This study has two objectives. First, to predict the outcomes of a public sector downsizing; second to measure effects of downsizing at organizational and inter-organizational levels. Primary data to assess the organizational level effects was collected through interviews with senior executives at two of Metro-Toronto's hospitals. Secondary data, to assess the inter-organizational effects, was collected from government documents and media reports. Due to the exploratory nature of the study's objectives a case study method was employed. Most institutional downsizing practices aligned with successful outcomes. Procedures involved at the inter-organizational level aligned with unsuccessful outcomes and negated organizational initiatives. This resulted in an overall alignment with unsuccessful procedures. The implication, based on private sector downsizings, is that the post-downsized hospital system was more costly and less effective.