Shouldice Hospital Case

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1.) How well is the hospital currently utilizing its bed?

90 beds x 7 days/ week = 630 beds available in a week 30 patients x 3 days x 5 days per week = 450 beds utilized

450 beds utilized / 630 availble beds = 71.43%

The hospital is currently utilizing 71.43% of their beds, this is actually an ideal operating point. To increase its rate of utilization might decrease the service quality.

2.) Develop a similar table to show the effects of adding operations on Saturday. (Assume that 30 operations would still be performed each day.)
Check-in DayMondayTuesdayWednesdayThursdayFridaySaturdaySunday Monday303030
Tuesday303030
Wednesday303030
Thursday303030
Friday303030
Saturday
Sunday303030
Total60909090906060

How would this affect the utilization of the bed capacity? Is this capacity sufficient for the additonal patients?

90 beds x 7 days/ week = 630 beds available in a week 30 patients x 3 days x 6 days per week = 540 beds utilized

540 beds utilized / 630 beds available = 85.71%

Adding operations on Saturday will improved the utilization rate of beds from 71.43% to 85.71%. It is still sufficient; however, we might risk the service quality.

3.) Now look at 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? (Assume operations are performed five days per week, with the same number performed on each day).

90 beds x 1.50 = 135 beds
135 beds x 7 days = 945 beds available in a week
945 beds / 3 days x 5 days in a week = 63 operations per day

The hospital could perform a maximum of 63 operations per day if the beds are increase by 50%.

How well would the new resources be utilized relative to the current operation?

30 patients x 3 days x 5 days per week = 450 beds utilized 135 beds x 7 days = 945 beds available in a week

450 beds utilized / 945 beds available = 47.62%

With the current operation, the utilization rate would only be 47.62% if the beds would be increased by 50%. If we would add additional beds, we also need to accept more patients to fully utilize the investment.

Could the hospital really perform this many operations? Why? (Hint: Look at the capacity of the 12 surgeons and the five operating rooms.)

Operating room maximum capacity:
8 operations (7:30- 4:00) (one operation per hour) x 5 operating rooms = 40 operations 12 surgeons x 4 operations per surgeon = 48 operations 7 assitant surgeons x 4 operations per surgeon = 28 operations

The case states that surgeons operate on 4 patients per. If surgeons means all the full time surgeons only, we have a maximum of 40 possible operations; thus the 30 operations per day is feasible. However, if we would include the part-time surgeons as surgeons that operates 4 patients per day, only 28 operations is feasible.

4.) 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, with an average rate of $1,300 per operation. Due to all uncertainties in government health care legislation, Shouldice would like to justify an expansion within a five-year time period.

Option 1 - Add 50% more beds

Investment cost in adding 50% more beds :
45 beds x $100,000 = $4,500,000

Revenue:
Maximum of 40 operations per days (maximum...
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