How to Manage Healthcare Layoffs: 3 Factors to Consider

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Reviewed by Aldo Zilli, Esq. Senior Manager, B2B Content, IntelyCare
A physician, subject to the third of several healthcare layoffs, puts her head down in anguish.

As healthcare operating costs rise, companies are pressured to layoff clinicians, administrators, and C-suite executives to keep business operations afloat. Managing healthcare layoffs can be emotionally challenging for facility leaders who are invested in supporting and growing a successful team. Layoffs are especially detrimental for facilities that struggle with persistent nursing shortages and high employee turnover.

Why do hospital layoffs occur, and what can facilities do to make the process easier for everyone involved? In this article, we’ll review some of the structural challenges that can contribute to the need for healthcare staffing layoffs. We’ll then review tips that can help your organization respond to business challenges, support your employees, and maintain the high-quality care patients deserve.

What Are the Different Types of Healthcare Layoffs?

There are two main types of employee layoffs in healthcare:

  • Involuntary Layoffs: A company chooses to terminate the employer-employee relationship with members of staff; employees have no option of staying.
  • Voluntary Layoffs: A company offers employees a severance package if they choose to separate from the company; employees accept the terms and conditions of their layoff on their own free will.

Involuntary and voluntary layoffs can be either permanent or temporary, depending on the situation and the financial stability of the company.

Why Would a Healthcare Facility Lay Off Employees?

Healthcare layoffs can occur within an organization for a number of reasons. In the table below, we review a few common reasons an organization would have to terminate healthcare employees.

Reasons for Staff Layoffs
Financial Constraints Because of budgetary constraints, a facility may no longer be able to afford to pay the employee their wage and must reduce the size of their workforce to stay in business.
Change in Business Strategy A company restructures and no longer requires the services of an employee in a particular role.
Company Mergers or Acquisitions When two or more facilities merge, the organization that is established no longer needs all of the members of staff previously employed by each facility.
Technological Advancements A company purchases new technological tools or equipment and no longer requires the employee to perform their work or service.
Reduction in the Patient Census A facility discharges patients at a rate higher than they admit them and therefore requires fewer clinicians per shift to provide the same level of care.

What Time of the Year Do Healthcare Layoffs Most Commonly Occur?

There are cyclical layoff patterns that occur each year. If an organization is restructuring, employees tend to be let go:

Which Healthcare Roles and Professions Are Most Often Affected By Layoffs?

While healthcare layoffs can occur in every type of facility and department, administrative staff and unlicensed clinicians generally experience the highest rates of involuntary termination. As patient care demands increase, companies are forced to reduce the size of their non-clinical workforce (secretaries, receptionists, phone operators, etc.) to be able to retain and onboard more licensed and certified clinicians.

Many healthcare organizations are also moving toward hiring nurses who have earned their BSN or higher and are no longer considering nurses who only have an ADN. ADN-prepared nurses who are already employed by these companies are being asked to go back to school to get a higher degree, at the risk of getting laid off.

Managing Healthcare Layoffs: 3 Questions to Consider

When facing the potential for employee layoffs, there are factors healthcare administrators can consider to make the process easier for all parties. After weighing all of their options, leaders may even find opportunities to avoid terminating employees altogether. Before executing layoffs, healthcare administrators should ask themselves the following three questions to make the process more manageable for everyone.

1. Are Layoffs the Only Option?

Sometimes healthcare layoffs seem like the only option for organizations looking to reduce operating costs. However, there may be ways to keep your team members employed while also reducing staffing expenses. It’s important to note that making efforts to retain loyal staff in any capacity can improve your brand image and show your team that you prioritize their financial security and well-being.

One option would be to shift full-time clinicians to part-time or per-diem employment. This would allow you to keep the staff you’ve worked hard to train and integrate into the company while reducing their paid hours. Some employees may even be looking to cut back and would celebrate the improved work-life balance reduced hours could bring.

Another option would be to furlough employees until your organization’s budget has stabilized. Furloughs can look different in each employment situation, but usually involve a period of unpaid leave or temporary reduction in pay. Studies show that many employees prefer to be furloughed instead of being terminated, as they’re often able to retain their benefits and may also be allowed to collect unemployment.

2. Have You Involved Your Team in Restructuring Conversations?

Involving your team in any conversations surrounding layoffs and company restructuring early in the process can help you get to a better outcome for everyone involved. While it may seem unusual to involve your team in these discussions, being honest and transparent from the start can help build trust among administrators and employees.

During these conversations, it can be helpful to introduce how your organization will be conducting the layoff process and how you will decide which positions will be included in the layoff. This allows employees who are at risk of being laid off time to search and interview for jobs while they’re still employed and earning a paycheck.

In some situations, companies can allow employees to provide input into the restructuring changes that will need to be made. Soliciting employee feedback for how they would prefer the situation to be handled is one way to consider their needs and wishes. When involving staff members in these discussions, you can poll staff with questions like:

  • Is anyone interested in voluntary redundancy or a decrease in work hours?
  • If layoffs are not made but staffing budget cuts are still required, would those who choose to stay prefer a decrease in salary or a reduction in benefits?
  • Is there any training or guidance anyone would like before staffing changes are executed?

3. If You Have to Lay Off Employees, Are You Prepared to Help Them Find a New Job?

If reducing your staff size is your only real option, you’ll want to ensure your organization has structures in place to support employees who are laid off. You can help clinicians transition out of your organization by:

  • Connecting them with leaders from similar companies who may be hiring.
  • Providing recommendation letters and strong employee reviews.
  • Offering severance pay and extended benefits.
  • Referring them to industry-specific job boards to begin their job hunt.
  • Allowing continued access to company-sponsored emotional and financial support services.

While the layoff period can be difficult and uncomfortable for everyone involved, it’s important to help your employees feel supported and empowered to pursue new job opportunities. When support and empathy is provided appropriately, employees are more likely to come back to your organization if you’re ever in a position to rehire them in the future.

Discover More Tips to Help Your Organization Thrive

Managing healthcare layoffs can be tough, but IntelyCare is here to help. Our team of clinical and legal experts has developed a wide range of tools and resources to support your team whenever you need it most.

 

Legal Disclaimer: This article contains general legal information, but it is not intended to constitute professional legal advice for any particular situation and should not be relied on as professional legal advice. Any references to the law may not be current, as laws regularly change through updates in legislation, regulation, and case law at the federal and state level. Nothing in this article should be interpreted as creating an attorney-client relationship. If you have legal questions, you should seek the advice of an attorney licensed to practice in your jurisdiction.


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