Physician-hospital organizations (PHOs) are like people--they all make mistakes. Some PHOs recover from their errors and go on to become highly successful organizations. Others fall by the wayside. Success depends on some of the following methods: creating the PHO for the right reason; letting market forces shape the PHO instead of internal politics; mastering core competencies; communicating effectively and repeatedly; putting PHO interests before self-interests; having primary care physician buy-in.