This has been one of the ugliest things I've ever done—all the personal abuse, just for following the damn rules the university sent down. It is the closest I've come to quitting my job...

In September 1993, Dr. Richard Wells, Chief of Surgery at Hamilton Hospital in Chicago, Illinois, announced that all full-time doctors in the Department of Surgery were required to join the Surgical Group Practice or leave the hospital premises. In his eight years as chief, Dr. Wells had initiated numerous changes in the department, but never one as controversial as the Group Practice.

Dr. Wells had established the Group Practice or “trust” in 1991 to serve two purposes. First, it was intended to regulate each surgeon's professional income to comply with the Kent Medical School Salary Regulation, and second, it would augment the department's income with funds not otherwise attainable. Additionally, Dr. Wells was convinced that as an academic department of Kent Medical School, the Department of Surgery needed guidelines to ensure a standard of excellence:

I think this has to be done in any academic institution. Doctors here are supposed to provide ongoing patient care, carry on research, and teach. Now if you're at all good as a surgeon, your private practice will skyrocket, and your research and teaching will lose out. It's fun and lucrative to practice medicine, but in a teaching hospital you have other responsibilities, too.

BACKGROUND

The Department of Surgery was a clinical department of the 95 year-old Hamilton Hospital in Chicago. A private, 450-bed hospital, Hamilton had been a teaching affiliate of Kent Medical School since 1925. In its more than 70 years as a teaching hospital, Hamilton had demonstrated a firm commitment to teaching and research as well as patient care. Insisting that the three were interdependent units, which together enhanced the quality of medical care, Hamilton's medical staff had distinguished itself among hospital teaching staffs. In 1990, Hamilton was the most popular hospital among Kent medical students and attracted graduates of the top medical schools for its 175 intern and resident positions.

As part of the teaching hospital, Hamilton's clinical departments were subject to the guidelines of Kent Medical School. Prior to 1990, Kent's guidelines, which primarily stressed the school’s commitment to scholastic achievement, had had little effect on the school's clinical departments. Dr. Wells explained:

For years, we'd had what you'd call a “Gentleman's Agreement” with the medical school. They gave the department a modest budget and paid doctors something for their teaching and research. Other than that, doctors could work for the hospital and carry on a private practice making about as much money as they wanted. There was some innocuous stipulation in our agreement allowing doctors to make as much money as “didn't interfere with their . . .

Assignment

1. Classify the activities of Dr. Wells into the categories of strategy formulation, management control, and task control. How, if at all, does this assist you in understanding the problems faced by the trust?
2. How would you characterize the management control structure of the trust? Was it well designed? If not, how would you change it?
3. What is your assessment of the management control process of the trust? How, if at all, would you change it?