# Sholdice Hospital

Essay by animeshsinha123 November 2004

The Shouldice Hospital Limited

Q1) How successful was the Shouldice hospital and how do you account for its performance?

Ans ) The success of a hospital which basically is a part of the service industry can be done in 2 ways -

The financial perspective

The service perspective

Financial analysis :

Total market

Nos of operations in US = 600000 ( in 1979 assuming it is the same in 1983)

Nos of operations in Shouldice = 6850 (in 1982)

Market share = 1.14%(assuming that the market size remains the same)

Price charged per customer on average (assuming similar price for primaries and recurrence)

Accommodation = \$ 111 * 4 (4 days)= \$ 444

Surgery cost = \$ 450

Assistant surgeon = \$ 60(assuming every operation uses an assistant surgeon)

Anesthetic = \$ 75(assume we are using an anesthetic in every operation )

Transport costs = \$ 400(average of \$ 200 to \$ 600)

Total expenses for the customer = \$ 1429

Total revenue of the hospital = \$ 1029* 6850

= \$ 70,48,650

Cost incurred by the hospital:

Salaries of the surgeon = \$ 50000* 12

= \$ 600,000

Bonus = \$ 500,000

Assistant surgeon = \$ 30.6*

6850

= \$ 209610

Anesthetist = \$ 300 * 261(working days in an year)

= \$ 78300

Food expenses = \$ 1.1 * 400 * 261

= \$ 114840

Total expenditure = \$ 24,27,750

Gross operating margin = \$ 46,20,900

(This is excluding the other expenses which are not given in the case and also it considers only the variable costs and not the fixed costs of the building and the operation theater )

As we can see , the gross operating margin is substantial and hence the hospital is very successful in terms of the money

Now the other parameter that...