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Health maintenance organizations (HMO's) have been one of the major innovations in providing healthcare. However, as the HMO enjoyed success as an alternative delivery system, competition among individual HMO's intensified. As a result, the 1990's will require continued attention to the effective delivery of quality services to clients. Providers of healthcare services must work toward establishing a strong competitive position in the marketplace which means that they will have to understand how their customers perceive value in the services rendered. The authors examine exchange relationships that occur in the HMO and offer an approach for analyzing the dimensions of service quality demanded by the HMO's constituents. Practical ways to enhance service quality are discussed.