First question to answer is "Whether the state hospital has any internal policies and regulations that govern this specific occurrence. If so, they would have to adhere to the process set forth therein to successfully accomplish this. To set new requirements/qualifications for the same job is probably not allowed, unless the hospital's administrators/board have agree to up grade the new positions at the expense of the old. If the employees affected have contracts, those contracts should be honored. If not, the question then becomes whether they received notice of re-organization or for the reduction in force.
If applicable to those employees affected, you should review the grievance process for the hospital and fight the reduction in force if not approved. I would suggest that you consult with an employment law/labor attorney to get advice and options. The attorney should have experience in handling state government issues. Use AVVO's "Find a Lawyer" tool to find an attorney in your area. Good luck!
My response herein is an attempt to give you general information and direction and is not intended to constitute an attorney-client relationship as perceived by state law.