The challenge of workforce shortage in addition to the increasing burden of chronic illness requires health professionals capable of leading change in service delivery. The University of Tasmania (UTAS) Faculty of Health Science has strategically allied with Sydney South West Area Health Service (SSWAHS) to deliver postgraduate education for practicing clinicians addressing the complex issues involved in reforming the sector. Academics are working closely with public sector employees in developing learning opportunities for health services staff working in a challenging political and socio-economic environment. This case study explores the emerging issues for university teaching in an industry partnership. Issues that have been experienced include: pressure on academics to subscribe to client agendas in learning content; lack of understanding of different bureaucratic constraints; conflict between ideals and reality; opportunities to incorporate real and ongoing case studies; and the need for creativity and flexibility in developing mostly online content and assessment for delivery to busy and well-qualified students working in a variety of healthcare professions.