Hospital layoffs. One facility's experience with a work force reduction

In 1994 the conversion of Tennessee's Medicaid program to managed care sharply reduced the census of all Memphis hospitals, including St. Joseph Hospital and Health Care Centers. St. Joseph's Operations Leadership group (OLG) decided that expenditures must be cut by $8 million-$6 million of it coming from wages and salaries--so the hospital could enter fiscal year 1995 with a balanced budget. With the help of a consulting firm, the OLG determined that the wage and salary cuts could be realized by laying off a certain number of employees. All workers were told, in a series of round-the-clock meetings, that 162 jobs (22 managers and 140 hourly workers) would be eliminated in nine days. The hospital's labor relations attorney approved the criteria according to which workers would be dismissed. On the designated days (one for managers, another for rank-and-file workers), the layoffs were completed in an organized manner. The OLG had arranged with a private firm to set up a career placement center for the dismissed employees. Of the 162, 105 took advantage of the center's services. Thirty-five of those (21 percent) had new jobs within 45 days of the layoffs. The OLG was straightforward with the local media about the layoffs. Hospital leaders calmed remaining St. Joseph workers' anxieties with a series of follow-up meetings. These sessions also provided the OLG with useful feedback on the way it had conducted the layoffs.