Shouldice Hospital Case Solution Essay Introduction

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Shouldice Hospital Case Study

...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 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......

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Shouldice Hospital

...1. Problem statement With the increasing demand on Shouldice Hospital, the hospital management is looking to increase the capacity of the hospital to meet the demand without sacrificing the quality of service the hospital offers and has built up over 30 years. 2. Situation analysis Shouldice hospital is a well-known hospital for its specialization in hernia operations. Last year, Shouldice performed operations on 7500 patients. The greatly developed technique that the hospital uses and the excellent customer service that all staff members and doctors work hard to provide give the hospital a great reputation. Thisincreases demand on the hospital as its exceptional reputation increases patients’ desire to have their hernia operations performed at Shouldice hospital. As per the customer service, the patient should arrive one day before the operation and stay one day after for a total of 3 days. The first day gives the patient the opportunity to understand his or her situation by meeting with other patients and sharing their personal experiences. Inaddition, the patient pairs with another who has similar interests and hopes. As a result, the patient forgets their fear and enjoys their time. The journey does not end by leaving the hospital; Shouldice has a yearly event where all patients are invited to mingle, socialize, and see the doctors and staff. Currently the hospital has 90 beds, 12 full time surgeons, 7 part-time assistances, 5 operating rooms, a patient recovery......

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Shouldice Hospital

...Executive Summary Shouldice Hospital is the world’s leading centre of excellence in abdominal wall hernia repair . Shouldice’s reputation has been built on an exterior quality service and a high rate of successful hernia repair operation. A 99% success rate in hernia surgery has long been the benchmark for medical professionals internationally. Shouldice has averaged 7,000 operations annually, while last year it performed 7,500 operations. The patient number increased a lot in recent years. The hospital’s current capacity cannot meet extensive increased patient demand. The senior manager of the hospital needs to find the best option to expand the capacity to service unsatisfied demand while maintaining control over the high quality service delivered. Shouldice Hospital has a unique operation system to ensure its success. The notable features contributed to its service delivery system are innovative hernia repair technique; specialized program of care and recovery; and sociable atmosphere in the hospital. However, the utilization of overall capacity is not high. Current operation system does not run very efficiently. Shouldice needs to take steps to redesign its operation system to increase the capacity utilization. External analysis shows that Shouldice can use currently available high technology to further improve its operation quality. There are certain medical and health related laws to regulate hospital’s operation. In addition, Shouldice needs to commit to social......

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Shouldice Hospital Case

...The Shouldice Hospital was created by Dr. Edward Earle Shouldice who is the inventor of the Shouldice method which is a hernia surgery designed to reduce recovery time and improve surgical results. The method was in response to men who couldn’t enlist in the military due to complications and it would quickly restore their physical fitness for military training. Due to high demand and scarce hospital space, Dr. Shouldice decided to open up his own hospital specializing in his unique hernia repair method. At the Shouldice hospital, only external types of hernias were performed creating a facility that offers expertise and specialization in their service. There are numerous characteristics of the Shouldice hospital that differ from most other hospitals. The most significant difference is the performance of a single operation and nothing else. This helps provide customers were assurance that they are being taken care of by knowledgeable professionals who have performed hundreds of similar operations. Not only were they getting a quality service, but a speedy recovery time helped to add value to their experience. In addition to the surgery received, the entire experience of a quick check in, a comfortable atmosphere, an opportunity to create relationships, well prepared meals, and the freedom to move around are all services which help to differentiate themselves from your typical hospital. This helps to relieve stress and anxiety many people have when getting a surgical......

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Shouldice Case Study

...Case Study 2: Shouldice Hospital Kenneth Snell, David Drummond 1. How successful is the Shouldice Hospital? a. Perform a comparison of the cost to patients at Shouldice vs other Hospitals The cost to a patient at Shouldice is based on an average 3.5 day stay: ($320.00/day x 3.5 days) = $1120.00 $650.00 surgical fee $300 anesthesia fee (20% of the patients) = 300 x .2 = $60.00 Average cost to patient is $1120.00 + $650.00 + $60.00 = $1830.00 Average charge for operations performed at other facilities: $5,240.00 b. Perform an analysis of the profitability of the operation at Shouldice. Include Return on Investment (7,600 patients/year) x $1120.00/patient = $13,908.00 annually Operating budget for the clinic: $3.5M Operating budget for the hospital: $8.5M Estimated annual net income: $13.9M - $12M = $1.908M *Net income is the numerator for any return calculation, and typically shareholder’s equity and total assets would be in the denominator. Since insufficient data was given to estimate total INVESTED CAPITAL in this business, ROI cannot be effectively calculated. c. How is all this achieved? How do you account for this performance? The keys to financial success for the hospital is that Shouldice manages its expenses to reduce overhead costs through allowing patients to be active participants in the service delivery process,......

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Case Study of Shouldice Hospital

... CASE DY STUOF SHOULDICE HOSPITAL 2ND JUNE 2014 INTRODUCTION The Shouldice Hospital, located in Thornhil, Ontario is considered a global leader in hernia repair and recovery. The Shouldice Hospital was established in 1945 by Dr. Edward Earle Shouldice.   Major Dr. Edward Earl Shouldice saw many men denied enlistment into the army because they were deemed physically unfit to serve due to the need of hernia surgery.   Dr. Shouldice developed an innovative technique to repair hernias during this World War II era and has been known in the medical world for his superior methods ever since.   Shouldice created a method that included factors such as a local anesthetic, the abnormal nature of the surgical procedure itself, encouraging movement following the surgery, and many other postoperative methods used by his team. Using these factors, Dr. Shouldice developed a surgical technique for repairing hernias that were superior and much more efficient than other methodologies. HISTORY Dr. Edward Earle Shouldice graduated from the University of Toronto in 1916. During World War II, he was called to serve on the Medical Examining Board. Dr. Shouldice, a major in the army, found that many young men willing to serve their country had to be denied enlistment. These men needed surgical treatment to repair their hernias before they could be pronounced physically fit for military training. In 1940, hospital space and......

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Shouldice Case Study

...ldi Case Study 1: Shouldice Hospital Limited 1. What has the leadership of Shouldice been excellent at? Shouldice leadership has been able to develop one of its surgical service lines, inguinal hernia repair, to an “internationally-recognized” brand. This has allowed Shouldice to dominate the market share and create a demand for its specialized services resulting in financial stability. The creation of this brand also has a strong influence with how the organization functions and how it is perceived. Levey (n.d.) reveals why branding creates organizational value. Levey expresses that “from a marketing or consumer perspective, it is the promise and delivery of an experience.” Shouldice leadership has also created an organizational culture that provides employees a sense of purpose, motivation, and opportunity to enhance their skills. Levey (n.d.) adds that a “brand is the greatest asset for uniting employees around a singular culture and mission.” 1. What has the leadership of Shouldice been excellent at? Shouldice leadership has been able to develop one of its surgical service lines, inguinal hernia repair, to an “internationally-recognized” brand. This has allowed Shouldice to dominate the market share and create a demand for its specialized services resulting in financial stability. The creation of this brand also has a strong influence with how the organization functions and how it is perceived. Levey (n.d.) reveals why branding creates......

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Shouldice Hospital Case Study

...Case 1: Shouldice Hospital Limited Q1: How does shouldice compete? In other words why do patients come to shouldice hospital? Two main reasons drive customers into choosing Shouldice over other competitors/hospitals. The first is quality, and the other is cost. talking about quality of the Shouldice “product” includes both, quality of the operation, and quality of post operation activities and overall services offered by Shouldice. The Shouldice method is a focused, specified operation that deals with Hernias, with a reputation that has been built throughout the years and is still growing; the hospital doesn’t even use advertisement to attract patients, the “word of mouth” way of advertisement has been doing very well for them so far. The superior quality offered by the Shouldice method, gives the patients a motive to operate at Shouldice for what it gives regarding peace of mind, low risk and low recurrence rates. Away from the in-operation excellence in quality, the services that Shouldice hospital offers are more tempting than other hospitals. Patients do not feel that they are in a hospital; they consider it more like a recovery vacation with an excused absence from work without feeling any guilt in that. Moreover, it gives patients the independence and sense of control and preserves patients’ dignity when it comes to the fast recovery after the operation, and when it comes to the fast ambulation process after the operation, where a patient rises up and walks by......

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Shouldice Hospital Estudio #4 Shouldice Hospital Integrantes: Ronald Batista 07-40635 Isabel Blanch 07-40657 Jocelyn Machado 08-10659 Eduardo Rocco 08-10947 Stephanie Ziritt 08-11220 Profesor: Manuel Martín Sartenejas, Febrero de 2013 1. CONTEXTO El hospital Shouldice (nombrado luego de su fundador, Earle Shouldice) es un centro clínico donde se operan únicamente hernias abdominales externas. El 82% de los procedimientos quirúrgicos que realiza el hospital son operaciones primarias (operaciones realizadas por primera vez que requieren intervenciones de 45 minutos de duración) y el 18% restante se compone de pacientes con hernias recidivantes, reparadas anteriormente en otra clínica. Earle Shouldice desarrolló una técnica quirúrgica para la operación de hernias que supera a otras técnicas en cuanto a procedimiento, anestesia necesaria, tiempo y recuperación del paciente. Esta técnica es utilizada por todos los médicos cirujanos que trabajan en la clínica, sin embargo, el método Shouldice no es un método público conocido por otros médicos fuera del hospital. El hospital se compone de 5 quirófanos, un laboratorio, sala de reanimación y un área de aprovisionamiento central donde se limpian y esterilizan los instrumentos quirúrgicos. Cuenta con oficinas de recepción y contabilidad, una gran sala de espera (con una capacidad para 50 personas), 6 salas de exploración, 3 oficinas administrativas y 89 camas para los pacientes. Actualmente, el Dr. Shouldice desea......

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Shouldice Hospital Case Analysis

...Introduction Shouldice is a private hospital located in Toronto, and was founded by Dr. Earle Shouldice in July 1945. The hospital started out as a six-room nursing home in downtown Toronto. As demand increased for hernia operations, Dr. Shouldice expanded the facilities to a capacity of 36-beds, which turned into an 89-bed facility after the addition of a large wing. Dr. Shouldice is a famous doctor known for his private method of hernia surgery. Unlike normal methods, his way allowed the patient to be up and about right after surgery, and move freely about by the end of the day. When patient numbers increased, Dr. Shouldice decided to exploit this by opening up his own hospital. His hospital, Shouldice Hospital, specialized in external hernia cases and proved to be a big success. Dr. Shouldice died in 1965, but his hospital continued to grow, and by the end of 1982, his hospital had 6,850 operations per year. Issue Statement The Shouldice Hospital is a successful and admired organization. However, due to its unique surgery method, and without the assistance of mass advertisement, they are operating close to 100% capacity. Thus, Shouldice fears not being able to meet future demand. Moreover, “competing” hospitals and surgeons utilize and perform the Shouldice method (and advertise as such), although they often perform the method incorrectly, ultimately giving the Shouldice Hospital a bad reputation. Shouldice’s critical concerns are meeting future demand,......

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Shouldice Hospital

...© 2007-2008 Richard E Murphy Even Swaps - Shouldice Hospital 18 November 2007 1. How Successful is Shouldice Hospital? Shouldice Hospital is a highly successful business that maintains a focused service delivery system due to the success rate of its surgeries, its low employee turnover, its ability to maintain high quality standards, its ability to keep costs low and to remain profitable, and most especially the positive evaluations of its patients. Its strengths can be attributed to stringent policies of staff training in the Shouldice surgical method; the preservation of a communal atmosphere amongst both the staff and with the patients; the implementation of efficient and cost-effective facility operations; and high demand for operations. Its less successful aspects include: an inability to serve a considerable unsatisfied demand, as it is operating at near-full-capacity in its present facility; limited marketing; and an inability to prevent proliferation of its surgical techniques. 2. What Accounts for Shouldice’s Performance? a. Unique Operating Techniques Shouldice has vertically integrated nearly all operational functions in an effort to tightly control its distinctive techniques for performing hernia operations, as well as for pre- and post-operative patient care. The hospital has been remarkably successful in its ability to provide its patients with a quick, quality, low cost surgery in a comfortable environment, and has enjoyed......

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Shouldice Hospital Case

...1. How successful is the Shouldice Hospital? Process: Day 1 Day 2 Day 3 Day 4 Steady state scenario Monday Tuesday Wednesday Thursday Friday Saturday Sunday Monday 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 29 29 29 29 Table 1 Shouldice hospital is currently only focussed on hernia operations. Their USP is their focus on early ambulation. They also put more emphasis on post-operative care for 2-3 days offering accommodation. Other hospitals do not focus on early ambulation or accommodation after operation. This gives Shouldice a competitive advantage. The procedure is well defined and structured. As it is mentioned in the case, change in procedure usually requires the chief surgeon to be present to look after the proceedings. This fixed procedure ensured that the primary operations got over in 45 mins, and minimal chances of secondary operations on Shouldice operated cases. The secondary operations also take about 90 mins. The number of operations performed by a typical general surgeon is 25-30 per year whereas the surgeons at Shouldice perform 750 operations per year. They are well paid and looked after with a profit sharing plan, and this applies to even the administrative staff along with nurses and surgeons. Some features: Infrastructure - A 17,000 square foot main building on a 130 acre estate with 89 beds for patients with 7600 operations performed per year as of......

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Shouldice Hospital

...Case 5: Shouldice Hospital Limited (Abridged): Phần Uyên History of Shouldice Hospital: Dr. Earle Shouldice was interest in early ambulation stemmed, his medical license permitted him to operate anywhere, even on a kitchen table. 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. In 1965, before Dr. Shouldices died, Shouldice Hospital Limited was formed to operate both the hospital and clinical facilities under the surgical direction of Dr. Nicolas Obney By 2004, 7.600 operations were performed per year The Shouldice Method: Only external (vs. internal) abdominal hernias were repaired at Shouldice Hospital. The most first-time repairs required 45 minutes. The recurrences and very difficult repairs required 90 minutes. The end result of Shloudice method reinforced the muscular wall of the abdomen with six rows of sutures under the skin cover They used sleeping pills, pain killer plus a local anesthetic, a injection of Novocain in the region of incision, this allowed immediate post-operative patients ambulation and facilitated rapid recovery The Patients Experiences: Approximately 10% of Shouldice patients came from outside the province of Ontario, most of these from the United States. Out-of-town patients were often diagnosed by......

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Shouldice Hospital Case

...Question 1 Model Shouldice Hospital as a processing operation with products, attributes and resources. Model Shouldice Hospital as a Processing Operations unit can be viewed as having the following Process structure. Input: The patients entering the Clinic after getting the confirmation on the date of the operation. Output: The output in this case is the number of successfully operated patients who underwent the entire process. Flow Unit: This is one patient that go through the process. The Process starts when the patient enters the hospital and ends on the day of the discharge. We can also find that the number of inputs in the process may not be equal to or could be less than the number of output. There are patients who are sent back because of the medical complications such as overweight and if the diagnose proves to be negative. The process can be viewed in a diagram. There are waiting times in between each location. Process view of Shouldice hospital Limited Network of activities and Buffers (Patients at different departments ) (Waiting time for each) * Input Output Patients operated patients Capital and Labour Products Since the case is from a service sector the set of process outputs include tangible and intangible interpretation. The product of the service can be inferred as the number of cured patients but along with that there are some intangible aspects such as the experience of the patients in the Hospital. ......

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Shouldice Hospital Case Study

...INTRODUCTION The Shouldice Hospital, located in Thornhil, Ontario is considered a global leader in hernia repair and recovery. The Shouldice Hospital was established in 1945 by Dr. Edward Earle Shouldice. Major Dr. Edward Earl Shouldice saw many men denied enlistment into the army because they were deemed physically unfit to serve due to the need of hernia surgery. Dr. Shouldice developed an innovative technique to repair hernias during this World War II era and has been known in the medical world for his superior methods ever since. Shouldice created a method that included factors such as a local anesthetic, the abnormal nature of the surgical procedure itself, encouraging movement following the surgery, and many other postoperative methods used by his team. Using these factors, Dr. Shouldice developed a surgical technique for repairing hernias that were superior and much more efficient than other methodologies. SWOT ANALYSIS Strengths Very efficient process Specialized Expertise Culture, atmosphere unlike hospitals Reliable and high quality service Competitive Pricing Minimal overhead Capacity utilization Customer satisfaction Quick recovery time for patient Weaknesses Narrow product line Inability to market due to inability to keep up with potential demand Location (Decrease in demand during winter months) Number of locations Age of some key personnel Opportunities New locations, Possible location in United States Create new market segments...

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Dr. Shouldice established a speciality hospital in 1945 near downtown Toronto, Ontario, for the treatment of hernia with a special focus on primary hernia. Starting as a small six room nursing home in 1945 the hospital grew over the years to become an 89 bed facility by 1982. Dr. Shouldice’s seminal contribution was to develop a surgical technique for the treatment of hernia which proved to be far superior to the existing practice and had crystallized from his observations over the years that quick and early ambulation following the operation expedited the trouble free recovery process.

This surgical technique, popularly known as the ‘Shouldice technique’ was based upon incorporating operative and post operative processes such as the “use of local anaesthetics, the nature of surgical process itself, the design of a facility to encourage movement without unnecessarily causing discomfort and the post operative regimen designed and communicated by the medical team”, which facilitated early ambulation. The entire process significantly reduced the stay in the hospital for the patients and facilitated their early return to their jobs. It was also the cheapest option available to the patients. Besides, the entire experience of staying in the hospital itself was a pleasant experience for the patients. This constituted a major “value proposition” for the patients who themselves provided “word of mouth” publicity of the benefits and experience undergone by them at the hospital and contributed greatly towards the success of the Shouldice Hospital.


Facts of the case reveal that the Shouldice hospital had acquired a huge reputation of a hospital which offered reliable and quality medical facility for the treatment of hernia at a very cheap cost. This had also led to the expansion of the hospital from a modest beginning into a modern facility which carried out 6850 operations in 1982. We carried out the SWOT analysis for the Shouldice Hospital which reveals the following:


Unique and pioneering surgical technique for Hernia operation which considerably reduced the suffering of the patients and led to much quicker recovery as compared to the existing methods. The Shouldice technique enabled the patients to resume their normal routine and jobs in a much shorter period of time ( one to four weeks) as compared to other hospitals ( two to eight weeks).

Standardisation of operating procedures which led to efficient utilisation of the medical staff and other resources. Doctors could conduct 600 operations in a year as compared to 25 to 50 operations per year in other hospitals.

Experienced doctors and nursing staff through careful recruitment philosophy wherein experience, good education, knowledge about domestic situation, personal interest and habits (consciously avoiding people with drinking and drug problems), and their willingness to adhere to the shouldice technique were evaluated to match their value systems with that of the hospital.

‘Un-hospital’ like experience for patients through measures such as carpeting the hospital that gave the place smell other than that of disinfectant. And encouraging interaction and recreational activities amongst the patients and also with the hospital staff made the stay of the patients a pleasant experience. Matching of roommates based on similar background and the scheduling of their operation at the same time are examples and care exerted to create a friendly and warm environment which is believed to lead to faster recuperation. They developed feeling of belongingness to the hospital during the stay. These patients also proved to be the main source of ‘advertising’ for the hospital through ‘word of mouth’ publicity.

Unique recuperating techniques that stressed upon ambulation led to minimizing the cost by cutting down on various post operative patient care activities such as the reduction in laundries, common dining areas, common recreational facilities etc. This had also resulted low nurse to patient ratio compared to other similar hospitals.

Offering the cheapest option for treatment of hernia in the region.

Ensuring uninterrupted workflow through measures such as flexibility in the use of administrative staff

High reliability of Hernia operation with very small recurrence rate of 0.8 % as compared to high recurrence rates of close to 10 % as in the United States.

Motivated doctors and nurses due to higher salaries and profit sharing systems in the form of bonuses compared to other hospitals in the region, greater leisure and reasonable workload leading to sense of belongingness amongst the doctors and nurses leading to low turnovers.

Encouraging group cohesiveness and clan type of coordination mechanism within the organisation leading to greater operational efficiency.

The above factors resulted in tremendous credibility for the Shouldice Hospital which positioned it in the market as a hospital which ensured cost effective, reliable, caring and responsive service to the hernia patients. The success of the Shouldice hospital is reflected through its profitability as shown below:

Financial implication is discussed below.






Thus, the entire cost is recovered in the first year itself. Thus, this alternative is profitable. Moreover, this alternative also reduces backlog. Ensuring the same level of quality of service will be an issue as workload on the staff and doctors will increase.

Adding an additional operating day on Saturday is also a valid consideration. It would utilize idle plant capacity. This is discussed in the table given below.

Financial implication of this alternative is discussed below.




This alternative is profitable and it also reduces backlog.

Ensuring the same level of quality of service will be an issue as workload on the staff and doctors will increase and in fact some of the senior doctors and staff are opposed to it.

Opening new centre in Canada or in US can be considered. However the point to consider is whether to have it as complete hospital or clinic services centre which would act as screening centre for patient requiring surgery. This would reduce the time spent on non-operation activities by the surgeons.

In order to meet the unmet market demand the option of adopting franchisee model on revenue sharing basis could also be explored. The main hospital could help set up these franchisees by providing the standardised procedures and training the doctors and other staff. These franchisees can cater to the requirements of profitability and reduction of backlog. However, the biggest constraint in such an approach is that the same level of quality as the main hospital will be extremely difficult to replicate. Hence, this option is not a viable proposition.

Given the fact that the hospital is a profitable business entity and has a strong reputation in the market of a quality medical service provider there could be a strong inclination to maintain status quo. In view of these facts there may not be an immediate stimulus for tampering with the existing setup. However, the risk with such an approach is that the organisation will become fossilised and might end up losing the position in the market in the long run.


Based on the analysis of the alternatives we would recommend adoption of the first alternative i.e. to increase the number of beds by 40 % as this would generate the maximum revenue. However, the success of this alternative would depend upon ensuring that the quality of service is not compromised. In case quality cannot be ensured then the status quo needs to be maintained as the organisation is profitable.

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