Evidence of success at Shouldice (1)Evidence of service success: i.e. achieving satisfaction The reunion The recommendation to others The extended orderbook The position of potential expansion The profitability of the hospital The value to patients The motivation of the employees
Evidence of success at Shouldice (2)Evidence of profitability For the Hospital: Revenues: 4 days x $111 x 6850 patients = $3,040,000 Costs (p.10) = $2,800,000 Profit = $ 240,000 For the Clinic: Revenues: $510 x 6850 + 20% anaesthetic ($75 x 6850) = $3,596,000 Cost (p.10) = $2,000,000 Profit = $1,596,000
Evidence of success at Shouldice (3)Cost to patients Shouldice Other hospitalsOperating cost (p.13) $95 $2000 – 4000Transportation 200 – 600Time lost from work at Hospital (p.7) 5 days 10 daysTime lost from work recovering 5 days 10 daysValue @ 50 to 500 / day $1,600 - $6050 $2,250 - $11,500Recurrence 0.8% 10%Weighted cost $15 – 20 $275 – $1,150Total all costs $1,615 - $6,100 $3,025 - $12,650
Evidence of success at Shouldice (4)Fulfilling the service concept What is the service concept of the hospital? To the patient: Peace of mind A holiday experience New friends – a fraternity You are special but treatment is standard To the employee: A direct professional contribution A team and a place in the team
Methods used at Shouldice (1)Standardisation: screening of patientsParticipation: patients do much of the workWork environment: staff freed from usual disagreeable workEconomics: sharing of expensive servicesBest practice: interaction of surgeonsMotivation: all employees interface with the customer
Methods used at Shouldice (2)Facilities for patients: Avoidance of hospital atmosphere Use of TVs, ‘phones The Schedule and Programme (keep moving!) Stairways Operating rooms in semi-circle
Future expansion options (2) Add a floor (45 more beds) 29% increase, $930,000/year, i.e. 45% return on investment Add a Saturday shift 148 to 177 patients/week = $627,000 /year Develop another facility Replicate Shouldice on new specialty BUT: when will service system break down? for patients for individual employees for team and concept
Explaining success of Shouldice Every employee has a role Every employee interfaces with ‘customer’ Control of customer input Necessary flexibility to keep to schedule Small enough to work; big enough to be known
SummaryShouldice is an effective integrated system Represented by theproblems it does not have!!Financial Operations Profitability Breakdowns & absenteeism Budget failure Yield on resource activities No future orderbook Failure on customer expectation Unexplained Delays & unexplained bottlenecks overhead costs Marketing People Undefined product/service Lack of commitment Unforecastable demand Lack of cooperation & flexibility Unspecified requirements Exclusivity of customers Interfaces between functions
Creating an effective and manageable service system Consider the operations as a customer processing system, rather than a product processing system Recognise the total design of the service system as the basis for inspection – not customer questionnaires (as proof of the service concept) Separate the profitability for the customer and profitability for the provider Value employees in terms of consistency, standards and individuality Protect the customer from queues inside the organisation Create an image, and experience, of the facilities as an expression of marketing statements
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