In the fall of 1959, eight Catholic hospitals in the Philadelphia area announced that they would terminate their contractual relationship with the Associated Hospital Service of Philadelphia (Blue Cross) as of midnight December 31, 1959.The decision came after 18 months of analysis of the new Blue Cross contract and its effect on them. These hospitals wanted a contract based on hospital charges or billings. The Philadelphia Blue Cross stated two principal reasons for opposing this sort of contract: (1) that charges in hospitals varied too widely to provide a constant base of reference, and (2) that the Pennsylvania insurance commissioner would not permit a Blue Cross plan in the state to pay charges.The Catholic hospitals also objected to administrative and contractual methods adopted by the Philadelphia Blue Cross. Their complaints, described in an article in the August, 1960 issue ofHospital Topics,**dealt with the verification procedure, review procedures of the Physicians' Review Board, late payments, amount of payment for outpatient services, complicated nature of Blue Cross contracts, discounts to Blue Cross, coinsurance, and regulations for hospital extension of care to subscribers following a hospital's termination of its Blue Cross contract.The dispute between these hospitals and Blue Cross ended on September 16, 1960, when the hospitals signed a new contract which incorporated many of the principles they called essential when they announced their withdrawal.How is the contract working out? Dennis J. J. McGee, head of the negotiating committee appointed by the hospitals, answers that question in this sequel to the 1960 article.