Rommel E. Lubon
Case Study – Employee Layoffs at St. Mary’s Hospital
1. Identify the major problem or problems at St. Mary’s Hospital and the causes.
The occupancy rate at St. Mary’s hospital has fallen from 82% in 2002 to 57% in 2003. This is
cause by recent reimbursement policies, new emphasis on outpatient services, and increasing
competition and financial crisis of 2008 and 2010. Consequently, the hospital incurred a deficit
for the first time in 2003. Management then decided to tighten requirements for equipment and
supply purchases. During the latest quarterly meeting, Sister Mary Josephine informed the board
of a forecasted operating deficit of $ 3,865,000 for the coming year. This is expected to continue
unless some additional revenue or new source for saving can be identified and implemented.
Hence, the board recommended that Sister Josephine consider laying-off up to 10 percent of the
hospital’s workforce.
