Shouldice Hospital Essay

Generation of options:

Based on the above criteria, the following options can be generated.
I. The hospital can continue with the current scale of operations
i.e. Maintaining Status Quo
II. The hospital can plan to scale up the level of operations. This can be done in 3 different ways A. Start operating on Saturdays which increases the capacity by 20% B. Expand the hospital building by adding one more floor C. Open new hospital in the USA, and thereby expanding operations to new geographical locations
III. Expand to other types of operations

Evaluation of Options:

Option I. Maintaining Status Quo:
Firstly, we shall analyze the present situation at Shouldice Hospital.
Current Total Throughput •
Expanding the Facility

Option A. Operating on Saturdays:

If Saturday’s were also made to be working days for the doctors and the staff
Average patients stay is 3 to 4 days per week
We have 89 + 28 beds, 3.5 average stay
Total number of patients per week = 137*1.2 =165 (20% increase)
Working on Saturday operations:
Increase in capacity by 20%
Total revenue = 923.4 x 6850 x1.2 = $ 7,590,348
Total operating cost = $ 2.8 *1.2+2 = 5.36 $Million
Profit = $7,590,348 – $5,360,000 = $2,230,348
Increase in Profit = $2,230,348-$1,525,290 = $ 705,058

Option B. Expanding the hospital by adding another floor:

Increase in capacity of beds by 50%
Total number of patients per week (Avg.) = (89+45)*5days/3.5Avg.stay of patient=191
% Increase in Patient = 191-137/137=40%
Total revenue = 923.4 x 6850 x1.4 = $ 8,855,406
Total Operating cost = $ 2.8 *1.4+2 = $5.92 Million
Profit (expect Year1) = $8,855,406-5,920,000 = $2,935,406
Increase in Profit = $2,935,406 -$1,525,290 = $