A few of the opportunities and difficulties of educating pediatric residents in a particular community-based setting, the managed care organization, are discussed in this article. Some of these organizations have deliberately recruited corporate employees with young families, offering relatively complete coverage. Quality problems remain, however. Children may benefit, because managed care arrangements may reduce overdiagnosis and overtreatment, but children may also be deprived, particularly in Medicaid managed care programs, of needed, appropriate care. Pediatric faculties must be confident about the quality of care, the quality of teaching, and the opportunity for residents to develop interpersonal skills before residents are placed in managed care settings. First, however, important, broader aspects of contemporary pediatric education are discussed. These essentials of contemporary pediatric education apply in any setting, community based or not, and not only to physicians in training, but to those who are delivering ongoing care as well. A case study illustrates the impact of technologic advances on medical diagnosis and management. Such advances may lead to the chance for better outcomes but also to confusion, including misperceptions about disease prevalence, the natural history of disease, and therapeutic effectiveness. To meet patient needs and to provide a medically educated physician, the understanding of biology and disease that grows out of scientific advances must be balanced with the illness-related functions of the physician. Two approaches to this goal are suggested: (1) the epidemiologic and demographic anatomy of the health of populations and the socioeconomic kinetics of our society and its diverse value systems relevant to health care should be deliberately structured into all phases of medical education; and (2) the sites of the educational process should be diversified so that residents are placed, perhaps as much as half the time, in those settings in which most patients interact with physicians.