Healthcare News: Hospital Layoffs and Financial Viability: Do They Go Hand-in-Hand?

Written by LeAnn Thieman, CSP, January 24th, 2013

Layoffs have become common news in the hospital and healthcare industry over the past couple years. Often times, the moves are used as a way to shore up short-term finances.

Most hospitals say layoffs are the last resort because they are well aware it is a sensitive area. Facilities will usually look at operational efficiencies, purchased services, materials costs and financial alternatives before cutting jobs. Anticipating future financial issues — decreasing reimbursements, decreasing volumes, increasing outpatient and primary care responsibilities, etc. — can mean an insurmountable problem down the road, which could ultimately lead to acquisition or closure.

Well-managed layoffs are designed to have the lowest impact on the staff and community as possible. This means a facility will look at closing open positions, attrition and early retirement packages before they look at letting others go. They should also be looking at minimizing impact on patient care, meaning departments that have layoffs are those that have an opportunity for greater efficiency or automation as opposed to a 5 percent reduction across the board.

The greatest adverse effects from hospital layoffs are felt if they are poorly managed. For example, if you lay off a large portion of your environmental services staff to save nursing jobs, nurses may be expected to take on some of the environmental job responsibilities, which is not only a skill mix issue, but also decreases nurse satisfaction as they are looking to focus more on their patients.

The other adverse effect is the hospital’s image and brand. Without a clear message and communications plan to help clearly establish the hospital’s position as to why it is moving toward layoffs, there is a greater chance of backlash from local media and the community itself.

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