Focusing on one state university academic health center (AHC) located in a rural setting in the southeastern United States, this case study investigates the strategic response to the increasingly turbulent and competitive environment in the healthcare industry. The qualitative research reported here involved a review of pertinent documents and archival data and interviews with key informants including AHC executives and staff, community leaders, and others. Additional information was obtained from published sources, including a literature review that covers a five-year period ending in 1997 and searches conducted using the key words "academic medical or health center." The AHC in this case study demonstrates how it is possible to respond proactively to changes in the environment without sacrificing the multiple missions of the institution. This AHC implemented strategies that ensure access for both inner city and rural underserved populations while providing venues for primary care training and educational programs. In addition, the AHC positioned itself to compete more effectively by implementing a continuous quality improvement program that is aimed at maximizing quality while controlling costs. Administrators in not only AHCs but also other healthcare organizations, such as community hospitals and competing systems, should consider the findings from this case study useful in evaluating existing strategies and possible alternatives. In particular, the use of an affiliation strategy for growth in a resource-poor environment may encourage organizations located in rural areas to consider innovative expansion strategies to develop integrated systems of care.