Managed health care has grown rapidly during the past decade and is likely to continue its expansion during the next several years. Psychiatric services have been subject to especially stringent efforts to control costs, including intensive utilization review and formation of provider networks that primarily utilize master level professionals. Psychiatrists' responses to these changes have ranged from antagonistic to proactive. The most effective actions are proactive ones that attempt to shape these new health care systems. A thorough understanding of the impact of managed care upon psychiatry and of psychiatrists' responses can help providers in other medical specialties as they develop their own strategies to cope with the changing health care environment.