Team Crucial, Capacity Write Up

4,494 views

Published on

Published in: Business, Health & Medicine
0 Comments
4 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
4,494
On SlideShare
0
From Embeds
0
Number of Embeds
12
Actions
Shares
0
Downloads
252
Comments
0
Likes
4
Embeds 0
No embeds

No notes for slide

Team Crucial, Capacity Write Up

  1. 1. Shouldice Hospital Capacity Case Study Paul Aguilar Amir Assad Jin Cha Scott Skinner Team Crucial
  2. 2. Shouldice Hospital Introduction <ul><li>Hospital specializes in hernia repair surgery </li></ul><ul><li>Currently facilitates 7,000 surgeries per year </li></ul><ul><li>Effective operations with quick turn-a-round </li></ul><ul><li>Patients subject to early ambulation, which promotes healing </li></ul>Hospital only accepts patients with uncomplicated external hernias, in otherwise good health .
  3. 3. Operations Schematic Operations Schematic From “Start” to “Finish”, The Hernia Patient Processing System Spans A Three Day Period. 30 30 60 90 90 90 60 30         30 30                               30 30 30           30 30 30           30 30 30           30 30 30 Total         Sun               Sat               Fri       Thur         Wed         Tue         Mon Sun Sat Fri Thur Wed Tue Mon Check-in CURRENT “DAY ONE” INTAKE LEVELS On Each “Day One”, An Average of 30 New Patients are Admitted OPERATION INTERFACE On Each “Day Two” The 30 Previously-Admitted Patients Undergo their Hernia Operations DISCHARGE SEQUENCE On Each “Day Three” The 30 Patients That Were Previously Administered a Hernia Operation are Discharged Surgeons are Scheduled to Perform Hernia Operations Monday through Friday “ DAY ONE” CAN OCCUR ON THESE DAYS Patient Intake Process Begins with Screening and Pre-Operative Exam. Day Ends With Orientation Dinner and Social with “Recovering Patients” “ DAY TWO” CAN OCCUR ON THESE DAYS Patient is First Administered a Local Anesthetic. Hernia Operation is Then Performed. Day Ends with a Dinner and Social With Newly Admitted Patients. “ DAY THREE” CAN OCCUR ON THESE DAYS Patient is Discharged From the Hospital. Values in Each “Total” Column Represent Aggregate Number of Patients In Hospital (System) Each Day. Each of These Patients Requires a Bed. Number of Beds in Hospital 89 89 89 89 89 89 89 90 89 = 101.12% Hospital Capacity Utilized With Current Average Patient Load Example: Determining Capacity Utilization
  4. 4. Capacity Problem Summary <ul><li>Shouldice is Currently Running at 72.23% Average Weekly Hospital Capacity </li></ul><ul><li>Average # of beds required per week is 150 </li></ul>PROBLEM AREAS: Hospital Over Capacity on These Days Sharp Capacity Utilization Drop, Limited Monetization on These Days 33.71% 33.71% 67.42% 101.12% 101.12% 101.12% 67.42% Sunday Saturday Friday Thursday Wednesday Tuesday Monday
  5. 5. Capacity Configuration Options <ul><li>Option 1: Maintain Current Hospital Capacity Configuration </li></ul><ul><li>Option 2: Hire Surgeons for Saturday, Extending Surgeries from Mon-Sat </li></ul><ul><li>Option 3 : Add a Second Floor to the Hospital </li></ul>
  6. 6. Option 1: Business As Usual 60 60 90 90 90 90 60 Total 30         30 30 Sun     Sat         Fri   30 30 30       Thu     30 30 30     Wed       30 30 30   Tue         30 30 30 Mon Sun Sat Fri Thu Wed Tue Mon Check In
  7. 7. Option 1: Business As Usual 60 60 90 90 90 90 60 Total 30         30 30 Sun     Sat         Fri   30 30 30       Thu     30 30 30     Wed       30 30 30   Tue         30 30 30 Mon Sun Sat Fri Thu Wed Tue Mon Check In Leave Capacity Configuration AS IS , Maintaining Current Operation Schematic While Monetizing Existing # of Beds.
  8. 8. Current Capacity Utilization 100% Capacity Utilization Utilization Exceeds Planned Capacity
  9. 9. Current Break Even Point Shouldice Breaks Even When Demand Reaches 60 Beds, Creating $1,400,000 in Profit.
  10. 10. Option 2: Saturday Surgeries 30 30 30 Adding 30 Additional Patients to the Hospital on Friday, Saturday, and Sunday 60 60 90 90 90 90 60 Total 30         30 30 Sun     Sat         Fri   30 30 30       Thu     30 30 30     Wed       30 30 30   Tue         30 30 30 Mon Sun Sat Fri Thu Wed Tue Mon Check In Employ Surgeons to Facilitate Surgery on Saturday - Amount Earned per Surgery $10,000 - Cost per Surgery $ 3,500 - Yearly Fixed Cost $22,000 Recommended Capacity Option
  11. 11. Option 2 Capacity Utilization 100% Capacity Utilization Utilization Exceeds Planned Capacity
  12. 12. Utilization Comparison Current Schematic Option 2 100% Capacity Utilization A Longer Period of Maximinum Facility Monetization
  13. 13. Option 2: Break Even Point Shouldice Breaks Even When Demand Reaches ~ 65 Beds, Creating $8,300,000 in Profit.
  14. 14. Option 3: Build a 2 nd Floor - Amount Earned per Surgery $ 10,000 - Cost per Surgery $ 3,500 - Yearly Fixed Costs $ 30,000,000 - One-time Construction Costs $ 8,800,000 44 44 88 132 132 132 88 Total 44         44 44 Sun     Sat         Fri   44 44 44       Thu     44 44 44     Wed       44 44 44   Tue         44 44 44 Mon Sun Sat Fri Thu Wed Tue Mon Check In Expand the Hospital By Adding an Additional Floor (Creating 14 Additional Beds / Day)
  15. 15. Option 3 Capacity Utilization Declining Rapidly The Remainder of the Week. Our Investment is Only Paying Off When Utilization is Close to 100%. 100% Capacity Utilization Utilization Approaches, But Stays Under, 100%.
  16. 16. Utilization Comparison Current Schematic Option 3 100% Capacity Utilization
  17. 17. Option 3: Break Even Point Shouldice Breaks Even When Demand Reaches ~ 95 Beds, Creating $1,7500,000 in Profit.
  18. 18. Indifference Point Analysis There is NO INDIFFERENCE POINT. Variable costs remain constant, regardless of which option you choose .
  19. 19. Decision Tree Analysis “ ADD A SECOND FLOOR” “ FACILITATE SURGERIES ON SATURDAY” $151,033,333.33 Expected Value (Over Five Years) $177,300,000.00 Expected Value (Over Five Years) BEST OPTION $31,566,666.67 $94,700,000 $295,300,000 $390,000,000 150                                                                                     $129,466,666.67 $194,200,000 $273,800,000 $468,000,000 180 66.67%       $47,833,333.33 $143,500,000 $246,500,000 $390,000,000 150 33.33%                                     $3,500.00 $22,000,000.00       $3,500.00 $30,000,000.00 $71,000,000.00 $213,000,000 $359,000,000 $572,000,000 220 33.33% $48,466,666.67 $145,400,000 $322,600,000 $468,000,000 180 33.33%   33.33%       Expected Value Profit Expected Cost Revenue Demand Prob Variable Cost Yearly Fixed Cost                     “ ADD A SECOND FLOOR” “ FACILITATE SURGERIES ON SATURDAY”
  20. 20. Our Recommendation <ul><li>With surgeries facilitated on Saturday, Shouldice realizes an additional full day of maximum facility monetization </li></ul><ul><li>The decision tree results detail that, over a five year period, Option 2’s expected value will exceed Option 1 </li></ul><ul><li>The break-even point for Option Two occurs sooner than Option Three, which makes it less risky from an efficiency standpoint </li></ul>Based on our capacity data / financial analysis, we recommend extending surgery facilitation to Saturdays .
  21. 21. Shouldice Hospital We thank you for your time. Paul Aguilar Amir Assad Jin Cha Scott Skinner Team Crucial

×