Emily McCann

Shouldice Hospital Case Study

Case Synopsis
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This article discusses Shouldice Hospital, it’s patients, administration, and facilities.
Shouldice is a hospital that specializes in hernia repairs and patient recurrences. It is located in
Toronto, Canada and was founded by Dr. Earle Shouldice. Shouldice came up with the idea for
this hospital while performing an appendix removal on a seven-year-old girl. He decided that
postoperative patients should be able to have ambulation directly after surgery. Shouldice
Hospital encourages patients to move around after surgery and socialize with other patient’s to
create a more relaxing environment and a speedy recovery. Shouldice doctors all use the same
method which has created harmony at the hospital and lowered the employee turnover rate. The
facility includes a hospital and clinic which allows for about 30 operations per day. Shouldice
advertises their services through word of mouth and has become a prestigious institution due to
their fair prices and high quality of service.

Key Issues/Problems

Lack of Marketing:

The article states that Shouldice does not advertise directly to patients. Rather the hospital

relies on word of mouth from previous patients and doctor referrals. The patient experience is

something that the administration and employees care most about. With that being said, they

have created a culture at the hospital/clinic that gives patient’s enough satisfaction that they are

willing to spread word of the operations at Shouldice. As nice as that is, it still limits the hospital

to a very small pool within the medical market. The article continues to state that several of the

patients that come to their hospital/clinic were referred by doctors. The article further mentions

that doctors were “less likely to recommend Shouldice because of the generally regarded

simplicity of the surgery” (Heskett and Hallowell, 2). In this case, Shouldice can not entirely rely

on doctors who diagnose patients with hernias to give them a recommendation. Instead they

would have to rely on word of mouth and recommendations from alumni. Shouldice does not

want to market too aggressively because they fear they will have too much demand or will attract

copycats. If Shouldice wanted to expand their hospital/clinic into the United States, as mentioned

in the article, they might have trouble breaking into the market due to the fact that they have not

marketed their services and have no public reputation.

Lack of Resources:

Shouldice Hospital consists of two separate facilities; including the hospital and the

clinic. The hospital could hold a total capacity of eighty-nine patients at one time while the clinic

consists of five operating rooms, a laboratory, and a patient-recovery room. With the limited

space they have, Shouldice would struggle with more demand. The article states that the nurse to

patient ratio is 1:15 and each of their full-time surgeons and 8 part-time assistant surgeons

performs three to four surgeries per day. If demand increased, Shouldice would have to hire

more staff and expand their facilities. With that being said, if they cannot keep up with demand

they could lose market share. If other companies realize that Shouldice cannot handle demand,

they may take advantage and in turn take their patients.

Fear of Expansion:

Shouldice Hospital cares deeply about having good relationships with patients and

creating a good work environment that encourages collaboration and unity between colleagues.

Unfortunately, this limits them from expanding their practices and facilities. Shouldice

administration fears that expansion will tarnish the values that the hospital holds as mentioned

before. If the hospital were to include more services other than hernia repairs, they risk losing the

“Shouldice Method” and techniques may begin to vary between surgeons. They also risk losing

that meaningful relationship with their patients because they will have to focus on more people.

Shouldice has to make a decision on whether they want to increase their revenues and make their

company more public or if they want to maintain the harmony they have created within their

small practice.

Copycats:
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Another key issue that Shouldice could face is copycats. Because their reputation has

become strong due to good patient experiences, word of the hospital has become more public and

doctors from other clinics have come to see for what Shouldice was being run. Dr. Shouldice

stated, “I’m a doctor first and an entrepreneur second” (Heskett and Hallowell, 8). In this

context, he meant that as a doctor his first obligation was to help other surgeons be better which

could put Shouldice at risk of having other hospitals and clinics attempt to copy their practices.

Shouldice feared that other firms might attempt to take the Shouldice Method and possibly

tarnish their reputation if they performed the technique wrong. An example of one of Shouldice’s

copycats is The Canadian Hernia Clinic. If they don’t expand or market themselves better, they

could risk being beaten out of their market share by one of their copycats.

Questions to Assist in Exploring Key Issues/Problems

1. If the hospital wanted to expand into the United States, what would be their strategic

plan? What would their marketing plan be?

2. What is Shouldice’s current financial situation? Do they even have the funding to

expand?

3. What are Canada’s government regulations and how would they affect expansion

opportunities for Shouldice?

4. How will Shouldice deal with high demand but limited resources if they do not expand?

5. What are the company's alternative options to expansion?

6. How could Shouldice maintain relationships and company adhesiveness while still

allowing for more capacity?

7. Can Shouldice get a patent on the Shouldice method?

Alternatives
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In order to overcome their lack of marketing and fear of copycats, Shouldice could invest

in a marketing team and a lawyer so that they can market their products and possibly get a patent

on their methods. By doing this they can attract more potential patients while still being able to

have control over other firms trying to mimic their practices. Instead of relying on marketing

from word of mouth by patients and doctors, Shouldice could hire a sales team that could send

representatives out to doctors offices and other firms in order to speak on behalf of the hospital

from an employee’s perspective. If they get a patent, they could also invest in creating a

commercial or magazine article that could give them more exposure to more potential patients

and doctors. With more marketing they can eventually go public, increase their market share and

in turn expand into the United States market.

Another alternative that Shouldice could explore would be adding Saturday operations.

The article mentioned that this was a consideration but had stated that the point of the hospital

was so that surgeons would not have to work on the weekend. Instead of operating five days a

week the hospital would operate six out seven days a week. This would require doctors to work

one extra day a week and perform three to four more surgeries a week. The extra day of

operations would allow them to take more patients and generate more revenue. The advantage of

adding Saturday operations is that it costs the hospital nothing and takes away risks of the

hospital losing their methods and decreasing quality of work. Eventually, if they do this and

show that they are capable of holding that much demand, they may be able to expand and take

even more patients.

Another alternative that Shouldice should consider is getting a patent on the Shouldice

method. By doing this, they would not have to worry about copycats and could hold intellectual

property rights on their practices. This way if doctors came to see Shouldice’s work, the hospital
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wouldn’t have to worry about them trying their methods, doing them wrong and tarnishing

Shouldice’s reputation. This eliminates the risk of competition in their specific niche market

while maintaining the quality of the method.

Another alternative that Shouldice could consider is becoming a teaching hospital. By

doing this, Shouldice surgeons could still do their duties as doctors and help other doctors learn

while still maintaining the quality of their methods. They can also learn from other doctors and

give them the opportunity to perfect their methods in house while also spreading it to other

hospitals/clinics. This way they have control over who is using their methods and if they are

doing them according to Shouldice’s principles. This will allow the hospital to maintain it’s

values of creating adhesiveness and encouraging collaboration and community.

Decision Recommendations and Risks

It is recommended that Shouldice offers Saturday operations and builds another floor to

allow for more capacity and more operations per year. By doing this, the hospital will generate

more revenue and be able to expand even further into the market. If they want to expand while

still maintaining quality, the Saturday operations would allow them to spread out operations and

still focus on the patient-doctor relationship. This extra day will also allow surgeons to gain

more experience using the Shouldice method and create a more consistent rotation of nurses. It

might also decrease the nurse-to-patient ratio which would allow for better patient relationships.

It also gives working individuals the opportunity to get their operation done during the weekend

so they can return to work on Monday’s.

It is also recommended that Shouldice invests in hiring a marketing firm along with a

lawyer. By hiring a marketing team and lawyer, they will be able to better advertise their services

while maintaining intellectual property rights. Eventually word of mouth will stop and the rate at
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which doctors recommend Shouldice’s services will also decrease. In order to keep demand high,

they need to advertise themselves on a larger scale to a more public audience. They could start

marketing in Toronto and the areas surrounding it, to test its effectiveness. Once they get an idea

of what marketing strategy would work best for them, they can expand marketing efforts

throughout Canada. If they decide to expand their firm into the United States, they would also

have to conduct marketing research for that market because they might need to use a different

strategy.

It is also recommended that Shouldice that Shouldice becomes a teaching hospital or

opens a second firm. By doing this, they would be able to help other surgeons perfect the method

and maintain a culture of community and collaboration. Shouldice values a good work

environment that encourages adhesiveness. Becoming a teaching hospital would further their

efforts of collaboration while allowing them to maintain quality. It will also allow them to do

their duty as doctors by helping others and creating a culture that would last generations. The

article also mentions needing to find someone to succeed Dr. Degani when he retires and

becoming a teaching hospital could be a good way to find out who could carry on his legacy.

Having to teach others is a good way of learning the skill yourself and perfecting your methods.

The risks associated with these recommendations include risk of not getting a patent, risk

of too high demand with too few resources, and risk of employees not being on board with

Saturday operations. The risk of applying for a patent is that the applicant might not receive the

intellectual property rights. If this were to happen, Shouldice would most likely be hesitant to

pursue marketing efforts which would stall the firm’s expansion in the market. The risk of

offering Saturday operations is that they might receive more demand and not have the resources

to support the extra patient’s. It also might encourage patients to overstay their needed recovery
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time. The risk that Shouldice should consider when implementing is that employees might not be

on board. At the beginning of the company, surgeons had weekends off and taking that away

from them might result in a higher turnover rate. All of these risks are reasonable but do not

outweigh the benefits of expanding Shouldice Hospital.

Action Plan to Implement

In order to implement these recommendations, Shouldice needs to develop an action plan.

This action plan should start with Shouldice getting all of their employees on board for Saturday

operations and inform them of schedule changes and new rotations. the n they have to start

applying for a patent for the Shouldice method. Once they receive the approval for the patent,

they would start the process of hiring a marketing team. Over the course of 6 months, the

marketing team would conduct market research within the industry to put together a unique and

effective marketing plan for the firm. Once the market research is conducted and the marketing

strategy is determined they have to start a marketing campaign. While market research is being

conducted, they would have to begin the construction of an additional floor and purchase new

furniture and equipment to house new patients. When construction is complete, Shouldice can

then begin accepting more patients and eventually expand into other markets.

Key Lessons

● Creating a good corporate environment can result in a community like culture and

decrease turnover rate.

● Specialization can create good culture and patient relationships but can prevent or

slow down possible expansion.

● A company's values don’t always match up with their strategic plan. In

Shouldice’s case, he had to decide whether or not he wanted to let other medical
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professionals see his methods or not. He had to decide whether his values as a

doctor were more important than his strategic plan as an entrepreneur.

Work Cited

Hallowell, Roger and James Heskett. “Shouldice Hospital Limited (Abridged).” Harvard
Business School, 2005. pp 1-14.