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Managed care and organized systems of care are restructuring the delivery of care in the United States. As care is reorganized, physician practice styles, autonomy, and compensation are undergoing profound changes. To successfully integrate physicians into the new managed systems of care, their organizational relationship to and their compensation within these systems must be carefully considered. This paper first explores physician motivation as it is related to compensation. The paper then describes a variety of emerging organizational designs aimed at aligning the interests of physicians and hospitals. The author considers fully integrated, physician-hospital organizations with target income compensation arrangements to be most suitable to the collective success of professionals and organized systems of care. The paper concludes with a discussion of the many dilemmas and challenges posed by the intertwining of managed care, organized networks of care, and professional compensation. [ABSTRACT FROM AUTHOR]