The study is concerned with the practice of physicians in a prepaid group practice setting. Specifically, it is concerned 1) with investigating the extent of variation in physician behavior concerning use of clinical resources, that is, office visits and telephone calls, and technical resources, that is, x-rays and laboratory procedures, and 2) with determining the factors that account for such variation. The universe of this study consists of all internists practicing in 1970 in the prepaid group setting of Kaiser Permanente at Portland, Oregon, a total of 34. The overall framework for the study is based on the belief that medical training and the setting in which physicians work are significant determinants of their use of clinical and technical resources in different disease situations. Specifically, the framework posits that different sets of organizational variables are important in determining use of resources for acute and undiagnosed conditions. The findings reported in the study suggest that while the teaching environment in which a physician is trained is important in shaping his clinical personality, the setting in which he actually works contains its own source of influence over his professional activity. These results also provide supportive evidence for the widely held notion that prepaid group practice, through changing the nature of the incentives to physicians and introducing professional regulation, leads to a more efficient way of providing medical care by reducing the use of costly resources.