CASE STUDY:

Employee Layoffs at St. Marys Hospital

Apostol, Vianca Mae C.

De Belen, Bea Carmina N.
Cabanting, Nikki B.
Jose, Kayla Angelica Y.
Natividad, Alexandria Louise L.
Ong, Angel Jacklyn M.
Raquedan, Clarisse Joy G.

2017
Viewpoint
St. Marys Hospital is currently facing a difficulty in maintaining a positive financial
position. The case presents short-term and long-term problems of the hospital where in the
management aims to answer. The researchers of this study aim to recommend suitable and
effective solutions to the business current drawbacks.

Problem Statement
This study attempts to identify the existing problem in St. Marys Hospital:
The source of the problem for St. Marys Hospital is the large projected deficit for the
coming year. With $3,865,000 at stake the hospital cannot afford to continue its financial
course.

Objectives
This study aims to answer the problems that St. Marys Hospital is facing through:
Generate savings through employee layoff to recover occupancy rates loss of twenty five
percent (25%) within the implementation of the plan.
To layoff less than five percent (5%) instead of ten percent (10%) to give consideration for
employees caused by the said plan.
To create a new line of service focusing on existing and potential customers who prefer
medications and recovery at home to have a new source of revenue.

Areas of Consideration
Strengths
St. Marys Hospital is ranked as the third largest hospital in the Northwestern City
The hospital is known in the industry since 1902 which helped them build a strong brand
name, image and company reputation over the years
St. Marys is entirely nonunion and has never experienced an employee layoff
The company has a director of personnel, Ms. Sharon Osgood, who is a MA in Human
Resource Management
Weaknesses
Subsiding revenues due to a decrease in occupancy rates
The company has never experienced an employee layoff
Sister Mary Josephine views the employees as family which makes it difficult for her
to lay off employees
There are no definite and certain criterion for the planned employee layoff
Opportunities
The said layoff plan will provide a space for new and fresh employees with new
experiences and updated knowledge and skills who will be replacing those who have
been laid off
Build connections through joint ventures
Acquisition of rival firms, customers, or suppliers
Openings to explore emerging new technologies
Threats
The first two top hospitals in the Northwest City
The new hospitals or the increasing competition
The resignation of efficient employees due to job opportunities

Alternative Courses of Action

1. Work sharing
- Employment arrangement wherein two people are retained on a part-time or
reduced-time basis to perform a job normally fulfilled by one person. This
would effectively help St. Marys Hospital to reduce employees by reassigning
them to double shifts instead of permanently removing their position.
2. Pay reduction
- It is the act of reducing a salary. This can aid with the problem concerning the
plan to lay-off. By doing this kind of act, you get to keep your job rather than
getting unemployed.
3. Additional offer: In-house service
- In-house service refers to conducting an activity of operation outside the
premises of the company. This would cover up the loss of the occupancy rates
of twenty-five (25) percent by targeting potential customers.
4. Mergers and acquisition
- It is a management strategy that deals with purchasing and/or joining with other
companies. This is beneficial for both employer and the employee because it
has opportunity to leverage, for both cost and revenue synergies.
5. Accept internships
- Internships are students/trainees who work for an organization, most of the
times without pay just to gain work experience. In line with medical school,
internships are usually paid by the students thats why its beneficial to both
parties. If St. Marys Hospital would consider this an option, this could help
support their financial problems.
6. Hiring freeze
- This method aims to stop all non-essential hiring in order to manage human
capital costs since St. Marys Hospital is experiencing a financial crisis.
- If the management of St. Marys will not undergo the layoff this will be an
effective strategy since it stops any addition to current employee costs.
Analysis of Alternative Courses of Action

1. Work Sharing

Pros Cons
Sometimes having bad partner could lead to
It gives additional knowledge and skills about
miscommunication and that could result to
the job. If they used job sharing technique
misunderstanding. The administration at St.
then they would produce efficient employees
Marys Hospital should have to consider the
that could be a good credential to the hospital.
relationships of the employees.

It has better channels of communication, it

Another problem they would encounter is
gives way to communicate with different
the division of labor. In this case, some
types of people with different types of jobs.
employee would want less work rather than
In that way, they could build diversity in their
his partner.
workforce.

Another downside is that there would be a

If they would do Work Sharing, it would heavy competition because two people will
increase loyalty and hard work. Those two be given the same job and of course two
are effective traits in order to build a good people will battle to bring out the best in it.
company. So instead of helping the company, it would
just make it worse.
2. Pay Reduction
Pros Cons
Reducing the salaries of employees can have
a great impact on them. They can be
discouraged to work efficiently knowing that
The institution can cut expenses due to
they won't get a just compensation.
compensation. This can also serve as a
Furthermore, it might trigger them to find
motivation to employees to work hard. They
another job that would be beneficial to them.
will become transparent financially to
Also, this may seem negative to the
employees.
employees and the company might lose some
of their best employees.

3. Additional Offer: In-House Service

Pros Cons
Professionals can attend to the needs of loyal
patients who cannot go to do check-ups or The hospital will be needing additional
therapies. Hence, the hospital will gain professionals to attend to confined patients.
additional profit.
The hospital will be known by doing In-
The hospital will face adjustments due to the
House Service that may lead to an increase in
new service offered.
potential customers.
By providing additional services, additional
The professional will have a chance to expense is expected to occur since there are
enhance their profession in new environment. specific equipments needed for In-House
services.

This new service line can add value to the

institution.
4. Mergers & Acquisitions
Pros Cons
Joining a joint venture will result to a
decrease in revenue for St. Mary's hospital
Merging to other company will allow St. due to a purchase of common shares to other
Mary's hospital to expand the institution and company that the institution seeks to be part
have an economic recovery. of. This transaction will also result to a
transfer of ownership and control over the
institution.
It will enable them to build connections
outside the institution that will result to an
easy access for the needed hospital facilities.
Also, they can gain more patients and
referrals.

5. Accept internships
Pros Cons
In here, the hospital gets to keep a lot
amount of money because trainees in
hospitals doesn't pay interns. The university
Instead of giving salaries to the trainees, the
or institution itself will be the one to provide
hospital will provide interns an opportunity
all their needs in their work. But this can be
to communicate with the people who are
a terrifying condition for a trainee who is not
experts in their field and exercise their skills
financially capable as he or she could have
at the same time in return.
otherwise pursued a paid internship or a
part-time job and could have also earned
money for the work.
 6. Hiring Freeze

Pros Cons

This will give the management time to This will hinder the company from attaining
manage their finances by not adding to any employees with better or suitable skills and
human capital cost. knowledge.

Conclusion
A. Decision Matrix

Pay Reduction Hiring Freeze Additional Offer: In-

house Service
Ease of Medium High Low
Implementation 2 3 1

High Medium Low

Cost Effective
3 2 1

Medium High Low

Attainable
2 3 1

Total 7 8 3

High - 3
Medium - 2
Low - 1
B. Selection of Best ACA
The best alternative course of action based from the Decision Matrix is to conduct the
method of Hiring Freeze. It helps because it is one way of conserving cash and it aids as a
reflection of financial issues within a company. It allows an employer to consolidate current
employees and potentially restructure departments to complete the work that is essential for
serving the customers of the business. Even during the span of Hiring Freeze, clever employers
continue to think and act strategically and hire in areas where skills are difficult to find and in
positions that will immediately generate revenue for the business.