Shouldice Hospital Ltd. Case Study

1. Shouldice Hospital Ltd. Case Study WCU HR-693 Org Planning & Execution – Group 2 Fall 2007

2. In this presentation… • Introduction • Overview of the facts of the case • Relevant business issues • Strategic recommendations • Unanswered questions • Key take-aways • Conclusion By Group Two Cindy Carter David Crouch Christian Frank Jean Gilreath

3. Introduction Shouldice Hospital Ltd. Case Study

4. Introducing Shouldice Hospital

5. Introduction • Shouldice Hospital Limited is an 89 bed healthcare facility located in the suburbs of Toronto, Canada. The 17,000 square foot facility is housed on a sprawling 130 acre estate and specializes in repairing external abdominal hernias. Currently, 7,600 surgeries are performed each year on patients from all across the United States and Canada. Founded by Dr. Earle Shouldice circa 1940, the organization enjoys a reputation for effectively using a unique surgical technique to repair hernias that is considered superior to all others. The procedure includes early ambulation following surgery for rapid and effective recovery. The organization takes great pride in its “patient as boss” philosophy of service.

6. Founder of the Shouldice Hospital in Ontario, Canada & of the unique Shouldice method for repair of inguinal hernias. Dr. Edward Earle Shouldice

7. Overview of the case Shouldice Hospital Ltd. Case Study

8. Case Overview • The Shouldice Method… • Specializes in external hernias only. • Is a 45 minute procedure for first time repairs, • And a 90 minute procedure for recurrences of hernias previously repaired elsewhere. • Involves separation of muscle layers and six rows of sutures in an overlapping fashion resulting in a reinforced muscular wall. • Typically, only requires use of a sleeping pill, a pain killer, and a local anesthetic allowing for immediate post-op ambulation & rapid recovery.

9. Case Overview Patient as boss! • The Patient Experience • Appointments are driven by patient referrals. • Patients are encouraged to self-diagnose to avoid a visit. • The experience requires only one or two visits. • A typical length of stay is about 3 days. • All rooms are semiprivate, and patients are grouped with someone of like interest. • Patients nearing discharge help orient new patients arriving. • Surgery occurs on day 2.

10. Case Overview Patient as boss! • The Patient Experience • Patients walk from the operating table to the post-op room (with some help from surgeons), • For psychological and physiological reasons • And are encouraged to exercise regularly, explore the premises and make new friends. • Patients were so fond of their experience that they sometimes asked if they could stay an extra day. • The most common after-effect in summer is sunburn!

11. Case Overview • The Nurse Experience • Shouldice employs 34 full-time equivalent (FTE) nurses on staff. • The ratio of nurses to patients is 1:15, • Compared to 1:4 in Canadian acute-care hospitals. • Nurses spend an unusually large amount of time providing counseling services to patients. • Due to low nurse turnover, there is a waiting list of nurses wanting to work at Shouldice. • Competition is constantly short-staffed.

12. Case Overview • The Doctor Experience • 10 full time surgeons, • 8 part-time assistants, • 2 anesthetists on site, • 30-36 operations per day. • Each surgeon performs 3-4 surgeries per day. • Salary is $144k + bonus (15% over competition). • Surgeon’s typically work 7:30 – 4:00 M-F. • On call 1 weekday night in 10, 1 weekend in 10 • Better quality of life than most surgeon schedules • Consequently, turnover is low. Dr. Chan, Dr. Georgievski, Mr. Dixon and Dr. Alexander

13. Case Overview • The Facility • A hospital and a clinic, in one building • Located in Thornhill, Ontario, Canada • A suburb of Toronto

14. Case Overview • The Facility (cont’d) • The facility is designed so patients have to walk in order to do things they need or want to do. • Rooms are not equipped with phone or TV. • Patients must travel to make a phone call, watch TV, socialize, eat, etc. • Small rise stairways make it easier on patients who have just completed surgery. • Carpeting makes it feel warm and comfortable. • Patients and staff eat together in the cafeteria. • Food all fresh ingredients and prepared from scratch.

15. Case Overview • The Administration • No one is fired! Turnover is low. • Staff is non-union. • Pay scale is higher than the competition. • Profit sharing plans are in place for doctors and staff. • Cross-training & teamwork are strong. • Managing director stays late one night per week to interact with patients and staff. • 2004 budget for hospital ~ $8.5 million, clinic ~ $3.5 million.

16. Case Overview • The Market • 1 million hernia operations in the US in 2000. • Most commonly performed on males. • Shouldice has a backlog of 2400 & growing. • Relies entirely on word-of-mouth advertising. • Rates are reasonable. • ~ $2230 compared to $5240 elsewhere • Annual checkups are provided for alumni free of charge. • Annual reunion of patients draws about 1000.

17. Relevant Business Issues Shouldice Hospital Ltd. Case Study

18. Relevant Business Issues • Lack of unity in leadership on strategic direction • Expansion • Competitive encroachment • Succession planning • Staffing • Impact of government regulations

19. Leadership Unity • The managing director and surgeon-in-chief do not see eye-to-eye on the strategic direction of the organization. • Older and younger surgeons differ on the issue of opening on the weekends for surgery. • Leadership unity is critical to any improvement or growth initiatives. • This issue is fundamental. • Without unity, the future is unstable.

20. Expansion • Should Shouldice expand? • This is a central issue in the case. • Advertising methods are currently limited. • Should they add other services & specialties? • Funds for expansion are needed. • Maintaining control of operations and service quality relative to expanding is a concern. • Expansion to weekend operations is currently debated. • Current staff has expressed concerns. • Is global expansion a viable consideration?

21. Competitive Encroachment • The Shouldice method has proven distinguishable. • Concerns have been expressed about others using the Shouldice name while not performing the Shouldice procedures verbatim thus damaging the reputation. • Consequently, Shouldice is hesitant to advertise at all.

22. Staffing • The 1:15 nurse/patient ratio appears high. • Does this pose an unsafe risk to patients? • There is a waiting list of staff wanting to work at Shouldice. • The no-fire policy could encourage low performance. • Current staff has expressed concerns about expanding to weekend operations.

23. Other Issues • Succession Planning • Current surgeon-in-chief retirement approaching. • Concerns have been expressed about this but no plan for succession was mentioned. • A succession plan is needed to ensure continuity. • Government Regulations • Concerns have been expressed about the regulatory environment in Toronto. • A negative or conflicting regulatory environment can dramatically impact the operation & future of the organization.

24. Strategic Recommendations Shouldice Hospital Ltd. Case Study

25. Leadership Unity • Resolve the conflict between the managing director and surgeon-in-chief on expansion strategies. • As long as that divergence exists at the top, future success at Shouldice with any expansion strategy is compromised. • Consider one of two other strategies: • Hire an OD consultant to diagnose and suggest an intervention to solve the conflict, or • Find a replacement for one of the leaders who can work together with the other for a unified strategic approach. • Conduct an ROI analysis on weekend surgeries to determine economic feasibility.

26. Expansion Issues • With a backlog of 2400 cases and growing, Shouldice should seriously consider expanding. • Their unique technique is gaining in notoriety and improving in reputation. • No serious effort has been launched to advertise, so expansion opportunities are strong. • No formidable competition exists.

27. Expansion Recommendations • Consider becoming a teaching hospital to provide a new revenue stream and spread the Shouldice technique around the world. • Consider performing surgeries on weekends. • Provide training for leadership & staff. • To overcome the concerns about compromised quality & control of operations with expansion. • Develop resilience skills of all staff and leadership skills for administration. • Hire new staff with the understanding of the new operating hours.

28. Expansion Recommendations • To combat the resistance to expanded operations on the weekends and the possibility of 24/7 operations… • Conduct employee focus groups and surveys to better understand employee feelings and opinions. • Solicit employee opinion on ideas to capture the backlog of patients on the waiting list. • Conduct change training to help the staff open their minds to the wonderful potential of the future.

29. Competitive Encroachment • Patent the Shouldice method. • Protection is needed to ensure that the reputation of Shouldice remains intact. • Once patented, Shouldice could license others to perform the technique around the world and ensure its quality and consistency. • This could also provide a strong additional revenue stream. • Once patent & expansion plans are secure, consider more aggressive marketing strategies.

30. Staffing Recommendations • High nurse ratio of 1:15 • Closely study the impact of that ratio on patient and guest care. • If decision is made to stay with the current ratio, remain cognoscente of the potential for negative impact on patient care and staff morale. • If a negative impact is discerned, hire more staff to reduce the ratio. This should have a positive impact on quality of care and staff morale.

31. Succession Planning • Get one! • Without a viable succession plan, the future stability of Shouldice is compromised. • Continuity in leadership will ensure their continued success.

32. Government Regulations • There is a concern expressed about the future role of government in the operations of the hospital in Canada. • Investigate regulatory requirements in the US and consider opening a sister facility there if conditions are favorable. • Network with government officials to seek opportunity to impact the regulatory environment locally.

33. Unanswered Questions Shouldice Hospital Ltd. Case Study

34. Unanswered Questions • Strategic Plan • What is the hospital’s strategic plan? • Is growth a real objective? If so, at what rate? • Slow/steady, as is, or aggressive? • If expansion is an objective, what is the cost feasibility of: • Local expansion • Expansion within Canadian borders • Expansion into the US • Global expansion

35. Unanswered Questions • Strategic Plan • What are other alternatives to expansion? • Teaching facility, additional services, etc. • What are the cost returns of those alternatives? • What is the overall financial situation of the hospital? • Can the hospital afford a new facility or to make any radical changes to procedures? • What is the leadership positioning on future plans & strategies?

36. Unanswered Questions • Government Regs & Restrictions • What are the Canadian regulations/restrictions for expansion? • What are the US regs/restrictions for expanding into the US? • What are the future anticipated regs/restrictions in Canada and the US? • What are the Canadian & US similarities? • Can the Shouldice technique be legally protected?

37. Unanswered Questions • Human Resources • Is there a succession plan for other key contributors besides the chief? • Does the right leadership exist for growth and expansion? • What measures are in place to get the right leadership prepared for the future? • Who exactly is on the leadership team? • Who oversees human resources? • Do they need an HR Director?

38. Unanswered Questions • Marketing • What does management do with the patient survey information? • Is there a marketing objective for the annual patient reunion meetings? • Have they done any other market research? • Into other US or Canadians markets? • Into other global markets? • Have other places actually copied the Shouldice method or is it just a concern that they might?

39. Key Take-Aways Shouldice Hospital Ltd. Case Study

40. Key Take-Aways • Shouldice provides a unique service experience that distinguishes it from competitors. • It’s a great place to work for healthcare professionals, so turnover is low. • The production process is efficient and effective. • Opportunities for growth are plentiful. • Key issue is “Should they expand?” • Problems and concerns are manageable.

41. Conclusion Shouldice Hospital Ltd. Case Study

42. Conclusion • Shouldice Hospital is very successful primarily due to its unique service delivered by motivated and empowered staff in a friendly, comfortable environment. Patients are viewed as the boss, so the patient experience is positive. Staff and physicians are treated well so turnover is low. The demand for the Shouldice technique continues to increase, so the future can bring much opportunity if Shouldice management chooses to expand. Issues of expanding operations & generational differences are manageable. The organization is run well but continued success is hinged on the upcoming change in leadership.

43. Questions? Shouldice Hospital Ltd. Case Study

44. Thank you! It’s been our pleasure to share with you. We hope you’ve enjoyed the presentation. We welcome your questions and comments. Please address them to Group 2. • Group 2 team members include: • Cindy Carter • David Crouch • Christian Frank • Jean Gilreath Go Catamounts!