Care of patients with osteoarthritis is compared for three different types of health service: fee-for-service, prepayment (Kaiser Health Plan), and an experimental service (Midpeninsula Health Service--MHS). While charging fees-for-service, MHS modifies medical practice in defined ways and seeks to involve patients through supervised self-care. Volunteer panels of patients provide the data at 6-month intervals through self-administered questionnaires. This report covers the first 18 months. Health status has not changed. Annualized utilization data, adjusted for age, income, education, pain, disability, disease duration, and prescription drug use, indicate that MHS members have fewer physician visits, fewer diagnostic tests, and lower antiinflammatory drug use than the other two services. MHS members express satisfaction equal to or greater than other participants. The results suggest that, in addition to modified financial incentives, there is another strategy that is relevant to achieving effective, efficient, and satisfying health care.