Case Study 6
Case Study #6: Budget Conflicts: Who Will Win?
Ginny Vaughn, the Chief Operating Officer (COO) of one of the city’s hospitals, has called a staff
meeting of all clinical department chiefs because she has received a task to cut operating costs by 10%.
This means the hospital must cut $10 million just to break even. More cuts would be necessary to begin
making a profit. The hospital has been running “in the red” for the past 3 years. Only through the
benevolence of a wealthy donor has the hospital escaped closure. However, the donor has indicated an
unwillingness to continue supporting a hospital that cannot balance its budget and is forcing the hospital
to fend for itself. Vaugh announces that the Chief Executive Officer (CEO), Ben Hope, has said these cuts
are absolutely necessary in order to keep the doors open for another year. Management understands this
will cause hardship in light of already decreased profits and increased need for care at the facility.
The clinical department chiefs begin to discuss ways to attack the issue. The physical therapy chief
tentatively suggested that all budgets should be cut by 10% to be perfectly fair. The pharmacy chief
quickly offered to take a straight 10% cut as long as everyone did the same. However, many chiefs
(including internal medicine, orthopedics, and surgery) immediately interrupted and insisted their
departments could not survive with any further cuts and stated that the cuts must come from other
departments. The pharmacy chief backed down and withdrew his proposal. The physical therapy chief,
who was feeling uncomfortable when the discussion turned into an argument, announced that he’d go
along with whatever everyone else decided. The discussion has quickly become quite heated and
nonproductive, so Vaughn interrupted and promised to provide the chiefs with the Department and Line
Item Profit and Loss Worksheet within the hour. They were quiet for only a few moments and then
resumed their animated discussion on which departments would bear the brunt of the budget cuts. One
ideal offered was to simply delete each line item that was experiencing a net loss of $2 million of less
because that would add up to $10 million. However, that brought objections also. Ginny Vaughn again
interrupted the heated discussion by announcing they had 10 days to present their ideas for bringing the
hospital in line with this new tasking, and then she adjourned the meeting.
The clinical department chiefs returned to their departments to hold staff meetings to discuss ideas for
budget cuts. Needless to say, the chiefs were very unhappy.
Case Study 6 Questions
In a 1-2-page APA paper, present the following:
1. Summarize and discuss the issues within this case study
2. If you were Ginny, the COO, what are examples of the types run charts or other statistical measures
that you would pull/request to assist in formulating a final decision on budget cuts?
3. In using role-play, construct a script and play the part of either a department chief OR a staff member
for one of the clinical departments. How will you begin the conversation? What points will you make sure
to say? Share your actual script.
Case Study #6: Budget Conflicts: Who Will Win?
Ginny Vaughn, the Chief Operating Officer (COO) of one of the city’s hospitals, has called a staff
meeting of all clinical department chiefs because she has received a task to cut operating costs by 10%.
This means the hospital must cut $10 million just to break even. More cuts would be necessary to begin
making a profit. The hospital has been running “in the red” for the past 3 years. Only through the
benevolence of a wealthy donor has the hospital escaped closure. However, the donor has indicated an
unwillingness to continue supporting a hospital that cannot balance its budget and is forcing the hospital
to fend for itself. Vaugh announces that the Chief Executive Officer (CEO), Ben Hope, has said these cuts
are absolutely necessary in order to keep the doors open for another year. Management understands this
will cause hardship in light of already decreased profits and increased need for care at the facility.
The clinical department chiefs begin to discuss ways to attack the issue. The physical therapy chief
tentatively suggested that all budgets should be cut by 10% to be perfectly fair. The pharmacy chief
quickly offered to take a straight 10% cut as long as everyone did the same. However, many chiefs
(including internal medicine, orthopedics, and surgery) immediately interrupted and insisted their
departments could not survive with any further cuts and stated that the cuts must come from other
departments. The pharmacy chief backed down and withdrew his proposal. The physical therapy chief,
who was feeling uncomfortable when the discussion turned into an argument, announced that he’d go
along with whatever everyone else decided. The discussion has quickly become quite heated and
nonproductive, so Vaughn interrupted and promised to provide the chiefs with the Department and Line
Item Profit and Loss Worksheet within the hour. They were quiet for only a few moments and then
resumed their animated discussion on which departments would bear the brunt of the budget cuts. One
ideal offered was to simply delete each line item that was experiencing a net loss of $2 million of less
because that would add up to $10 million. However, that brought objections also. Ginny Vaughn again
interrupted the heated discussion by announcing they had 10 days to present their ideas for bringing the
hospital in line with this new tasking, and then she adjourned the meeting.
The clinical department chiefs returned to their departments to hold staff meetings to discuss ideas for
budget cuts. Needless to say, the chiefs were very unhappy.
Case Study 6 Questions
In a 1-2-page APA paper, present the following:
1. Summarize and discuss the issues within this case study
2. If you were Ginny, the COO, what are examples of the types run charts or other statistical measures
that you would pull/request to assist in formulating a final decision on budget cuts?
3. In using role-play, construct a script and play the part of either a department chief OR a staff member
for one of the clinical departments. How will you begin the conversation? What points will you make sure
to say? Share your actual script.
