This paper describes the impact of managed care on an academic medical center department of psychiatry. Like the pioneers before us, academic medical centers have often traveled wilderness paths, training new generations of psychiatrists and providing research about and new understandings of psychiatric illness; under assault from powerful competitive forces, we have all too often circled the wagons in an attempt to survive what we perceive as an onslaught. We describe the ways in which our academic medical center department of psychiatry has responded to managed care forces, in particular, the impact of managed care on residency training, inpatient services, outpatient psychotherapeutic and psychopharmacological care, and faculty morale. We describe how we have worked closely with our medical colleagues, formed new committees, and initiated forays into capitated arrangements. Despite difficult external circumstances, we have been able to survive, regroup, provide leadership, and continue with renewed purpose.