The rapid expansion of managed care creates opportunities and dilemmas for those involved in school health and adolescent health promotion. Managed care organizations (MCOs), public health agencies, and school and adolescent health providers share certain common goals and priorities including an emphasis on prevention, cost-effectiveness, and quality of care--and a willingness to explore innovative approaches to health promotion and disease prevention. However, MCOs often face conflicting challenges, balancing the goals of cost containment and investment in prevention. In considering support for school health programs, MCOs will be interested in evidence about the effectiveness of services in improving health and/or reducing medical expenditures. Mechanisms for improving prevention efforts within MCOs include quality assurance systems to monitor the performance of health plans, practice guidelines from professional organizations, and the contracting process between payers and health care providers. Development of partnerships between MCOs and schools will be a challenge given competing priorities, variation in managed care arrangements, structural differences between MCOs and schools, and variability in services provided by school health programs.