Exercise on Negotiation

Students are presented with a scenario requiring negotiation of budget cuts inside a hospital. This is a six-person role play negotiation among hospital administration and employee representatives to reach consensus on budget cuts. Students are assigned to different roles on the budget advisory committee.

Budget Turmoil Inside a Hospital

This assignment reviews the process of negotiating budget cuts at Newtowne Hospital among hospital administration and employee representatives to reach consensus on budget cuts.

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 hospitals 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.

Except for the Chief Executive Office and the Chief Operational Officer, members of the budget advisory committee were all were a bit angry and worried about suggested cuts in their departmental budgets. The Chief Financial Officer 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.' The players are very concerned about their status within the hospital hierarchy, causing symbolic aspects of the negotiation to be quite important.

Chief Operating Officer:

• The COO supports Dr. Van Hagen coming on board and believes that Dr. Van Hagens presence will raise the visibility of Newtowne Hospital and the profits that Newtowne Hospitals Heart Health Center can make.
• The COO has worked at other hospitals before coming to Newtowne Hospital and is known for ruthlessly cutting staff budgets, in favor of higher-paid physicians.

Question- How can the COO negotiate budget cuts inside the hospital?