The Shouldice Model for Healthcare … Research Paper
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Capacity Management for Start-Up
The case material does not talk about the Shouldice situation in the 1940s. There is literature available about the Shouldice method, however. The Shouldice Hospital was set up to specialize only on hernia surgeries. Everything at the hospital is designed around hernia surgery and recovery. This allowed for a high level of standardization in the performance of the procedure. That standardization, in turn, allows for a high level of predictability. The people at Shouldice only work on hernias. There are trained hernia surgeons, and all other staff only deal with hernias. This system is effective because specialization allows each person to become exceptionally good at their role. The result is a reduction in error rates. The Shouldice method differs significantly from most other surgical facilities, which may have multiple different types of surgeries, and multiple different types of patients. There is far less standardization at other facilities, which makes for higher error rates, lower quality of care and greater challenges in managing demand.
The process/facility at Shouldice is designed specifically for hernia patients. The process is a three-day process where the patient undergoes the surgery and then recovers at Shouldice in a facility that is designed for maximum comfort and build around the needs of people who are recovering from hernia. Staff know that every patient has had the same type of surgery and that there is also a high level of standardization in the patient type.
The Shouldice method has evolved over time, with new technological developments. Incorporating new knowledge and technology to the process has allowed Shouldice to maintain a high level of excellence (Sadideen & Sadideen, 2014). It is relatively easy for staff to incorporate new technology because they all specialize in one thing, and are building on that knowledge.
The start-up team can learn a lot from the Shouldice model. The Shouldice model is built around specialization, which allows for a much higher level of expertise, but also a much higher level of predictability to the business. It is necessary to study the market that we are entering carefully. We not only need to know its size, but we also need to understand the size of different subgroups. One of the challenges that Shouldice faced was that its system worked best when the patients lacked major comorbidity. Hernia patients with comorbidity present unique challenges in both surgery and recovery that can reduce standardization. Care, therefore, has to be tailored to the individual. In turn, the amount of time and money spent on care will vary significantly. Shouldice solved this problem by targeting only those patients that did not have comorbidity. This allowed Shouldice to streamline care -- every patient is more or less alike, and therefore it is easier for Shouldice to anticipate the needs of every patient.
By anticipating patient needs, and understanding how many potential patients there are in the market, Shouldice has been able to anticipate its capacity requirements. The hospital can run with a high level of efficiency because managers know exactly what will be needed at all times. This allows for efficiency in purchasing, and it allows for efficiency in scheduling. Any expansion to capacity can be managed carefully, and only when it is known that the market for such expansion will be strong.
2) An accurate forecast is a critical element for ensuring quality of service. Levels of staffing, and capacity in terms of space and equipment, are set on the basis of expected demand. If demand falls short of expectations, the business can meet that demand but may not be profitable. If demand exceeds expectations, then the business may be unable to meet demand for lack of capacity. This can cause issues of its own, such as turning customers away, those customers then going to competitors.
For a new business, it is often difficult to estimate demand. There are a few different steps that can be taken in order to learn about the potential demand. If there is any sort of sales data from companies already in the business, either in annual reports or in the business press, or if it can be obtained another way, that is the best starting point. There may be some government sources, such as the Bureau of Labor Statistics, or industry groups, that compile data. If that fails, a business can conduct its own surveys in order to estimate demand. For example, a new restaurant can open a pop-up to gauge how the market will respond (Scilly, 2016). In health care, a company that wishes to start a new facility can look at demographic data, and data on the prevalence of specific conditions within each age and gender cohort. This information can be used to estimate the current demand for specific treatments, and that data can be analyzed in relation to the approximate capacity of current competitors to meet that demand. If there are two hospitals in the area and both have multi-hour waits in emergency at all hours, that might indicate that there is demand for a new emergency clinic in the area, just as an example.
Having the right capacity level for the demand that occurs is dependent on using such techniques to derive an accurate forecast. New start-ups in particular often have limited resources and therefore need to deploy those resources with a high level of efficiency. If they are able to do so, they will have a higher quality of service delivery. Overcapacity can result in wasted resources, and undercapacity clearly will stretch the organization's resources to the point where service quality will suffer.
Accurate forecasts of demand allowed Shouldice to make all of its business decisions. In terms of daily operations, Shouldice can set its capacity at a level that is below the demand in the marketplace. Because of its reputation for excellence, it can expect to fill capacity. Knowing that it will likely operate at 100% of its capacity makes things like purchasing and scheduling easier. In essence, accurate forecasts allow Shouldice to operate every day the same, and in any business that type of high level predictability leads to high levels of productivity, reduced error rates, and superior performance.
3. Shouldice specializes in one type of patient. The Hospital only performs hernia surgeries, which allows for its entire design to be based around the needs of hernia patients. Furthermore, it avoids patients with significant co-morbidities. The reason for this is that co-morbidity introduces complexity and variability to the hernia surgery and recovery process. By eliminating this complexity and variability, Shouldice is able to have a much higher level of standardization in both its surgeries and in the recovery. This allows it to implement specific designs for its facilities and for its recovery program. Other hospitals obviously will end up with the more difficult cases, but Shouldice built its model around what it needed to excel, and for its target market of relatively straightforward hernia surgeries, Shouldice has excelled in terms of successful surgeries and high recovery rates because it has been able to refine its system.
Our start-up will benefit from taking a similar approach to that of Shouldice. There are essentially two types of surgeries under the Shouldice model -- routine surgeries with little likelihood of complication, and complicated surgeries that are unique and have a higher risk of complication. The basic principle of the Shouldice model is that those two types are so different that they should be handled by different facilities. In our design, we should look at a standardized approach. This will typically mean adopting the Shouldice concept of avoiding significant co-morbidities, something that usually points towards a younger, healthier demographic. Taking this approach will allow for a high degree of standardization in our procedures. We can then determine the best approach possible. With standardized customers, and standardized procedures, there is the opportunity for statistical analysis of our operations. That in turn opens the door for a more scientific approach to management, such as something like Six Sigma or similar approach that will drive down error rates through process optimization.
Furthermore, having specific target market demographics will allow for much better capacity management. Heroman, Davis and Farmer (2012) make the case that having accurate forecasts allows for healthcare facilities to operate with a high degree of efficiency. When you know the precise market that you are going to serve, it is easier to estimate the size of that market. This in turn makes it easier to estimate what your demand will be. Capacity can then be set on the basis of understanding the exact size of the market and the share that you expect to capture. As a start-up, the better sense of demand you have, the more accurately you will build facilities that are large enough to meet demand, but not so large as to have overcapacity.
It is worth noting that our start-up could theoretically have any target market demographic, as long as we stick to a specific demographic and build a system around meeting the… [END OF PREVIEW]
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