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Hospital layoffs. One facility's experience with a work force reduction
1Saint Francis Hospital and Nursing Facilities, Memphis, TN, USA.
Abstract:
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.
Insights
Tennessee's Medicaid managed care transition led to hospital layoffs. St. Joseph Hospital reduced staff by 162 positions to balance its budget, offering career placement services to affected employees.
Area of Science:
- Healthcare Management
- Hospital Administration
- Public Health Policy
Background:
- Tennessee's Medicaid program conversion to managed care in 1994 significantly impacted hospital patient census.
- St. Joseph Hospital and Health Care Centers faced substantial financial pressure requiring immediate expenditure reductions.
Purpose of the Study:
- To detail the strategic response of St. Joseph Hospital's Operations Leadership Group (OLG) to a mandated budget deficit.
- To outline the process and outcomes of a significant workforce reduction initiative.
Main Methods:
- The OLG identified a need to cut $8 million, with $6 million from wages and salaries, to achieve a balanced budget.
- A consulting firm assisted in determining that layoffs were necessary to meet financial targets.
- 162 employees (22 managers, 140 hourly) were laid off following criteria approved by labor relations counsel.
Main Results:
- Layoffs were executed in an organized manner over nine days.
- A career placement center was established, utilized by 105 of the 162 laid-off employees.
- Within 45 days, 35 individuals (21%) secured new employment through the placement services.
Conclusions:
- The hospital successfully navigated a challenging financial period through strategic workforce reduction.
- Proactive communication with media and remaining staff helped manage anxieties and gather feedback.
- The implementation of a career placement center demonstrated a commitment to supporting displaced workers.