1. How successful is Shouldice?

Shouldice is successful in a technical sense with its combination of low recurrence rate, low cost and short recovery time. According to www.webmd.com an inguinal hernia repair, which is the primary procedure Shouldice Hospital performs, has an average recurrence rate of 1% to 10%. The recurrence rate for hernia repairs performed at Shouldice is less than 0.5%. The average recovery time for this procedure is 1to 2 weeks for light activity and up to 4 weeks for full recovery. Shouldice patients often walk to the wheelchair from the operating table, are participating in light exercise the same day, and are back to work within 8 to 10 days. Costs for this procedure at other facilities range from $2,000 to $4,000 while Shouldice is able to perform it for under $1,000. Shouldice is also successful in providing a positive experience with nearly 80% of patients being swayed by a positive review from friends and family.

2. How does Shouldice maximize perceived customer value?

Shouldice maximizes perceived customer value by providing services of quality higher than the market at a cost lower than the market in an environment that has the feel of a country club rather than a hospital. They have succeeded in instilling such camaraderie in their former patients that tickets to an annual alumni convention sell out every year. Shouldice has succeeded in wrapping their medical care within a social experience usually restricted to vacations.

3. What, if any, marketing strategies has Shouldice used?

Shouldice’s marketing strategies are focused on providing their core competency wrapped up in a top class service experience. They rely primarily on brand loyalty and word of mouth advertising. Through the service and experience that their patients receive Shouldice creates a customer community, exemplified by the “in the trenches” bond the patients form with each other through the shared experience of surgery and healing in this unique environment. These bonds and community feeling persist as evidenced by the yearly conventions where there isn’t even any room for the wives. Signs it is working include nearly 80 percent of their new patients were referred by friends and family along with their global reach and reputation with patients who travel from 115 countries around the globe to receive this specialized care experience. Shouldice’s expertise has been recognized in “business and medical publications as a model of excellence in specialized patient care.” The fact that “500 of the world’s leading business schools have included” the Shouldice case study in their business programs lends to their position as an elite member of the service industry. An interesting side effect of this fact is that a continuous stream of new business professionals are aware of Shouldice as a pinnacle in the industry and may choose to have services provided there based on the research they did in regards to the Harvard Business Review case study.

4. What are the possible expansion options for Shouldice?

Possible options for expansion include adding another facility, either through franchising or under the same ownership. Shouldice provides such a cultivated experience that either of these options would have to be undertaken with care so as to not water it down. The key to franchising in particular is the system. Developing a system that is pervasive is the core to expanding success beyond the single facility. If they are looking to expand to additional locations they need to first focus on systemizing the operation in order to make it reproducible. In doing so, quality control can be standardized. Other options for expansion could include expanding on the existing facilities to add patient rooms and staff to support them. If they also increased the hours when they provide surgery services, more operations could be done each day. Another option for expansion would be to diversify by building on the idea of specialized services performed in a specific type of environment. Doing so would involve an innovative method of providing a different outpatient procedure in a way that is cheaper, more effective, and with a shorter recovery time.

5. What are the greatest dangers and potential problems facing Shouldice?

One of the greatest potential challenges facing Shouldice is unmet demand. If this demand remains unmet a competitor could be enticed to enter the market and absorb that unmet demand. This competitor could attempt to copy the service provided by Shouldice, possibly by hiring away staff from Shouldice. There could also be technological advances that identify a new procedure with reduced cost and recovery time. Increasing their capacity and diversifying their services could address both of these challenges.

6. What potential problems do you see in a service business that is highly “atmosphere-dependent” or “attitude-dependent”?

A service business that is highly “atmosphere-dependent” or “attitude-dependent” is also highly reliant on its employees. In such a company it is important to maintain morale and consistency within the staff. This could be an issue if an extensive effort is made to expand either through extending operating hours or facility space. Any expansion would involve new faces and new ideas. If these are not harnessed, the close knit culture of the staff that creates the community feeling for the patients might be endangered. This indicates that great care needs to be taken in hiring and training. They need to maintain the feel of flexibility and closeness in the business while building a replicable and expandable system.