When Bruce Reid was hired as Blake Memorial Hospital's new CEO, the mandate had been clear: Improve the quality of care, and set the financial house in order.

As Reid struggled to finalize his budget for approval at next board meeting, his attention was focus on one issue; the future of six off-site clinics. The clinics had been set up six years earlier to provide primary health care to the community's poorer neighbor- hoods. Although they provided a valuable service, they also took funds away from Blake's in-house services, many of which were underfunded. Cutting hospital personnel and freezing salaries could affect Blake's quality of care, which was already slipping. Eliminating the clinics, on the other hand, would save $256,000 without compromising Blake's internal operations.

However, there would be political consequences. Clara Bryant, the recently appointed commissioner of health services, repeatedly insisted that the clinics were an essential service for the poor. Closing the clinics could also jeopardize Blake's access to city funds. Dr. Winston Lee, chief of surgery, argued forcefully for closing the off-site clinics and having shuttle buses bring patients to the hospital weekly. Dr. Susan Russell, the hospital's director of clinics, was equally vocal about Blake's responsibility to the community, and suggested an entirely new way of delivering health care: A hospital is not a building, 'she said, it's a service. And wherever the service is needed, that is where the hospital should be'. In Blake's case, that meant funding more clinics. Russell wanted to create a network of neighborhood- based centers for all the surrounding neighborhoods, poor and middle income.

Besides improving health care, the network would act as an inpatient referral system for hospital services. Reid considered the proposal: If a clinic network could tap the paying public and generate more inpatient business, it might be worth looking into. Blake's rival hospital, located on the affluent side of town, certainly wasn't doing anything that creative. Reid was concerned, however, that whichever way he decided, he was going to make enemies.

1. What sources of power does Reid have in this situation? Do you believe using legitimate power to implement a decision would have a positive effect at Blake Memorial? Discuss.

2. What influence tactics might you use if you were in Reid's position?

3. Do you see ways in which Reid might use the ideas of transformational leadership to help resolve this dilemma?