BACKGROUND Academic medical centers have responded to health care reform initiatives by launching a series of strategic plans designed to maintain patient flow and reduce hospital expenditures. Thought is also being given to processes by which the faculty can individually and collectively adjust to these changes and maintain morale at a time when reductions in the labor force and pay cuts are virtually certain. Physicians are concerned because managed care threatens their autonomy and jeopardizes the traditional ways in which they have carried out their multiple missions. Some doctors believe that it will become increasingly difficult to obtain genuine satisfaction from their job. METHODS The strategies that academic medical centers have begun to use to address the numerous challenges posed by a system of health care based on managed competition are reviewed. Potential mechanisms by which academic departments can continue to find fulfillment in an environment that threatens their traditional missions and values are discussed. RESULTS A study of the social and historical origins of medicine in the United States reveals that the introduction of corporate medicine in the United States was destined to happen. Strategies implemented by academic medical centers in response to managed care include building an integrated delivery network, the acquisition of primary care practices, increasing cost-effectiveness, and creating physician-hospital organizations. Emphasis must be placed on integrating traditional core values (excellence, leadership, and innovation) with newer values such as patient focus, accountability, and diversity. A shift from rugged individualism to entrepreneurial teamwork is crucial. These reforms, although frightening at the onset, can serve to reaffirm our commitment to academic medicine and preserve our mission. CONCLUSIONS The evolving managed care environment offers unique opportunities for academic medical centers to shape and positively impact health care delivery in the twenty-first century. In a reconfigured model that combines core values with newer values, university-based physicians can continue to reap the intangible rewards derived from patient care, research, and education.