Physician executives need to prepare their organizations for the next great system-wide challenge--HIPAA, the Health Insurance Portability and Accountability Act of 1996. Organizations will have to plan for and execute a compliance program with the same vigor and system-wide participation as they did for Y2K. This article provides a brief overview of HIPAA, emphasizing the privacy and security components that will be the biggest challenge for physician executives. Physician leaders must become actively involved in the policymaking process to ensure a balanced approach to protecting the confidentiality of health information, while giving providers optimal access to data to make informed decisions on patient care and management. Ignoring HIPAA is simply not an option.