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Case 5 Shouldice Hospital Limited (Abridged) Two shadowy figures, enrobed and in slippers, walked slowly down the semi-darkened hall of the Shouldice Hospital. They didn't notice Alan O'Dell, the hospital's manag-ing director, and his guest. Once they were out of earshot, O'Dell remarked good naturedly, "By the way they act, you'd think our patients own this place. And while they're here, in a way they do." Following a visit to the five operating rooms, O'Dell and his visitor once again encountered the same pair of patients still engrossed in dis-cussing their hernia operations, which had been performed the previous morning. HISTORY An attractive brochure that was recently printed, although neither dated nor distributed to prospective patients, described Dr. Earle Shouldice, the founder of the hospital: Dr Shouldice's interest in early ambulation stemmed, in part, from an operation he performed in 1932 to remove the appendix from a seven-year-old girl and the girl's subsequent refusal to stay quietly in bed. In spite of her activity, no harm was done, and the experience recalled to the doctor the postoperative actions of animals upon which he had performed surgery. They had all moved about freely with no ill effects. By 1940, Shouldice had given extensive thought to several factors that contributed to early ambulation following surgery. Among them were the use of a local anesthetic, the nature of the surgical procedure itself, the design of a facility to encourage move-ment without unnecessarily causing discomfort and the postoperative regimen. With these things in mind, he began to develop a surgical technique for repairing herniasi that was superior to others; word of his early success generated demand. Dr. Shouldice's medical license permitted him to operate anywhere, even on a kitchen table. However, as more and more patients requested operations, Dr. Shouldice created new facilities by buying a rambling 130-acre estate with a 17,000-square foot main house in the Toronto suburb of Thornhill. After some years of planning, a large wing was added to provide a total capacity of 89 beds. Dr. Shouldice died in 1965. At that time, Shouldice Hospital Limited was formed to operate both the hospital and clinical facilities under the surgical direction of Dr. Nicholas Obney. In 1999, Dr. Casim Degani, an internationally-recognized author-ity, became surgeon-in-chief. By 2004, 7,600 operations were performed per year. 'Most hernias, known as external abdominal hernias, are protrusions of some part of the abdominal con-tents through a hole or slit in the muscular layers of the abdominal wall which is supposed to contain them. Well over 90% of these hernias occur in the groin area. Of these, by far the most common are inguinal hernias, many of which are caused by a slight weakness in the muscle layers brought about by the passage of the testicles in male babies through the groin area shortly before birth. Aging also contributes to the development of inguinal hernias. Because of the cause of the affliction, 85% of all hernias occur in males. Professor James Heskett prepared the original version of this case, "Shouldice Hospital Limited," HBS No. 683-068. This version was prepared jointly by Professor James Heskett and Roger Hallowell (MBA 1989, DBA 1997). HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright Ci 2004 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechani-cal, photocopying, recording, or otherwise—without the permission of Harvard Business School.
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