Changes in the method of financing health care in the United States in order to gain better control over escalating costs are receiving considerable attention. If major changes are made in the system, the nation's teaching hospitals are particularly vulnerable and must be given special consideration. The attributes of teaching hospitals and the special role which they play in the health care delivery system are delineated. Since responsiveness to system changes by teaching hospitals is key to their survival, several short-term and long-term strategies are identified. Teaching hospitals will need to be as innovative in their management and organizational approaches as they are clinically.