AGRIB 110
Human Resource Management in Agribusiness
Case No. 2
Employee Layoffs at St. Mary’s Hospital
St. Mary’s Hospital is a medium-sized, 400-bed hospital in a northwestern city. It was
established in 1908 by the Sisters of the Sacred Heart, an order of Catholic sisters. The facility has grown
gradually over the years and is now the third largest hospital in the city. It is entirely nonunion and has
never experienced an employee layoff since its inception.
Sister Mary Josephine has been the Chief Executive Officer of the hospital for 11 years. Eight
years ago she hired Ms. Sharon Osgood as Director of Personnel. Ms. Osgood has an M.A. in Human
Resource Management and has been instrumental in formalizing the institution’s human resources’
policies and procedures.
Occupancy rates in the hospital had run between 76 and 82 percent from 1970 to 1982.
However, since then, occupancy has fallen to 57 percent. Such declines have not been unusual for this
industry during this time period as a result of changing reimbursement policies, emphasis on outpatient
services, and increasing competition. However, the declining occupancy rate has affected this hospital’s
revenues to such an extent that it ran a deficit for the first time last year. The only response to these
changes thus far has been a tightening of requirements for equipment or supply purchases.
At the most recent quarterly meeting of the Board of Directors, Sister Mary Josephine presented
