature on Shouldice, conducted on-site and off-site interviews with key Shouldice informants, and analyzed and taught about Shouldice as a health care organization.

According to Hori and Yasukawa, 2021 [ 6 ], Hernia was first described in 1552 BC in Egypt and the diagnosis comes from the Latin word for prolapse. There is a lifetime risk of 17% for men and boys, and only 3% for women and girls. Females have a 4 times higher risk for femoral hernias.

When considering issues of social justice, access, and equity, an important consideration is whether a surgical technique is affordable and scalable to lower resource countries.

The late Dr. E.E. Shouldice is the father of Dr. E.B. Shouldice, who also passed away in April 2022.

Each year 270 or more general surgeons apply for residency in Canada [ 42 ].

A Blue Ocean discovers a new, sustainable untapped market space that brings prices and costs down and, at the same time, bringing quality up, offering a leap in value for patients, caregivers, and for the organization.

The deep dissection enables the surgeon to identify occult (or hidden) hernias often present but difficult to discover by physical exam or advanced medical imaging technology.

History reminds us that hospitals in the 1870s was the place people went to die. By the 1950s hospitals had become such complex organizations that they required clinical leadership and competent management.

According to Bendavid [ 46 , 47 ] building on more than 100 years of evolution, by the 1950s Shouldice surgeons had incorporated all the steps of the Bassini repair that had been developed in 1886.

Following the death of Dr. E.E. Shouldice in 1965, his son, Dr. E.B. Shouldice took charge of the hospital. For nearly 57 years Dr. E.B. Shouldice led the hospital and in April 2022, Dr. E.B. Shouldice passed away. Today Shouldice is led by the Managing Director, Mr. John Hughes, and Dr. Shouldice’s three children, who sit on the Board of Shouldice.

Since 2016, this practice has been reduced. Shouldice surgeons started to perform the procedures with local anesthetic and IV sedation, moving away from the oral sedative that takes longer to metabolize and lowering fall rates postoperatively.

Co-production is about fairness and justice. It implies that the patient is an equal partner with the most responsible caregivers in a reciprocal, two-way relationship. Coproduction means the patient, as a partner, is treated with dignity and respect. Both will be honest and truthful when they share information, and the physicians will explain the rationale for any clinical decisions.

This was practiced safely until 2021, but new guidelines stopped this practice. Now, patients are put in their wheelchairs from the operating table, and ambulation is encouraged after four hours. This innovative practice is done in many outpatient facilities.

At other hospitals, a hernia repair admission could require up to 7 visits. The GP visit and surgeon referral visit would require 2 or more separate visits in most hospital and hernia centers.

The length of the wait time to schedule the surgery depends on the patient’s medical condition, as discussed in this section. Before Covid19, the waits ranged from 2–6 weeks. One estimate from the Managing Director (Summer 2022) is that more hospitals in Toronto have a two-year wait for hernia surgeries versus Shouldice’s 8–14 weeks.

Several physicians said the online application is reviewed within 24–48 h of its submission.

Questionnaire patients who present a complex medical history or require further investigation of their hernia will have a virtual exam is scheduled.

Interviews with two patients on postoperative day 1 revealed that that they only had mild and modest pain when moving, which they were able to do, although at a slow pace. Each one stated that they felt very comfortable going home on the second postoperative day and were planning on returning to a desk job a week after surgery. Both patients were delighted by their choice in Shouldice hospital and team-based care.

The Ministry pays the per diem when patients stay in a ward. Most Canadians have insurance that covers the semi-private room per diem of $305. Those without insurance pay the per diem rate out-of-pocket.

Two of the Shouldice chefs are certified “Red Seal” Chefs, which means they have advanced culinary skills recognized nationally in Canada. Shouldice patients who go on social media often praise the quality of the dining hall.

Patient satisfaction is rated on a scale from 1 = low to 5 = high

These are not unproblematic, as they are anecdotal information and not scientific. We interviewed a few patients informally and heard only extremely positive comments confirming a more than satisfactory experience. Since we were unable to interview patients in private or interview patients a few months after discharge, we may not have obtained accurate information. We reviewed on-line social media comments and posts (Facebook, Twitter, RateMD) and found it confirmed our impressions. RateMD, a social media cite ranked Shouldice Physicians #1 out of 500. There were, however, some patient complaints about a rusty bathroom sink, a large noticeable scar, 20-year-old furniture, being rejected as a patient owing to co-morbidities, and the like. But far and away most posts extremely positive comments.

Heskett [ 23 ] says that a service vision will achieve a superior position by employing three integrating elements: (1) positioning; (2) leveraging value over cost, and (3) integrating the operating strategy with the delivery system. We will use those elements in the discussion section.

The American Society of Anesthesiology (ASA) has for decades developed classification system based on pre-anesthesia medical co-morbidities. It ranges from ASA 1 (normal healthy person) to ASA 4 (a person with severe systemic disease that is a constant threat to life).

General practitioners and surgeons are trained under a structured “GP Change in Scope of Practice Program” supported by Ontario College of Physicians and Surgeons.

Owing to Covid19 protocols, baseline surgeries now take about 60 min. Once the pandemic is over, they expect they will return to the 45-min surgical time. Every surgery we observed was less than 45 min.

Prior to Covid in 2020, it was less than 5 min. After 2020 it takes 5–10 min to clean the room and sort out the new instruments for the next case.

These observations about the Shouldice method were made by one of the authors who is a hernia surgeon.

Again, all these observations about the Shouldice method were made by one of the authors who is a hernia surgeon.

Hirschberg and Mattox used the phrase “top knife” playing off the popular film Top Gun . The idea was the discipling required to train the very best trauma surgeons—thinking under pressure, adapting to uncertainty and rapidly changing situations [ 53 ]. Like the name of the Naval Fighters, you cannot be a Shouldice surgeon without commitment and courage in the face of adversity and being able to cut across any type of hernia and complicated anatomical areas.

In 2022, physician compensation is about $300,000.

The Board not only wanted to support their employees during the pandemic, but they also understood that because of the specific training to work at Shouldice they wanted those well-trained people to come back. They would be hard to replace.

A handful of employees did retire because of their age. After the second shutdown in 2021, they kept everyone on salary, but the second time over the 3 months, they ratcheted from 100% of salary to 90% and then 80%. Again, everyone returned. The last shutdown occurred in January 2022, for one month. This was their third shutdown. Owing to the significant losses in 2020 and 2021, they had no choice but to temporarily lay everyone off. After one month, when they were told they could re-open, every employee returned.

As Dr. Shouldice suggests, for many general surgeons, and hospitals, there are no incentives to keep very accurate track records of successes or hernia recurrence rates, so they are always understated. In addition, he said, “How many patients have a recurrence and choose to live with it? Every day our surgeons are operating on patients who had a repair at another facility, and it failed. So, I did 2 informal studies. I asked these patients ‘did you go back and tell your surgeon it failed?’ Two-thirds said, ‘no’ the first study, and one-third said ‘no’ in the second study. However, 100% said they told their general practitioner.”

Shouldice was headed by Dr. E.B. Shouldice, as Chair, until he passed away in April 2022. Today three of Dr. Shouldice’s children sit on the Board of Shouldice.

Everyone reports to the managing director. There are five senior executives and 7 supervisors,

New “in scope” surgeons undergo an extensive in-house training program, while surgeons undergoing a “change in scope” are supervised by senior Shouldice surgeons under a program approved by the Ontario College of Physicians and Surgeons of Ontario.

The clinic is invested in the patient having an excellent outcome and being healthy. As described above, to become a Shouldice patient, individuals with hernias must fall into an acceptable weight-for-their-height range (BMI). If they must lose more than 20 pounds, there is a diet that is recommended by the on-site dietician. The physicians and staff support, motivate and encourage the patient to become healthier.

The 11 FTE include the Chief Surgeon.

In 1968 Dr. E.B. Shouldice designed and built a 58,000 square foot addition to the existing estate.

In 2016, the land was sold and the hospital has a 20-year lease on 2.7 acres. The rest of the property surrounding the hospital is scheduled for further real estate condo development. In the past, the hospital had built an independent living facility on the grounds. That facility was sold in 2000.

In Ontario in 2017 the average general hospital cost per comparable hernia surgery case was $1639, compared to that funded to Shouldice of $1072. The difference is made up by the semi-private room and out-of-province fees.

Payments made by third parties (which include government or insurers) for health services are called a reimbursement. If there are no out-of-pocket charges to the patient, the amount reimbursed is the effective “price” paid for a service in health care.

According to the Managing Director, the government gave them a budget of $6,946,560 for the facility fee. That was based on a day-center rate for extra post-operative days (89%) and an inpatient rate (11%). If they had more than 6780 hernia repairs, they would not get more reimbursement. If they did fewer than 6280, they would get less than $6,946,560.

Most rooms are semi-private, and there is a ward rate option that is covered by the provincial health care plan. Most patients want a semi-private room and stay an average of 3.2 nights. As mentioned, their insurance covers the per diem charges. Patients with bilateral hernia surgery require a 5–6 day stay and most Canadians carry insurance that pays the $305 per diem.

About 60% of patients that come to Shouldice are scheduled for surgery. About 4000 patients are given a complete physical examination by the general practitioner, and checked for a hernia by the surgeon (surgical consult), but are not scheduled for surgery. The clinic can bill for the GP examination and surgical consult. About 10% of the Shouldice patients request a 30-min massage, for which the clinic will bill $75.

The data for Canada came from a 2014 research study [ 55 ] and the data from the US are from New Choice Health, [ 56 ].

In the United States, the average price for an inpatient hernia repair is $11,500 USD, while the average price for an outpatient procedure is $6400 USD. Those estimates came from New Choice Health [ 56 ].

The $4000 estimates are conservative. The Chief of Surgery at Shouldice conducted a hernia cost study in a Toronto general hospital comparing open versus laparoscopic hernia surgery from 2011–2009 [ 55 ]. He found that operating room and total hospital costs for open inguinal hernia repair were lower than for laparoscopic, (median cost, $3207 vs $3724). Over the last 8–10 years, it is likely that these costs have risen much higher than $4000.

Shouldice found several innovative ways to conduct longitudinal follow-up studies with patients. For 50 years, Shouldice had an annual reunion of patients with a celebration and dinner and at those events, thousands of Shouldice patients were checked for hernias. They also reach out to patients for whom they had performed surgeries and conduct monthly traveling clinics in Ontario, and now across western Canada.

A recent study of the utilization of mesh in hernia repair from 2014–2018 found most studies (81%) had one or more authors who had received payments from any one of 8 major mesh suppliers but did not declare a conflict of interest accurately [ 63 ]. The open payments database was used [ 63 ].

According to the Managing Director, it was further fueled by a newspaper headline from the nurses’ union “Ontario health dollars going to the US.” That resulted in less medical tourism. In the US, when Senator Rand Paul came to Shouldice and paid for his hernia procedure, the newspaper headline said “Kentucky Sen. Rand Paul , one of the fiercest political critics of socialized medicine , will travel to Canada later this month to get hernia surgery.” Today Shouldice would charge a patient who is not a Canadian citizen approximately a total of $5500 for the surgery and 4-day hospital stay.

Psychographic segmentation clusters patients by their attitudes, interests, opinions, personalities, sentiments, and values.

One study of 165 young German surgeons, median age 33, found that 36% would choose a pure tissue repair for their own hernia repair [ 17 ].

They have chosen hundreds of diagnoses and procedures that they will never do.

They do fewer than 50 recurrences a year on patients who previously had their hernia repair performed at Shouldice.

The term “productive work” implies that managers continuously eliminate anything that diverts caregivers and staff from patient care and performance. Removing unnecessary paperwork and unproductive meetings will improve caregiver and staff productivity and their job satisfaction.

Although not discussed in this chapter, there are protocols for cleaning and disinfecting rooms.

Before Covid19, patients were invited to get off the operating table and walk (with the help of the surgeon) to the post-operative room.

While they no longer have reunions, they still contact patients annually and offer free examinations.

This tool is called the eliminate-reduce-raise-create, or ERRC grid [ 36 , 37 ].

As previously stated, Shouldice has fewer than 50 recurrences a year on patients who previously had their hernia repair performed at Shouldice.

The classic model for training physicians was described as “see one, do one. Teach one.” Though some have called this practice old-fashioned, the benefits of teaching others include improving communication skills and feelings of self-efficacy while building leadership skills.

Patients get information from the staff, nurses and physicians, as well as other patients. In the operating room, the surgical team gets information from the patient and the situation. The chief of surgery and the administrator gets information from the nurses, and assistant surgeons, about underperformance or concerns, and so on.

Larger hospitals often lose money on patient care because of their total cost structure—direct plus indirect costs. First, they may have higher direct costs. Second, their indirect costs (e.g., administrative overhead) are substantially higher. Even if their direct costs are competitive, most large hospital systems have crushing indirect overhead costs.

We are not the first to write a case study on Shouldice. In 1983, James L. Heskett wrote a business School case study [ 73 ]. That case brought this fascinating hospital into the management curriculum of virtually every business school worldwide. We owe a debt of gratitude to him for that well-written, nicely framed original case study. Although we have added more clinical details, new facts, and updates, the narrative told in the original case has not changed much. Dr. Atul Gwande also visited Shouldice, observed surgeries, and talked about the distinct repair method and clinical efficiency [ 74 ].

Female patient posting on Facebook, see. https://www.facebook.com/ShouldiceHospital/photos/here-is-dr-michael-alexander-performing-his-30000-hernia-surgery-at-shouldice-ho/1157567120966286

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Chilingerian, J.A., Reinhorn, M., Sbayi, S. (2023). Shouldice Hospital from Interviews and Observations: The Well Managed Organization. In: Chilingerian, J.A., Shobeiri, S.A., Talamini, M.A. (eds) The New Science of Medicine & Management. Springer, Cham. https://doi.org/10.1007/978-3-031-26510-5_2

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Shouldice Hospital Ltd. – Case Solution

Different plans are proposed to increase Shouldice Hospital Ltd.'s capacity, but due consideration must be given to its culture. Other issues that need to be taken into account include capacity and organizational analysis, as well as creating a well-managed medical service facility for efficient operations in the future.

​James L. Heskett Harvard Business Review ( 683068-PDF-ENG ) April 25, 1983

Case questions answered:

We have uploaded two case solutions, which both answer the following questions:

• How does Shouldice Hospital Ltd. compete? Identify at least three characteristics of Shouldice’s operations that contribute to its competitiveness.
• Compute the cycle time (time per patient) and weekly capacity (patients/week) for the Examination Room, Nurse’s Station, Operating Rooms, and Doctors.
• What was the average throughput rate (patients/week) of Shouldice Hospital?
• What is the maximum possible throughput rate of Shouldice Hospital?

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Introduction

Shouldice Hospital Ltd. is one of the world’s most reputed healthcare facilities located in Ontario, Canada.

The hospital was founded by Dr. Edward Earle Shouldice in the 1940s and specialized in the treatment of external abdominal hernias. It became world-renowned due to its unique way of treating patients.

Shouldice Hospital Ltd.’s Success

The following are the competitive advantages that Shouldice Hospital has over its competitors, which are also the foundation of its success:

Surgical Technique

The organization uses a unique surgical technique, founded by Dr. Edward Earle Shouldice, for the repair of hernia, due to which early ambulation and rapid recovery of the patient is possible. Another crucial feature of the technique was there was only a 1% recurrence rate on more than 300,000 hernia operations.

All the surgeons of the hospital are well experienced and are trained in the Shouldice Hospital Ltd. technique for hernia repair before they can start practicing.

Furthermore, the price for treatment is very reasonable, i.e., a patient who receives treatment at the hospital pays nearly half of the price he has to any other hospital. The above factors make this technique superior to any other technique offered by any other organization.

Patient’s Experience

Patients who received treatment at Shouldice Hospital are extremely impressed by the experience they have had in the said hospital. Most of them feel like they are on vacation in a country club rather than a hospital.

They have been provided positive counseling sessions by the nurses. As the rooms are semiprivate, they are grouped with other patients who have similar interests or backgrounds as them. They felt warm, relaxed, and welcomed at Shouldice Hospital Ltd.

Even after treatment, the hospital offers free annual checkups to its recovered patients and even organizes lavish annual meets for them, which is the cherry on the cake for the patients.

This customer satisfaction not only…

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Shouldice Hospital Ltd. (Abridged)

By: Roger Hallowell, James L. Heskett

A hospital specializing in hernia operations is considering whether and how to expand the reach of its services.

• Length: 14 page(s)
• Publication Date: Jul 12, 2004
• Discipline: Service Management
• Product #: 805002-PDF-ENG

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Jul 12, 2004 (Revised: Jan 21, 2005)

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Shouldice Hospital: Standardized, Specialized Clinical Processes

standardized hernia surgery, the health care delivery model of the future?

“Every system is perfectly designed to get the results it gets” – Paul Batalden, MD

Hospitals are expected to deliver value in a variety of ways, including: 1) diagnosing and treating human disease, 2) educating practitioners, and 3) contributing to medical research. However, the first way of delivering value, often understood to be the primary purpose of hospitals—that of diagnosing and treating patients—is actually two business models grouped within the same operating unit. 1,4 If hospitals hope to be excellent in both diagnosing and treating patients, they must deconstruct these fundamentally different business models and match them with their own appropriate operating models. 1

One such hospital in Ontario, the Shouldice Hospital, has been particularly successful in aligning its business and operating models to treat hernias. 2,3 External abdominal hernias are protrusions of bowel through the abdominal wall due to weakening of abdominal wall tissues. The Shouldice Hospital’s mission is to be the world leader specifically for repairing abdominal wall hernias. 2

Shouldice’s operating model was designed very intentionally with the above business mission in mind. Both patient and clinician flow are standardized to maximize patient experience and outcomes, with complete process integration from pre-admission to patient discharge. 1,3,5 Patients are diagnosed either in-person or remotely and arrive in the hospital the afternoon prior to surgery. Upon arrival, patients meet with a series of individuals for a physical exam, a lab check, and a discussion of administrative issues. At fixed times, they then undergo an orientation to set expectations and then meet with patients who previously underwent surgery in order to ask questions. On the day of the operation, patients are awoken at a standard time and prepared for surgery. There are 5 operating rooms, which each surgeon performing many hundreds of hernia surgeries each year, a much higher volume than in traditional hospitals. After the procedure, patients themselves walk to the post-op area, and over the coming 3 days they are encouraged to exercise, eat, and explore the hospital premises and meet friends. In total, whereas hernia procedures often take 90 minutes, cost $4,000, and result in a 5-10% complication rate in more traditional hospital setting, procedures at Shouldice often take 30-45 minutes, cost 30% less, and have a complication rate of .5%. 1,3,5

Pathways to Just Digital Future

These efficiencies can be largely attributed to an integrated process flow and standardization. Not only is patient flow standardized, so are clinical duties. Surgeons are scheduled for 3-4 operations in the morning and spend the afternoon seeing patients for the next day. 1,3,5 Even the operation has been standardized to be almost robotic in fashion. Standardizing more mundane aspects of the procedure frees clinicians’ minds to focus on problem solving when the need arises, rather than having to think through routine best practices every time a procedure is done. Furthermore, when it comes to surgery, clinical experience is second to none on predicting success of outcomes. While all general surgeons nationwide are trained to perform hernia repairs, the experience and surgical volume of Shouldice surgeons is unprecedented.

Not only are processes and physician training aligned with the hospital’s mission, so is the hospital design itself. There are no televisions or phones in patient rooms, thus encouraging patient ambulation post-operatively, which has been shown to improve outcomes and decrease rates of deep vein thrombosis. 1,3,5 Many administrative staff members are cross-trained, allowing them to provide support to others when needed. 1,3,5 Even the compensation system, a salary system for the surgeons, helps align provider incentives to maximize patient care and not necessarily volume of procedures.

While Shouldice has made significant strides in aligning its operating and business models, it remains unclear whether such a standardized model of care delivery can be translated to other settings. Skeptics may argue that Shouldice patients are relatively healthy, not demanding care for a variety of medical comorbidities. However, certain centers, such as the Mayo Clinic, are already developing more specialized delivery models that focus on specific problem categories in an interdisciplinary fashion within the context of a larger medical center. 6 Skeptics also question process standardization and loss of physician autonomy. While a standardized process may be less appropriate for diagnostic roles in healthcare, numerous examples, including adoption of checklists in operating rooms and the Narayana Health cardiac model in India, demonstrate upsides of standardization. Standardization affords clinicians the opportunity to not have to constantly think about more basic tasks, freeing their attention to more problem-solving, creative tasks.

References:

• Christensen et. al. “Disrupting the Hospital Business Model” Forbes . 2009, Mar 31.
• http://www.shouldice.com/
• Gawande, Atul. Complications: A Surgeon’s Notes on an Imperfect Science
• Bohmer, Richard. Designing Care: Aligning the Nature and Management of Health Care
• Heskett, James. “Shouldice Hospital Limited.” HBS Case. 2003, June 2.
• Morgenthaler, Timothy & Charler Harper. “Getting Ride of ‘Never Events’ in Hospitals.” Harvard Business Review . 2015, Oct 20.

Student comments on Shouldice Hospital: Standardized, Specialized Clinical Processes

Interesting post! This highly standardized model of care reminds me of Aravind Eye Care System in India. This system is an extremely efficient “assembly line” model with high quality measures. The idea is to only use doctors for the actual surgery portion of cataract surgery (which takes about 5 minutes), and to have doctors perform an incredible large volume of cases so that they can become experts at the surgery and so that surgeon utilization is close to 100%.

The following quote in particular highlights this model: “Doctors are hard to find and expensive, so the surgical system is set up to get the most out of them. Patients are prepared before surgery and bandaged afterwards by Aravind-trained nurses. The operating room has two tables. The doctor performs a surgery — perhaps 5 minutes — on Table 1, sterilizes her hands and turns to Table 2. Meanwhile, a new patient is prepped on Table 1. Aravind doctors do more than 2,000 surgeries a year; the average at other Indian hospitals is around 300. As for quality, Aravind’s rate of surgical complications is half that of eye hospitals in Britain.” ( http://opinionator.blogs.nytimes.com/2013/01/16/in-india-leading-a-hospital-franchise-with-vision/?_r=0 )

And this highly efficient model has allowed them to be sustainable. They actually use the profits from the payments of patients who can pay to fund surgeries for individuals in poverty who can not afford eye surgery.

Now they are expanding into telemedicine to reach and diagnose patients in locations far from their hospitals and possibly bring those in need to their hospitals. The idea of standardization for increased efficiency and lower cost is an interesting one, and it is something that I believe will be explored more and more in the United States as we continue to focus on ways to reduce the cost burden of health care.

Eloquently said! Yeah, I think standardization has a huge role to play in improving health care efficiency in general in the future. I would love to speak more with surgeons who have actually worked in such hospitals though to get their take on the very high throughput and lack of variation in their day. While it makes for extremely well-practiced surgeons, I wonder if they feel that their careers become mundane at all without a greater variety in their case load.

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Shouldice Hospital Ltd. Harvard Case Solution & Analysis

Home >> Harvard Case Study Analysis Solutions >> Shouldice Hospital Ltd.

Hospital’s Success

The Shouldice hospital, serves as the only hospital that provides treatment for abdominal hernia operating approximately 6800 patients annually using its entire capacity. The hospital serves the niche effectively and the success is highly dependent on the unique surgical methods the hospital uses for the treatment of hernia patients. The reasonable prices play a major role in endorsing the positive image of the hospital as patient satisfaction is a key which provides a positive word of mouth for the hospital.

Problems Identification and Causes

The issues that hospital is facing are regarding the capacity of the hospital and the backlog of operations, which will be dealt  by expanding its capacity while maintaining the quality of the service delivered. The issue of imitation of the unique abilities of Shouldice is also a concerning factor as many doctors are claiming to use the methods of Shouldice and are not operating successfully which is creating a bad image for Shouldice. The objectives of the hospital is to maintain its leadership in operating hernia and to prepare a new team of doctors and train them in operating hernia. The hospital also wants to deal with its backlog issue while expanding and maintaining the quality of its services and to provide the patients with a better experience.

Alternatives

An extra day in the schedule and increase in the existing capacity will be helpful. The hospital can invest in building an extra floor, which will increase the bed capacity by 50% and will help in accommodating more patients. Adopting an expansion strategy and starting operations to other geographical locations across Canada and introducing diversification in the field and introduce other surgical fields as well.

Utilizing the capacity of operations at its optimum is also an option which can be done by scheduling operations at different time sets, besides the ones scheduled in the day and introducing and implementing different shifts for the doctors. Choose a doctor to lead the team and the doctor must be from the current staff. Create awareness about the services of the hospital and deliver the message of the uniqueness the hospital has, which will protect the hospital’s intellectual property and deals with the piracy.

Recommendation

Expanding the hospital capacity by increasing a floor and adding another day in the schedule and choosing a new leader are the best options for the hospital in terms of cost and time and will help the hospital to leverage on its existing capabilities to serve its patients in a better way and maintaining the quality of service. This plan is not violating any government regulations and will not require any extra cost, although some employees may have some reservations about the increase in the schedule.

Action Plan

The hospital as a first step should conduct programs and meeting to create awareness among the employees about the need of expansion and addition in the schedule. In the next step interviews and screening tests should be conducted in order to select the new leader. The selection should be done after proper scrutinizing of the possible candidates. The hospital management in order to improve efficiency must make its administrative ...............

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Various proposals set out to extend the hospital. In their estimation, serious consideration should be given to the culture of the organization and the importance of conservation in the system of services. In addition to the capacity and organizational analysis , describes a focused, well-managed medical service that may well point the way to the future of the economy in the area. "Hide by James L. Heskett Source : HBS Premier Case Collection 18 pages. Publication Date: April 25, 1983. Prod. #: 683068-PDF-ENG

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Case Description of Shouldice Hospital Ltd. Case Study

Various proposals are set forth for expanding the capacity of the hospital. In assessing them, serious consideration has to be given to the culture of the organization and the importance of preserving it in a service delivery system. In addition to issues of capacity and organizational analysis, describes a well-focused, well-managed medical service facility that may well point the way to future economies in the field.

Case Authors : James L. Heskett

Topic : technology & operations, related areas : financial management, growth strategy, manufacturing, marketing, organizational culture, product development, social enterprise, social responsibility, strategic planning, what is the case study method how can you use it to write case solution for shouldice hospital ltd. case study.

Almost all of the case studies contain well defined situations. MBA and EMBA professional can take advantage of these situations to - apply theoretical framework, recommend new processes, and use quantitative methods to suggest course of action. Awareness of the common situations can help MBA & EMBA professionals read the case study more efficiently, discuss it more effectively among the team members, narrow down the options, and write cogently.

Case Study Solution Approaches

Three Step Approach to Shouldice Hospital Ltd. Case Study Solution

The three step case study solution approach comprises – Conclusions – MBA & EMBA professionals should state their conclusions at the very start. It helps in communicating the points directly and the direction one took. Reasons – At the second stage provide the reasons for the conclusions. Why you choose one course of action over the other. For example why the change effort failed in the case and what can be done to rectify it. Or how the marketing budget can be better spent using social media rather than traditional media. Evidences – Finally you should provide evidences to support your reasons. It has to come from the data provided within the case study rather than data from outside world. Evidences should be both compelling and consistent. In case study method there is ‘no right’ answer, just how effectively you analyzed the situation based on incomplete information and multiple scenarios.

Case Study Solution of Shouldice Hospital Ltd.

We write Shouldice Hospital Ltd. case study solution using Harvard Business Review case writing framework & HBR Technology & Operations learning notes. We try to cover all the bases in the field of Technology & Operations, Financial management, Growth strategy, Manufacturing, Marketing, Organizational culture, Product development, Social enterprise, Social responsibility, Strategic planning and other related areas.

Objectives of using various frameworks in Shouldice Hospital Ltd. case study solution

By using the above frameworks for Shouldice Hospital Ltd. case study solutions, you can clearly draw conclusions on the following areas – What are the strength and weaknesses of Shouldice Hospital (SWOT Analysis) What are external factors that are impacting the business environment (PESTEL Analysis) Should Shouldice Hospital enter new market or launch new product (Opportunities & Threats from SWOT Analysis) What will be the expected profitability of the new products or services (Porter Five Forces Analysis) How it can improve the profitability in a given industry (Porter Value Chain Analysis) What are the resources needed to increase profitability (VRIO Analysis) Finally which business to continue, where to invest further and from which to get out (BCG Growth Share Analysis)

SWOT Analysis of Shouldice Hospital Ltd.

SWOT analysis stands for – Strengths, Weaknesses, Opportunities and Threats. Strengths and Weaknesses are result of Shouldice Hospital internal factors, while opportunities and threats arise from developments in external environment in which Shouldice Hospital operates. SWOT analysis will help us in not only getting a better insight into Shouldice Hospital present competitive advantage but also help us in how things have to evolve to maintain and consolidate the competitive advantage.

- High customer loyalty & repeat purchase among existing customers – Shouldice Hospital old customers are still loyal to the firm even though it has limited success with millennial. I believe that Shouldice Hospital can make a transition even by keeping these people on board.

- Experienced and successful leadership team – Shouldice Hospital management team has been a success over last decade by successfully predicting trends in the industry.

- Shouldice Hospital business model can be easily replicated by competitors – According to James L. Heskett , the business model of Shouldice Hospital can be easily replicated by players in the industry.

- Little experience of international market – Even though it is a major player in local market, Shouldice Hospital has little experience in international market. According to James L. Heskett , Shouldice Hospital needs international talent to penetrate into developing markets.

Opportunities

- Lucrative Opportunities in International Markets – Globalization has led to opportunities in the international market. Shouldice Hospital is in prime position to tap on those opportunities and grow the market share.

- Developments in Artificial Intelligence – Shouldice Hospital can use developments in artificial intelligence to better predict consumer demand, cater to niche segments, and make better recommendation engines.

- Age and life-cycle segmentation of Shouldice Hospital shows that the company still hasn’t able to penetrate the millennial market.

- Growing dominance of digital players such as Amazon, Google, Microsoft etc can reduce the manoeuvring space for Shouldice Hospital and put upward pressure on marketing budget.

Once all the factors mentioned in the Shouldice Hospital Ltd. case study are organized based on SWOT analysis, just remove the non essential factors. This will help you in building a weighted SWOT analysis which reflects the real importance of factors rather than just tabulation of all the factors mentioned in the case.

What is PESTEL Analysis

PESTEL /PEST / STEP Analysis of Shouldice Hospital Ltd. Case Study

PESTEL stands for – Political, Economic, Social, Technological, Environmental, and Legal factors that impact the macro environment in which Shouldice Hospital operates in. James L. Heskett provides extensive information about PESTEL factors in Shouldice Hospital Ltd. case study.

Political Factors

- Political and Legal Structure – The political system seems stable and there is consistency in both economic policies and foreign policies.

- Little dangers of armed conflict – Based on the research done by international foreign policy institutions, it is safe to conclude that there is very little probability of country entering into an armed conflict with another state.

Economic Factors

- Inflation rate is one of the key criteria to consider for Shouldice Hospital before entering into a new market.

- According to James L. Heskett . Shouldice Hospital should closely monitor consumer disposable income level, household debt level, and level of efficiency of local financial markets.

Social Factors

- Consumer buying behavior and consumer buying process – Shouldice Hospital should closely follow the dynamics of why and how the consumers are buying the products both in existing categories and in segments that Shouldice Hospital wants to enter.

- Leisure activities, social attitudes & power structures in society - are needed to be analyzed by Shouldice Hospital before launching any new products as they will impact the demand of the products.

Technological Factors

- Proliferation of mobile phones has created a generation whose primary tool of entertainment and information consumption is mobile phone. Shouldice Hospital needs to adjust its marketing strategy accordingly.

- 5G has potential to transform the business environment especially in terms of marketing and promotion for Shouldice Hospital.

Environmental Factors

- Consumer activism is significantly impacting Shouldice Hospital branding, marketing and corporate social responsibility (CSR) initiatives.

- Environmental regulations can impact the cost structure of Shouldice Hospital. It can further impact the cost of doing business in certain markets.

Legal Factors

- Health and safety norms in number of markets that Shouldice Hospital operates in are lax thus impact the competition playing field.

- Property rights are also an area of concern for Shouldice Hospital as it needs to make significant Financial management, Growth strategy, Manufacturing, Marketing, Organizational culture, Product development, Social enterprise, Social responsibility, Strategic planning infrastructure investment just to enter new market.

What are Porter Five Forces

Porter Five Forces Analysis of Shouldice Hospital Ltd.

Competition among existing players, bargaining power of suppliers, bargaining power of buyers, threat of new entrants, and threat of substitutes.

What is VRIO Analysis

VRIO Analysis of Shouldice Hospital Ltd.

VRIO stands for – Value of the resource that Shouldice Hospital possess, Rareness of those resource, Imitation Risk that competitors pose, and Organizational Competence of Shouldice Hospital. VRIO and VRIN analysis can help the firm.

What is Porter Value Chain

Porter Value Chain Analysis of Shouldice Hospital Ltd.

As the name suggests Value Chain framework is developed by Michael Porter in 1980’s and it is primarily used for analyzing Shouldice Hospital relative cost and value structure. Managers can use Porter Value Chain framework to disaggregate various processes and their relative costs in the Shouldice Hospital. This will help in answering – the related costs and various sources of competitive advantages of Shouldice Hospital in the markets it operates in. The process can also be done to competitors to understand their competitive advantages and competitive strategies. According to Michael Porter – Competitive Advantage is a relative term and has to be understood in the context of rivalry within an industry. So Value Chain competitive benchmarking should be done based on industry structure and bottlenecks.

What is BCG Growth Share Matrix

BCG Growth Share Matrix of Shouldice Hospital Ltd.

BCG Growth Share Matrix is very valuable tool to analyze Shouldice Hospital strategic positioning in various sectors that it operates in and strategic options that are available to it. Product Market segmentation in BCG Growth Share matrix should be done with great care as there can be a scenario where Shouldice Hospital can be market leader in the industry without being a dominant player or segment leader in any of the segment. BCG analysis should comprise not only growth share of industry & Shouldice Hospital business unit but also Shouldice Hospital - overall profitability, level of debt, debt paying capacity, growth potential, expansion expertise, dividend requirements from shareholders, and overall competitive strength. Two key considerations while using BCG Growth Share Matrix for Shouldice Hospital Ltd. case study solution - How to calculate Weighted Average Market Share using BCG Growth Share Matrix Relative Weighted Average Market Share Vs Largest Competitor

5C Marketing Analysis of Shouldice Hospital Ltd.

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James L. Heskett (2018) , "Shouldice Hospital Ltd. Harvard Business Review Case Study. Published by HBR Publications.

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