As the result of managed care, such as variable admissions, shorter lengths of stay, higher productivity, new technology, and other factors, the capacity of some healthcare organizations could significantly exceed demand. As a result, these organizations may be required to reduce their work force. Additionally, mergers and consolidations can result in further reductions and reassignments of staff. Financial pressures will continue to fuel this trend. However, patient care needs should not be compromised when determining staffing requirements.

Careful planning, diligent cost controls, effective resource management, and proper consultation can lessen the hardship and stress of a reduction in force. Formal policies and procedures should be developed well in advance of the need to implement them.

The decision to reduce staff necessitates consideration of the short-term and long-term impact on all employees—those leaving and those remaining. Decision makers should consider the potential ethical conflict between formally stated organizational values and staff reduction actions.

The American College of Healthcare Executives recommends that specific steps be considered by healthcare executives when initiating a reduction in force process to support consistency between stated organizational values and those demonstrated before, during and after the process. Among these steps are the following:

• Recognize that cost reduction efforts must be appropriate—if they are too aggressive, the consequences for patients, staff and the organization can be as harmful as doing too little or proceeding too late;

• Consult with labor counsel;

• Provide timely, accurate, clear and consistent information—including the reasoning behind the decision—to stakeholders when staff reductions become necessary;

• Review the principles and ideals expressed in vision, mission and value statements, personnel policies, annual reports, employee orientation materials, and other documents to test congruence and conformance with reduction in force decisions;

• Support, if possible, through retraining and redeployment, employees whose positions have been eliminated. Also, consider outplacement assistance and appropriate severance policies, if possible; and

• Address the needs of remaining staff by demonstrating sensitivity to their potential feelings of loss, anger and survivor guilt. Also address their anxiety about the possibility of further reductions, uncertainty regarding changes in workload, work redesign, and similar concerns.

Healthcare organizations encounter the same set of challenging issues associated with reductions in force as do other employers. Reduction in force decisions should reflect an institution’s ethics and value statements.

Approved by the Board of Governors of the American College of Healthcare Executives on November 7, 2005.