Budget turmoil inside a hospital

By on / Daily, Negotiation Skills

How to Negotiate Under Pressure

The PON Clearinghouse offers hundreds of role simulations, from two-party, single-issue negotiations to complex multi-party exercises. Negotiating Budget Cuts at Newtowne Hospital is a six-person negotiation among hospital administration and employee representatives to reach consensus on budget cuts in three departments.

SCENARIO:

Dr. Van Hagen, a distinguished heart surgeon, will soon join the staff at Newtowne Hospital, a 750 bed teaching institution. Although some staff members are elated and perceive the arrival of the doctor as an indication of the hospital’s coming-of-age, other staff members are in shock. Newtowne is already facing financial difficulties, including the fact that the annual wage increase for staff has not kept up with the cost-of-living. Now that the hospital has promised financial support to Dr. Van Hagen and his special staff, and will also fund his new equipment, Newtowne is going to have to cut $3.5 million from the rest of its budget. John Demars, the Chief Operating Officer, has met privately with five people who will serve as a budget advisory committee. The five members, the Chief of the Medical Staff, Vice-President of Nursing, Chief Financial Officer, Head of the Nurses Union, and President of the Hospital Workers Association all were a bit angry and worried about suggested cuts in their departmental budgets. Demars has asked the advisory committee to try to reach a consensus on the budget cuts. If no agreement is reached, the Chief Financial Officer will submit his own recommendation to the hospital’s Board of Directors.

MAJOR LESSONS:

  • Relationships are a key issue in this case. In order to keep the hospital running smoothly, the players must remain accountable to their constituents while maintaining a good working rapport with each other.
  • Identifying ‘success’: During post-negotiation discussions, participants can take a close look at the different notions of a good outcome in each of the negotiating groups. Did the parties try to accommodate each other’s interests? What were the results when they did?
  • Interests vs. positions: The parties must separate their interests from their positions, as well as the people from the problem in order to reach a consensus in a distributive bargaining situation. Reactions of the parties make this dispute difficult. The players are very concerned about their status within the hospital hierarchy, causing symbolic aspects of the negotiation to be quite important.

TEACHING MATERIALS:

For all parties:

  • General information
  • Budget Cutting Strategies Memorandum

Role specific:
Confidential instructions for

  • John Demars, Chief Operating Officer
  • Harry Baxter, Chief of the Medical Staff
  • Diana Antry, Vice-President of Nursing
  • Bob Carter, Financial Officer
  • Vickie Eaton, Head of the Nurses Union
  • Felicity Fulton, President of the Hospital Workers Association

Teacher’s package:

  • All of the above
  • Results form

KEYWORDS/THEMES:

anchoring; assumptions; authority; BATNA; closure; commitment; competition v. cooperation; compliance; consensus building; constituents; cost-benefits analysis; cut-back planning; fairness; financial analysis; group process; health care management; hospital administration; internal budget negotiations; interests, quantifying; legitimacy; linkage; managing uncertainty; meeting design; message analysis; objective criteria; options, generating; partisan perceptions; preparation; relationship; reservation price; risk perception; systems of negotiation

To purchase this role simulation, click here.

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