It's no surprise that most laid-off hospital personnel don't find themselves floating away on a golden parachute. But some may find that their chutes are emptier than others'.
While two-thirds of hospitals anticipate staff cuts in the coming three years, only half have formal severance policies, and just half of those policies are outlined in an employee manual.
Some 19% of hospitals do not have any severance policy, while one-third have informal policies or are considering adopting a formal one.
And even fewer have policies that apply in the event of a sale or merger.
These are some of the findings of a study of 586 hospitals conducted by Right Associates, a Philadelphia-based human resources consulting firm. A University of Tennessee Department of Management team provided data analysis.
Hospitals grant severance benefits primarily because of layoffs or the elimination of a position, as opposed to performance issues, voluntary resignation or retirement. The value of severance packages is primarily based on years of service, the study found.
You're much better off if your title is above the level of department head, especially if the severance policy is an informal one, the study also showed.
About half of respondents considered top-level executives and department heads eligible for the severance plan, whether formal or informal. But that qualification drops to 44% for supervisors and technical personnel in organizations with a formal severance plan, and to 30% for those with an informal policy.
In hospitals with formal policies, the highest-level executives frequently work out severance packages through an employment contract, the study found. From the department head level down, severance tends to be one week's pay for each year of service.
Hospitals with informal policies lack set formulas for determining severance amounts, especially for higher-level po-Human resources
The maximum severance payout to those carrying titles from CEO to vice president is generally six to 18 months, the survey showed. Below vice president, maximum severance is 18 weeks in most cases.
The ceiling varies for lower-level positions in informal policies. But from CEO to vice-president level, 20% of respondents said there was no set limit.
Becoming a casualty of consolidation within the industry may give cause for valid concern. About 80% of hospitals said they do not have a special severance policy in case their organization is bought or merges with another.
In the event of a merger or acquisition, only the highest-level executives tend to be included in special policies adapted to the transaction. Presidents, chief executive officers or chief operating officers are included 25% of the time in formal merger/acquisition severance policies, and other senior executives are included 26% of the time. That inclusion drops to 14% for department heads and managers.
Informal policies include top-level executives just under 20% of the time, and the next level of managers is included in 9% of merger/acquisition severance programs.
For hospitals belonging to a system, half with formal plans said their policy applied systemwide, while 37% of hospitals with informal policies said theirs applied to all hospitals in the system.
The biggest concern for hospitals facing layoffs is support for remaining employees, followed by assistance for departing employees, the survey found. Maintenance of quality patient care ranked third.
Hospitals with formal severance policy
Benefits included in severance package*
President, Sr. execs, Physicians Dept. heads Supervisors/ Other Maint. All
CEO, COO CFOs, VPs & mgrs. technical primary care
planning 17.1 15.2 6.7 11.5 6.3 4.8 3.7 6.2
planning 17.5 16.7 6.7 12.6 7.8 6.7 5.9 11.4
insurance 23.7 21.9 8.2 18.6 9.7 8.9 7.0 7.7
life insurance 34.6 35.7 13.0 32.3 21.6 20.1 17.2 18.3
in addition to
COBRA 45.4 47.6 17.5 46.5 34.2 30.5 27.5 34.4
reimbursement 8.2 10.4 4.1 11.5 8.9 8.2 8.4 11.0
services 63.2 66.5 19.7 60.6 34.2 27.9 23.4 31.1
Retraining 5.2 6.7 1.9 8.2 9.7 9.7 9.9 7.1
services 27.5 28.3 7.8 18.2 5.6 4.1 2.9 6.2
Use of office
space 26.8 26.4 7.4 14.5 3.0 2.2 2.2 4.4
*Numbers in table indicate percentage of respondents answering "yes" to each benefit for the employee level shown
Source: Right Associates