Both academic and economic goals must be served by the academic health center. In response to ongoing stresses on medicine, the Johns Hopkins School of Medicine and the Johns Hopkins Hospital rapidly developed and implemented an expanded system of medical care. Vertical integration included provision of both acute and chronic care facilities and both primary and specialty care, as well as insurance products, in particular a health maintenance organization. Horizontal integration was accomplished by acquisition of or affiliation with other hospitals. The realignment of medical resources and patients shifted the locus of medical education somewhat, from the traditional hospital setting to the ambulatory care setting (in which many students and residents will eventually practice anyway). In addition, many physicians in the new settings are not traditional Johns Hopkins faculty members. Results of educational efforts in these altered circumstances so far have been mixed, partly because the capacity of the individual center to train students and residents is necessarily limited, and the fragmentation of the system makes inevitable problems of quality control and management. These issues are being worked out. The drain on faculty resources for research imposed by the need to expand clinical practice has been offset by a system of awards for research to faculty members. Efforts are being made to sustain the excellence of the traditional Johns Hopkins faculty's reputation while assuring doctors newly affiliated with the Hopkins system that they are no less important to the system. Opportunities to learn and to teach more economical medicine while retaining quality are discussed.