Qualitative analysis of a large ethnographic database from observations of a resident teaching clinic revealed three important findings. The first finding was that breakdown, a situation where an 'actor' (such as a person or the group) is not achieving expected effectiveness, was the most important category because of its frequency and explanatory power. The next finding was that exposure to breakdown was a necessary ingredient for reflective learning. The final finding was that effective response to breakdown (with concomitant reflective learning) requires six factors to be present: the patient is engaged directly; responsibility is matched to authority; tools are matched to tasks; information resources are matched to need; values are matched between co-participants; and expectations are matched with capacity. These findings have implications for planning, improvements and further studies in ambulatory teaching clinics.