One approach to reform of the medical-care-delivery system emphasizes the development of constructive competition among providers of health care. In this article we describe competition among providers in Minneapolis-St. Paul, one of the few areas that can provide information concerning the practicality of this type of reform. We have found that competition has helped to reduce hospitalization, contain costs and improve access to medical services. At the same time it has focused attention on consumer satisfaction with medical services, increased the range of consumer choice and given consumers better information about providers. Certain public and private measures could facilitate the development of similar competition in other communities. (N Engl J Med 301:812–818, 1979) THE current debate concerning the appropriate public policy for restructuring the medical-care-delivery system in the United States appears to have identified two broad policy options. The first alternative is increased regulation, probably eventually including mandatory ceilings on health-care expenditures. A second approach emphasizes the introduction of effective market incentives in the delivery of medical care through the establishment of competing “health-care plans” in communities.1 2 3 4 These organizations could take many different forms,2 but their common characteristic would be the provision of comprehensive medical services by means of a defined set of physicians to a voluntarily enrolled population paying a prospective per.