Internet Case for Supplement 7: Capacity Planning

Capacity Planning at Shouldice Hospital

Canadas Shouldice Hospital is known worldwide for its specialty of hernia repairs. In fact, that
is the only operation Shouldice performs, and it performs a great many of them. Over the past
few decades, this 89-bed hospital has averaged 7,000 operations annually, with more than
250,000 hernia surgeries since 1945. Patients, coming from 80 different countries, are so loyal
that as many as 1,500 per year attend the Hernia Reunion gala dinner, complete with free hernia
inspection.Perhaps Shouldices recurrence rate of only 1%, as opposed to 10% for general
hospitals performing this surgery, is a major factor. About 1% of Shouldices patients are
themselves M.D.s.
A number of features in Shouldices service delivery system contribute to its success: (1) it only
accepts patients with uncomplicated external hernias and who are in good health; (2) patients are
subject to early ambulation, which promotes healing; (3) its country club atmosphere, superior
nursing staff, and built-in socializing make a surprisingly pleasant experience out of an
inherently unpleasant medical procedure.
The Medical Facility
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 3 days. Operations are performed only 5
days a week, but the remainder of the hospital is in operation continuously to attend to
recovering patients.
An operation at Shouldice is performed by one of the 12 fulltime surgeons. Surgeons generally
take about 1 hour to prepare for and perform each hernia operation, and they operate on four
patients per day.
The Surgery Procedure
All patients undergo a screening exam either by questionnaire or in person (if convenient) prior
to setting a date for their operation. Patients then arrive at the clinic the afternoon before their
surgery, receive a brief preoperative examination, and see an admissions clerk to complete
paperwork. They are next directed to one of the two nurses stations for blood and urine tests and
then are shown to their rooms. Orientation begins at 5 P.M., followed by dinner in the dining
room. Patients gather in the lounge area at 9:00 P.M. for tea and cookies.
On the day of the operation, the patients are administered a local anesthetic, leaving them alert
and fully aware of the proceedings. At the conclusion of the operation, the patient is encouraged
to walk from the operating table to a wheelchair, which is waiting to return them to their room.
After a brief period of rest, patients are encouraged to get up and start exercising. By 9 P.M. that
day, patients gather in the lounge for 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 remainder are removed the following morning just before the patient is discharged.
When Shouldice started, the average hospital stay for hernia surgery was 3 weeks. Today, some
institutions push "same-day surgery" for a variety of reasons. Shouldice Hospital firmly believes
that this is not in the best interests of the patients, and is committed to its 3-day process.
Shouldices post-op rehabilitation program is designed to enable the patient to resume normal
activities with minimal interruption and discomfort.
The Plan for Expansion
Shouldices management has been thinking of expanding the hospitals capacity to serve a
considerable unsatisfied demand. The first option for expansion involves adding Saturday
operations to the existing 5-day schedule. This 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.
Table 1 illustrates room occupancy for the existing system. Each row in the table follows the
patients who 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 for Monday, Tuesday, and Wednesday. Summing the
columns of the table for Wednesday indicates that there are 90 patients staying in the hospital
that day.
The administrator is concerned about maintaining control over the quality of the service
delivered. He thinks the facility is already achieving good utilization. The doctors and the staff
are happy with their jobs, and the patients are satisfied with the service. Further expansion of
capacity, he believes, might make it hard to maintain the same kind of working relationships and
attitudes.

Table 1 Shouldice Hospitals Operation, with 30 New Patients per Day
a
Beds Required
Check-in Day Monday Tuesday Wednesday Thursday Friday Saturday Sunday
Monday 30 30 30

Tuesday

30 30 30

Wednesday

30 30 30

Thursday

30 30 30

Friday

Saturday

Sunday 30 30

30
Total 60 90 90 90 60 30 30
a
The actual number of beds at Shouldice Hospital is 89. Ninety is used to ease computations.
DISCUSSION QUESTIONS
1. How well is the hospital currently utilizing its beds?
2. Develop a table to show the effects of adding operations on Saturday. Assume that 30
operations would still be performed each day. How would this affect the utilization of the bed
capacity? Is this capacity sufficient for the additional patients?
3. If operations are performed only 5 days a week, 30 per day, what is the effect of increasing the
number of beds by 50%? How many operations could the hospital perform per day
before running out of bed capacity? How well would the new resources be utilized relative to the
current operation? Recalling the capacity of 12 surgeons and five operating rooms, could the
hospital really perform this many operations? Why?
4. If adding bed capacity costs about $100,000 per bed, the average rate charged for the hernia
surgery is $2,400, and surgeons are paid a flat $800 per operation, can Shouldice justify any
expansion within a 5-year time period?
Source: Adopted from R. B. Chase, N. J. Aquilano, and F. R. Jacobs, Production and Operations
Management, 11th ed. (Boston: Irwin-McGraw Hill, 2006): 446448, using information on
Shouldice Hospital found at www.shouldice.com/, January 2005.