What do large hospital do when they're in budget deficit?

loriangel14, RN · Feb 15, 2013

They can't just "let people go" and then hire new grads.The unon would have a fit and you can't just fire people for no reason.A hiring freeze would be likely though.

joanna73, BSN, RN · Feb 15, 2013

Yes hiring freezes, not replacing sick calls, and posting positions which remain unfilled are usual tactics. Asking nurses who are interested in retiring early and then giving them a package is another ploy. But new grads are hardest hit, because although new grads are cheaper to hire, the training costs money and time. Also, many new grads don't stay long on certain units, so facilities are reluctant to hire.

Deeee · Feb 15, 2013

Ok, that makes more sense. Thank you!

HouTx, BSN, MSN, EdD · Feb 15, 2013

I can only provide insight into how US hospitals respond to declining finances . . . in a nutshell:

There are 2 types of corrective actions - increase revenues & cut expenses. Since revenues are not the topic of discussion, and may not even be relevant in Canada, here's a summary of how expenses are normally handled

Again, there are 2 types of expenses: non-controllable and controllable. Non-controllable are those that are (for the most part) unrelated to patient care at all - building maintenance, depreciation, insurance, etc. The only way these can be cut is to get rid of 'hard assets' such as buildings and other assets that have to be maintained. You may see the organization trying to sell off peripheral items such as clinic buildings, mobile service vans, etc.

So, the majority of cost-cutting efforts will obviously focus on controllable expenses which consist of Supplies and Labor. There will be a huge emphasis on elimination of wasted supplies, making sure that everything is accounted for, and trying to find cheaper supplies. Nurses may see fewer linens, fewer items on the supply cart, decreased 'snack' or nutritional items for patients. There may be increased delays in getting your meds because the pharmacy inventory has been slashed & they have to order from outside sources.

Cuts in the labor budget - YIKES! That's what we really feel. Salaries may be frozen. Management & executive bonuses may be eliminated. Managers will be asked to eliminate overtime & maintain very strict staffing controls. Use of Agency or any other type of 'premium pay' nurses will probably be eliminated. Nurses will be 'sent home' or 'called off' with greater frequency when patient census drops. The organization will analyze departments and close or consolidate any areas that are not fully utilized. IF they close a department, this will obviously eliminate those jobs. And there may be efforts to change the skill mix - substituting lower paid (unlicensed) staff if possible. A common alternative to RIFs is to freeze hiring - thereby decreasing staff through attrition. This will save on severance pay with is normally provided to laid off employees. Managers will have to jump through a lot of hoops & provide enormous justifications to fill any vacant positions.

In union environments, nurses with "seniority" have specific protections from layoffs or 'reductions in force (RIF)'. In non-union environments, US labor laws prohibit discrimination for protected classes - one of these is the 'over 50' crowd. When any organization with > 100 employees is planning to RIF 50 or more people, they have to comply with the WARN Act (Fact Sheet - The Worker Adjustment and Retraining Notification Act) which requires them to analyze the layoff group for discrimination. So they can't just chop out the long-tenured high earners.

Unfortunately, even the most stringent efforts haven't been enough to save some very high-profile hospitals in the US (remember St. Vincent in NYC?).