Nurse Ratched's Policies

Nurse Ratched, the head of the ward staff, is the central decision-maker in the film; she observes all the patients on a daily basis and is responsible for leading group therapy sessions, devising treatment plans, establishing patients' schedules, and implementing ward policies.  In fact, the facility's head psychologist defers to her on the most crucial decision in the film: should they keep McMurphy in the ward or let him go? (ie., Is he crazy or not?)

decisions/values

Nurse Ratched decides the ward should keep McMurphy, beyond his mandated 90 days, for an indefinite extension.  She cites the ward's responsibility to its patients and to society--to let McMurphy go would be to "pass our problem onto somebody else."  Perhaps he would be a danger to society if let free completing therapy/treatment...perhaps he would just end up in another institution (another ward or prison), or so her thinking goes.  Ultimately, her decision is based on a sense of professional responsibility--the actor's consistent and resolute composure creates an impression that she is not acting out a personal vendetta against McMurphy (at least not in the movie, the book's a bit different).

That Nurse Ratched decides/acts out of responsibility much more than animosity is precisely what prevents the film from becoming melodramatic.  She never appears to hate any of the patients, maybe she loves them.  When she leads the group therapy sessions, probing into each man's problems (Billy's suicidal tendencies, Harding's failed marriage, etc.), she clearly hurts them.  But she genuinely believes its for their own good, and that she would be failing her responsibility by taking it easier on them.  Every single shot of her in the film could be very plausibly captioned with Hamlet's motto: "I must be cruel only to be kind."  

In deciding to keep McMurphy in the ward indefinitely, she is being cruel out of kindness to him, to society, and to all humanity.  And yet, her decision leads to disaster: McMurphy--unable to leave--brings the outside world into the ward: the patients go wild (as opposed to "insane"), Nurse Ratched's scolding drives Billy to suicide, Billy's suicide drives McMurphy to choke Nurse Ratched, and this nearly fatal choking incident drives Nurse Ratched to order McMurphy's lobotomy.

reversibility