St Mary’s hospital, a non-union entity, is a medium sized hospital which was established in
1908 is the third largest hospital in a northwestern city after the continued growth
throughout the years. Since its inception i.e. 1900 until 2000 St Mary’s occupancy rates
had run between 76% and 82% but due to recent changes in reimbursement policies,
emphasis on outpatient services, increase in competition and financial meltdown of
2008-2010 the hospital faced financial consequences and its occupancy rates has fallen to
57% and has affected hospital revenue to such extent that it ran a deficit for the first time
last year and to date the only remedy to the deficit has been making changes in
requirements for equipment and supply purchases more rigid and tight. Robert Barry who
is the CEO of the hospital for the last 11 years presented in a meeting a weak f picture of
the hospital’s current financial position to the Board of Directors and predicted an
operating deficit of $3,865,000 for the coming year unless some additional revenue or new
source of income or savings can be recognized and implemented to save the financial
deficit of the hospital. To overcome with the dilemma and with the intensions of producing
short term savings, the Board recommended Barry to consider lay-offs up to 10 percent of
the hospital’s staff in those areas which are non essential.
The hospital considers its employees as family and has never experienced layoffs since its
inception and would therefore find it very difficult to start the layoff process. Since there
