The COVID-19 pandemic which started in early 2020 shook the world by storm. Almost all businesses were caught off-guard and affected by its onslaught. It is a medical crisis that struck a negative impact even for the healthcare industry. The implementation of community quarantines, strict travel restrictions, and people’s fears brought about by the pandemic resulted in a decline in the utilization of some hospital services. A popular privately owned hospital in NCR suffered the same fate. The management has already done several cost-cutting measures to reduce its capital expenditures such as cancellation of projects and deferment of upgrading
equipment. However, these were not enough to get them out of their financial crisis. As a last resort measure, the company had to review its operational expenses and other costs to continue with the business. Given the financial situation they are in, they opted to pursue a renewal strategy and reorganization. They were to cut on redundant workforce and those who have long been working in the company (10 years or more) and retain only the essential personnel. However, the hospital will be replacing them with new hires or younger people who will have lower salaries. This
will balance out the company’s operational expenses for their entire workforce. To encourage its redundant and tenured workforce to leave, the company offered special separation programs/benefits for those who will voluntarily retire.
What are the implications of the management’s decisions and what potential problems could the hospital face?
Step by step
Solved in 2 steps
