Our fifth annual guide to benchmarking under managed care presents data that is a study in market dynamics and adaptation. New this year are financial indicators on HMOs exiting the market and those remaining. Hospital financial ratios and details on department performance are included. The physician group practice numbers show why physicians are scrutinizing capitated payments. Overall, hospitals in markets with high managed care penetration are more successful in managing labor costs and show productivity gains in imaging services, physical therapy and materials management.