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Curriculum Center Browse Bibliography Build EPacket Pricing Structure Distribution Process Management Control in Nonprofit Organizations
Robert Wood Johnson Medical School
Young, David W.
Functional Area(s):
   Management Control Systems
   Healthcare Management
Difficulty Level: Advanced
Pages: 18
Teaching Note: Available. 
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First Page and the Assignment Questions:

In November, Sanford Klein, D.D.S., M.D., Professor and Chairman of the Department of Anesthesiology at The Robert Wood Johnson Medical School, was rethinking his department’s incentive plan. Dr. Klein was acutely aware of the tension between the academic and clinical activities of the physicians in his department. He knew that academic anesthesiologists’ progress in their careers required research and teaching activities that would lead to their promotion and tenure within the medical school. At the same time, The Robert Wood Johnson University Hospital (affiliated with the medical school) was demanding increasing amounts of the anesthesiologists’ time for clinical activities. On top of this, the medical school, feeling the pinch of state and federal cutbacks for medical education, was requiring increasingly large financial contributions from the clinical practices (such as anesthesiology). To meet these demands, Dr. Klein’s faculty needed to engage in more private practice so as to generate additional funds for the anesthesia group that then could be turned over to the medical school. As he described it:

There have been increasing requests for the clinical practices to up their contributions to the medical school. This interferes not only with a department’s academic mission, but with the medical school itself. We cannot be in the lab, the lecture hall, and the operating room simultaneously. Moreover, an emphasis like this forces academicians to do private practice-type services. If they had wanted to do private practice, they wouldn’t have joined an academic department.
This new emphasis hits the service specialties, such as anesthesiology, pathology, and radiology the hardest. Surgeons, pediatricians, internists, and the like, are more mobile. They can go to another hospital and practice, but we cannot. We are hospital based. We have a contract with the hospital that mandates performance standards. Moreover, we are driven by these other practices. When the surgeons want to do surgery, we need to be there to administer the anesthesia.
If an anesthesiologist in academic practice is ordered to do more clinical care indefinitely, he believes that this breaks his fundamental agreement for services. If he wanted to do more clinical care and not teach and not do research and not do administration, then he would do it for much more money in private practice.


The Robert Wood Johnson Medical School (RWJMS) was part of the University of Medicine and Dentistry of New Jersey (UMDNJ). The Robert Wood Johnson University Hospital (RWJUH) was an acute care facility with 416 beds (271 of which were designated for medical/surgical use). These and other relevant organizational relationships are shown in . . .


  1. What is the strategy of the Robert Wood Johnson Medical School? The hospital? The Department of Anesthesiology? The physicians within the Department of Anesthesiology? How, if at all, are these strategies interrelated?
  2. What kind of responsibility center is each of the above groups/individuals? What are the financial flows among these responsibility centers? Where, if anywhere, is there a lack of goal congruence? If there is a lack of goal congruence, what should be done about it?
  3. What sorts of problems does Dr. Klein face? How does the Department of Anesthesiology’s incentive plan help him to address these problems? How, if at all, would you modify the incentive plan?
  4. What should Dr. Klein do?