Throughout the United States, the growth of managed care is forcing pe
diatric providers (physicians and hospitals) to reconstruct and integr
ate the health care delivery system with a focus away from the academi
c center and toward the community. Managed care also is forcing new fi
nancing approaches geared toward the assumption of economic risk for p
atient management and utilization of services. Radical changes in pedi
atric training programs will be necessary to accommodate the strategic
and operational changes being pursued in response to these evolving m
arket forces. These changes, while disruptive, will strengthen the bre
adth and diversity of graduate medical education and will better prepa
re trainees for the new delivery system in which they will practice. I
n this article, we examine how the evolution of managed care is redefi
ning the basic financial and organizational framework for pediatric ca
re and the implications of this redefinition for children's hospitals
and academic medical center-based pediatric programs. We draw on our e
xperience in the greater Philadelphia market to illustrate the impact
of these changes and discuss one pediatric system's response. Finally,
we review the educational opportunities provided by these changes.