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Case A

A New Faculty Practice Administrator for the Department of Surgery

David M. Kaplan and Anthony R. Kovner

Donald Matthews recently announced he was leaving his role as the administrator for the department of surgery at Wise Medical Center to move to a chief operating officer position at another local medical center. Dr. Francis, who is the chair of surgery, asked Matthews to assist in the selection of his successor prior to leaving for his new position.

The faculty practice in the department of surgery has been in place since 2006, when Dr. Francis took over as chair and Matthews joined him as the administrator.

Wise Medical Center is regarded as one of the largest and best-managed hospitals in Eastern City. The CEO, Dr. Dante, was appointed in 2001. He has elevated the medical center from the depths of financial despair to one of the most successful in the country. His philosophy has been one of growth and investment in new faculty, clinical programs, research, and teaching programs. Dr. Dante also worked to replace nearly all the department chairs. The department of surgery is one of the medical center’s largest departments. Dr. Francis is a vascular surgeon, world-renowned for his ability to treat aortic aneurysms, but also is regarded as a savvy businessman.

Over the past five years, Dr. Francis and Matthews have developed a tremendous partnership as they have significantly grown the department of surgery. Specifically, they have recruited more than 30 faculty and increased total faculty practice revenue by more than 150 percent. In 2010, the department earned more than $40 million in physician receipts for the first

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EXHIBIT 1.5 FPC* Surgery Practice Suites Billing and Collections

$3,899,226               $4,532,633                                                          105%

$3,749,477                                                                                              101%

$3,459,275

$2,927,637                $4,683,078                      34%

$7,847,159                                                        $3,852,977             109% $4,547,715    41%         92%

$7 ,046.892                   $3,136,728                  $3, 875,791                      45%

June                                                $6,781,441                   $2,968,865                   $3,729,793

July  $4,297,333 45% 101% August$3,263,89579%

Total

time in its history (see Exhibit 1.5). Dr. Francis is praised for his leadership skills, his business intelligence, and his loyalty to his faculty and staff. This loyalty sometimes inhibits his ability to make tough decisions regarding his less-productive faculty, such as reducing their salaries or moving them out of the institution. Both the department and the medical center face increasing financial pressures as the state and federal government look to reduce funding for Medicare, Medicaid, and other related programs. As such, Dr. Dante and others are trying to determine the most effective response to these increased financial pressures.

Simultaneously, the faculty practice group (FPG) for Wise Medical Center is also grappling with significant space constraints due to the rapid expansion of all departments, consistent with Dr. Dante’s growth strategy. The FPG has more than 800 faculty across 26 different clinical departments. The FPG generates nearly $450 million in patient revenue and schedules more than 530,000 outpatient visits per year.

The F PG building has IS specialty floors, and each department is responsible for providing the staff for its clinical practice. The department of surgery has two clinical floors, with a total of five specialty -specific suites. Each suite is staffed with a front desk receptionist, two medical assistants, and two medical billers. The suites are roughly 5 ,000 square feet apiece, and each has four exam rooms and two consult rooms. The suites were designed to accommodate two physicians for each session (defined as a four-hour time block).

EXHIBIT 1.6 FPG Surgery Practice Utilization Statistics, September 2009-August 2010

Percent           Percent           Tota I        Total Ava ilable        Total Available          Total Actual        Total Actual

Utilization ‘ iv-•-.ic				Utilization	Exa m		Sessions	Sessions			Sess ions	Sessions
	General surgery	92	94		4	104			156	96		147
	Vascular surgery	94	94		4	208			208	196		196
	Plastic surgery				4	156			208	156		208

Surgical oncology 75 77 4 104 104 78 Colon and rectal surgery 87 87 4 104 104 90

Bariatric s urgery                  63                   67                   4                      104                            104

Transplant surgery               65                   62                   4                      104                            156

Ped iatric surgery   65            62            4              104          156 o Total              83  4  1,196

Nate: Utilization defined as Total Actual Sessions/TotaI Available Sessions.

Dr. Francis has asked Matthews to compile the utilization statistics for the surgery practice for an upcoming meeting with Dr. Dante. Matthews has assessed that the visits over the past year have increased from 25,000 to 32,450, representing 30 percent growth. Overall the department has a utilization rate of 90 percent for its practice suites (see Exhibit 1.6), above the benchmark for acceptable utilization across the FPG which was set at 85 percent. But numbers only tell one side of the story. Two of the suites—plastic surgery and colon and rectal surgery—are particularly busy, leaving many of the surgeons to complain they cannot get adequate time to see their patients.

At present, the surgery suites are open from 9:00 a.m. to 5:00 p.m. Monday through Friday, and Matthews has estimated that if the office hours were to be expanded to include nights and weekends, these suites could increase their volume by 10 to 15 percent. Matthews also estimated that this increase in volume could increase practice receipts by about $ 15 ,000 per month, or $180,000 per year. Altering these hours would, of course, require additional staff costs, and possible overtime costs, plus additional space charges for off-hour access.

Dr. Dante has also asked all chairs to prepare a plan to address possible reductions in clinical revenue caused by budget reductions for their departments. These plans should include possible reductions in expenditures as well as projections for growth and investments in key strategic programs that expect large returns within a short period of time.

In the midst of these competing demands, Dr. Francis and Matthews were getting ready to embark on the interview process for Matthews’ replacement- Their discussion went as follows:

Dr. Francis: Donald, you have been an incredible partner during our five years together’ While I am excited about your new opportunity, I have great trepidation about your departure. Given the new financial landscape that is evolving, I need a candidate who is financially savvy and not afraid to take risks. I also need someone who is operationally adept and can relate well to both the faculty and the staff. What do you think?

Matthews: Well, Dr. Francis, as you know, I have truly enjoyed working with you and members ofthe department, and I will be sorry to leave. But I am also looking forward to my new challenges. I agree with your general assessment of the type of person you need. In addition, I would suggest you seek someone who can “put out fires” as well as being resourceful. Given that people are going to be asked to do more with less, having someone who can keep the place running with limited resources is going to be essential.

Dr. Francis: I agree with you. As you perform your initial interviews of these candidates, I want you to look for all these qualities, but recognize that we also need someone who is personable and energetic, who isn’t afraid to work, and perhaps someone who is considered a rising star in the industry.

Matthews: No problem. I have started the recruitment process and will send you all the good candidates. I have spoken to several directors of healthcare administration programs and to the hospital human resources department. I have also been in touch with many of my personal contacts to identifÿ any additional candidates. I will let you know how I am progressing.

Dr. Fi•ancis: Good. I know you will do an excellent job of identifying someone. I have to run to the operating room, so I will catch up with you tomorrow to discuss this further. Try to pull together the rest of the materials for my meeting with Dr. Dante as well. I would like to be able to give Dr. Dante an update on our search when I meet with him later this week.

Matthews: OK, talk to you later. I will work with Cindy, your assistant, to schedule interviews for you with any good candidates.

Fortunately, Matthews was able to quickly identify several candidates whom he was able to schedule for interviews for this position over the next few days. In total, Matthews was able to interview eight people for this role. With the permission ofthese candidates, he recorded all the initial interviews to assist him with the selection process going forward.

Matthews was able to quickly eliminate two of these candidates because of their lack of experience or irrelevant experience for this position. He was also able to remove another set of two internal candidates who worked

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in the finance department and did not seem to have the people-management skills required to manage one of the largest departments in the medical center. Matthews was able to identify four potential candidates whom he felt might be appropriate for the position, but he was having a tough time choosing one of them.

Matthews’ first viable candidate was David O’Brien, currently assistant director for the medical center finance department at the medical center. The second was Sal Sorrentino, currently the divisional administrator for cardiology at Westside Hospital. The third was Marcia Rabin, the director of ambulatory services for the Partner’s Health Group, also in Eastern City. Finally, there was Bonnie Goldsmith, currently the vice president of surgical services at Rochester Medical Center. Matthews decided to review the initial interview recordings with the vice chair for the department of surgery, Dr. Harris, who also practices in the FPG surgery suites, before scheduling follow-up interviews for the possible candidates with Dr. Francis.

David O’Brien

Matthews (to Dr. Harris): The first candidate is David O’Brien, age 28. He wears conservative glasses and dresses conservatively. When I spoke to Michael Scanlon, Wise Medical Center chief financial officer, he said that David is energetic and conscientious, and that he was able to get things done. He recommended David for this position. If there is any weakness, Michael said that David is a bit intense, and sometimes intimidates and antagonizes others. He continued to say that David has no problems, it seems, in getting along with his superiors, but has limited experience working with physicians. (Matthews plays the interview recording for Dr. Harris.)

Matthews: David, thank you for coming in today for this meeting. Can you please tell me a little bit about your background and why you feel it might be a good fit for this position?

O’Brien: Sure, Mr. Matthews. I went to Upstate College where I was a business major. Then I started working here in the finance department for Mr. Scanlon as a reimbursement analyst. After a couple of years, I was appointed as the assistant director for the finance department, where I oversee all budget and reimbursement activities for the medical center. Given my understanding of the medical center’s finances, I am now looking for operational experience, which I feel this role will provide.

Matthews: I see that you are currently enrolled in school. What are you studying, and why?

O’Brien: I am currently working on getting my master’s in public administration from the City University. I am enrolled in their part-time program.

I feel that this will be important for my future career prospects. I am scheduled to finish this May, so I’m almost done.

Matthews: What would you say are your biggest accomplishments in your role in the finance department?

O’Brien: I would say that my biggest accomplishment is the recent simplification and redesign of the budget process. There were a lot of complaints about how complicated this process had become, and people were begging for an upgrade to the system. Based on this feedback, we were able to automate and simplify the system, and many folks are now singing praises for the newly designed system wouldn’t you agree?

Matthews: Fair point. I think the system is much improved, but far from perfect. We certainly recognize your contributions to the new system. Ifyou were in this position, what would you consider to be your greatest asset?

O’Brien: I would say it’s my ability to get a job done. There are too many people in this industry who are just willing to live with the status quo until there is a “fire” that requires them to take action. By that point, it is often too late. I prefer to be proactive in my approach to fix things.

Matthews: What would you say is your greatest liability?

O’Brien: Well, you know, in every organization some people are against change, either because it affects their own interests or because they just are averse to change. After all, every change in somebody’s department has to affect everyone involved in a relative if not in an absolute way. As one of my professors once said, “You don’t make an omelet without breaking a few eggs.” And I guess I must rub some people the wrong way who are against me as a change agent.

Matthews: What aspect of this new position do you believe is the most important?

O’Brien: I think it will be improving the overall revenue of the department. I’ve spoken to Mr. Scanlon, and he preaches this to all of us in the finance department. While I think that you and Dr. Francis have done a tremendous job over the past several years, I think by looking at the revenue cycle operation, and exploring the day-to-day expenses, we could possibly identify further opportunities that will help us achieve this goal.

Matthews: Before you go, is there anything you would like to ask me about the job?

O’Brien: As a matter of fact there is. We’ve talked about the salary and benefits, but if I perform as expected, what is the likelihood of an annual bonus and/or increase after the first year? You know I have a wife and two young children.

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Matthews: Well, I’d say the chances are pretty good. Dr. Francis is fair and I think he would be generous if the practice results improved significantly. (Matthews turns off the recorder.)

Harris: He seems like a fine candidate.

Salvatore Sorrentino

Matthews (to Harris): Sal Sorrentino is the next candidate. Sal is 27. Hé is presentable, although he dresses a bit on the flashy side—fast-talking and enthusiastic. Sal is currently the divisional administrator for cardiology at Westside Hospital. When I spoke to his reference, Dr. Plotkin, he recommended Sal highly for the position. He said that Sal is idealistic, energetic, and pleasant. If there is any weakness, Dr. Plotkin thought that Sal has a tendency to initiate or implement new initiatives without understanding the possible implications. I asked him to clarify, or to provide an example, and he said Sal had decided to change the way patients were scheduled without getting sufficient input from the physicians, nurses, or secretarial staff. The result was that patients were being triple-booked and, in some cases, having to wait for more than two hours for their appointments. The issue was quickly resolved, and Dru Plotkin believed that Sal had learned his lesson. Dr. Plotkin did reiterate that he highly recommends Sal for this position. (Matthews plays the recording of the interview. )

Matthews: Sal, can you tell me, in a few words, something about your background and experience?

Sorrentino: Yes. I have been in healthcare for about six years. I started my career as a physician biller, where I learned about revenue cycle. I then quickly moved into the role of division administrator for cardiology. Dr. Plotkin and I have really formed a solid partnership and have accomplished many things together. However, he has decided to take another position in California, and I am unable to relocate. That’s why I am searching for a new position, because I am sure the new chief will want his or her own administrator.

Matthews: And what would you say, Sal, was your greatest accomplishment while working as the administrator of cardiology?

Sorrentino: Well, one of the things I am proudest of is the development of a new marketing program to promote our cardiologists. This took a tremendous amount of time and effort, but the rollout was successful and has made our division incredibly successful.

Matthews: Can you tell me more about this marketing program?

Sorrentino: I independently crafted a number of marketing brochures and letters for our faculty and developed the mailing lists from our billing system. We opted to distribute these via e-mail as well as using

traditional mailings to effectively canvass the area. Some of the physicians didn’t particularly love their brochures, but overall I think the benefits far outweighed any negative feedback.

Matthews: I see. In the position you are applying for, what do you think would be your greatest asset?

Sorrentino: Well, it seems like your biggest concern is increasing sales and profitability. This is clearly something that I have some experience with as a divisional administrator. I believe that my analytical ability, along with my experience, would be my greatest asset to this position.

Matthews: Another question, Sal. What do you think would be your greatest liability, if any, if you were chosen for this position?

Sorrentino: I don’t know. I want to get things accomplished, so perhaps I move a little too fast. Sometimes I act without thinking of the consequences as I try to enact change. I also believe in delegating to empower your staff, and sometimes I assume things get done once assigned to people. I could do a better job at verifying that tasks get completed.

Matthews: Ensuring people are accountable for their responsibilities is certainly important. What do you think is the most important aspect of the job you’re applying for in terms of the work that needs to be done?

Sorrentino: I guess first you have to get all your systems working properly, such as billing and reporting. I think the next most important thing is to increase your revenues. Based on your description, it sounds like Dr. Francis’s plan for the department is for the faculty practice to generate enough revenue to help support faculty member salaries.

Matthews: You’re right there. Is there anything now you want to ask me about the job?

Sorrentino: Two things, really First, what kind of person is Dr. Francis to work for? And, second, what are your best ideas, Donald, about how to increase departmental revenue?

Matthews: In answer to your first question, I think Dru Francis is an excellent person to work for, as long as you produce for him. He’s loyal, and gives you enough autonomy to do your job. Perhaps my only complaint is that it is sometimes difficult to see him because he is so busy. I often don’t want to bother him with trivial issues. I have recommended to him that he appoint another physician within the department as head of the faculty practice, a plan that I know Dr. Francis is considering. As to your second question, I would probably say that the largest opportunity to enhance departmental revenues is to open a satellite surgical center. I feel ambulatory surgery is the future for surgical departments to successfully grow their business. (Matthews turns off the recorder).

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Harris: Well these first two candidates have quite contrasting backgrounds, yet it seems clear to me that either of them might do a perfectly respectable job. Nonetheless, the outcomes resulting from their work might be quite different.

Marcia Rabin

Matthews (to Harris): Yes, that’s so. The third candidate is Marcia Rabin.

Marcia is 26 years old and energetic. Les Carson, the CEO of Partner’s Health Group, highly recommended her for the position. Ms. Rabin is the director of ambulatory services for the group, which consists of 50 physicians and 20 support staff. Carson said she is hardworking and gets along well with both professional and nonprofessional staff. If there is any fault to find with her, Carson said that Rabin takes her work too seriously, drives herself too hard, and, as a result, has taken her full quota of sick days. But Carson stressed that Rabin has performed very well on all the big jobs that he has given her to do, and that she has been both reliable and competent. He continued to say that she has demonstrated the ability to positively relate to the staff and faculty to drive change. (Matthews plays the recording of the interview.)

Matthews: Ms. Rabin, can you tell me, in a few words, something about your background and experience?

Rabin: Certainly. I guess you don’t want me to go back to high school, but I was president of my student government at Suburban High. In college I majored in psychology, and for a while I thought I would like to be a psychologist. But my father works in a hospital—he is director of housekeeping at Sisters’ Hospital—and he encouraged me to go into healthcare management. After attending the City University master’s program, I was hired as the director of ambulatory services at Partner’s. Previously they didn’t have this position, but when the group bought two additional practices and expanded from 20 to 50 physicians, the position was established. While at Partner’s, I worked under the tutelage of Mr. Les Carson, the CEO.

Matthews: What would you say your greatest accomplishment was in this position?

Rabin: I think my greatest accomplishment in this position has been working to maximize the patient volume in the practice. We had to work on mapping out patient flow, revising physician schedules, and evaluating the hours of the practice. Our efforts helped the practice to realize a roughly SO percent growth in practice volume within a six-month period.

Matthews: That sounds interesting. In terms of the present position with Dr. Francis, what would you say would be your greatest asset?

 

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Rabin: I don’t know exactly how to answer that question. My first response would be to say I like and am good at doing systems work—creating order out of chaos and working effectively with people so that they feel it is their system, not something that I pushed on them. I feel that I am particularly skilled at building consensus around new initiatives. I relate well to people, and this helps to get things accomplished.

Matthews: And what, if you’ll pardon my asking, would you say is your greatest liability?

Rabin: Well, if you must know, Mr. Matthews, I’m not aggressive enough. Sometimes I think my efforts aren’t properly appreciated, and I don’t push myself to the front the way some people do. I work hard and I

work well and it annoys me—sometimes more than it should—that others who don’t work as hard and don’t do as well still push themselves forward and move ahead faster.

Matthews: What aspect of the job, as I have tried to outline it to you, would you say is the most important at this time in the history of the faculty practice?

Rabin: I think you have to set up more clearly defined ways of doing things systems, if you prefer the word. I noted in the materials that you shared with me that your collection rate isn’t what it should be, and that your utilization of examining rooms in certain areas can be improved. I don’t think that this kind of systems work is that different from my work at Partner’s.

Matthews: Are there any questions that you would like to ask me?

Rabin: Well, one question is how the physicians might relate to having a woman in this position. Second, when can you let me know if you are offering me the job?’ I have been offered a job as assistant director of human resources at King Hospital, and although they aren’t pressing me that hard, I would like to be able to tell them something soon.

Matthews: With regard to the first question, I do not think this will be an issue. Our physicians are amazing to deal with, and as long as you are logical, honest, and transparent with them, they will align with whomever is in this position. To answer your second question, I think it will take about a month for Dr. Francis to decide on a candidate. I can’t tell you what you should say to the King people. You are one of the four candidates whom I am sending on to see Dr’ Francis. (IMatthews turns off the recorder. )

Bonnie Goldsmith

Matthews (to Harris): Permit me to introduce our last candidate, Bonnie Goldsmith. She dresses conservatively and gives the impression of a modest, unassuming, kind young woman of 27. Bonnie is currently the vice president

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of surgical services at Rochester Medical. Her boss, Mr. Robert Muldoon, who recently left Rochester Medical as their chief operating officer, recommended Bonnie as hardworking, modest, and reliable. He said Bonnie gets along with people, but she tends to lack drive and needs to be motivated occasionally. However, Mr. Muldoon says that once a task is clearly outlined, Bonnie is thorough, dedicated, and relentless. As an example, he praised Bonnie’s work on a recent report related to improving operating room utilization- (Matthews plays the recording of the interview.)

Matthews: Bonnie, can you tell me a few words about your background and experience?

Goldsmith: Yes. I was a zoology major at City University. Originally, I wanted to be a physician. In fact, I attended medical school for one year, and then I decided it just wasn’t for me. I didn’t know what I wanted to do. I don’t know why, but I thought that working in a hospit-al admitting department might be interesting, and I did that for a while. My father is a psychiatrist. The administrator is a good friend of my father’s, and he talked to me and convinced me to apply to City University’s graduate program in health policy and management. Back in school, I really enjoyed the coursework related to quality improvement, information systems, and statistical analysis. A whole new world opened up to me, although I must confess I had a bit of difficulty with some of the heavy reading and writing courses. After graduation, I was fortunate to get a position at Rochester Medical in the surgical services department as an analyst. Once again, my father’s connections helped to open some doors for me. After being there for a few years, I was promoted to department head for surgical services, and for the past two years, I have been fortunate to serve as the vice president for surgical services. Of course, Rochester is a small institution, but I am ready to consider working for a larger academic center. Also, the role on the hospital side is a bit limited compared with what I would expect for a department administrator role.

Matthews: What would you say has been your greatest accomplishment at Rochester?

Goldsmith: I would say my greatest accomplishment has been working to maximize the utilization of our operating rooms. One of the biggest challenges that any medical center has is ensuring the ORS are utilized to make sure the case volume and associated revenue are also realized. We worked with the faculty closely to revamp the entire OR schedule. Matthews: What kind of solutions did you come up with?

Goldsmith: Well, we first looked at which surgeons were not using their assigned times on a regular basis; these folks were then bumped. We

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then reviewed the volume of cases per surgeon, and the lower-volume surgeons were bumped from having assigned block time. Lastly, we took the existing faculty members and lined them up on the schedule. We now have roughly a 95 percent utilization rate overall, which is tremendous.

Matthews: I see. What do you think would be your greatest asset in the open position here within the department of surgery?

Goldsmith: Perhaps it’s my ability to get along with and to understand the needs and problems of the surgical profession. I don’t have a big ego. I like analytical work, solving operations problems, and I think I’m pretty persistent in trying to solve them. I also think my surgical management experience could be an asset.

Matthews: And your greatest liability?

Goldsmith: Well, some people think I’m not driven to succeed at work, and that I don’t sufficiently express my opinions. Others may think that I don’t work that hard, but I don’t want work to be an obsession, as it is for my father. I mean I’m married, with a nice husband and a young son, and I want to enjoy my work and perform well, but I also want to enjoy my family. From my perspective, this also helps me remain calm and even-tempered when managmg staff and faculty, especially surgeons.

Matthews: If you do the job well, what you say makes sense. What aspects of the job strike you as most important?

Goldsmith: Well, I don’t know. Certainly, we have to improve surgeon and patient satisfaction, and of course increase overall revenues. I’d like to assess each of these elements to determine where the opportunities for improvements exist. This might require a number of meetings, and I don’t know how feasible such meetings would be because of people’s time requirements. There are a few questions I would like to ask you.

Matthews: Please go ahead.

Goldsmith: My first question is, do you think the surgical practice is going to grow? The second is incidental, but I would like to know more about the benefits, such as tuition remission, as I was thinking about fúrthering my education at City, perhaps taking some more courses in statistical analysis.

Matthews: I think the surgical practice will continue to grow. Space is our key constraint now, and the medical center will have to figure out how we are going to better deal with managed care and possible reductions in reimbursement given the economic climate. With respect to your second question, yes, I believe tuition remission for such purposes is available, although I don’t see where you will have the time to fit everything in with the demands of this job—which

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are quite considerable—along with your commitment to your family. (LMatthews turns off the recorder.)

The Recommendation

Harris: Well, Donald, now all you have to do is tell Dr. Francis whom you recommend for the job.

Matthews: I need to sleep on it. This selection process is much more difficult than I had envisioned, but that’s also what makes it so much fun.

Harris: I agree with you there. Sorry, but I’ve got to leave now. I will also mull this over and I’ll give you my opinion tomorrow.

Case Questions

I . What criteria would you use in evaluating the four candidates?

2. What are the strengths and weaknesses of each candidate?
3. What were Matthews’s criteria for evaluating the four candidates?
4. Whom would you recommend to Dr. Francis as your selection for the position?’
5. What is the evidence that you used in making this recommendation?

Case B

The Associate Director and the Controllers

Anthony R. Kovner

Fortunately for Jim Joel, he didn’t lose his temper often. Otherwise, he might not have been able to function as associate director of the Morris Healthcare Program of the Nathan D. Wise Medical Center (NWMC) (see Exhibit 1.7). But now, he had become so enraged at the Morris program controller, Percy Oram, that he had to concentrate hard to keep from yelling. Joel had just been informed by Felix Schwartzberg, an assistant director, that the accounting department was not collecting cash from the billing assistants in the family health units as previously agreed. Unfortunately, Oram did not usually keep Joel informed of his actions. But in any case, Joel knew his own reaction was excessive—an aspiring health services executive did not throw a tantrum, which is what he now felt like doing.