Data from the most recent Community Tracking Study (CTS) interviews in twelve nationally representative metropolitan areas indicate that hospitals are increasingly employing physicians, particularly specialists. Nonemployed physicians are separating from hospitals passively by refusing to serve on medical staff committees or take emergency department call, and actively by creating specialized facilities, such as ambulatory surgery centers (ASCs), to compete for hospitals' most profitable services. Employment is more common and physician-owned ASCs are less common in consolidated hospital markets. The interviews also suggest other factors motivating physician employment by, or separation from, hospitals, and likely consequences of these trends.