The physician network, heart institute and college have been added since the merger.

State medical societies in 21 states are organizing physician networks, H.M.O.'s or other types of managed care groups.

Employees who go outside the physician network are required to pay very high deductibles.

Emphesys, which has two health maintenance organizations, offers most customers various kinds of physician networks.

The Milwaukee group began its hospital network in July 1987 and its physician network eight months ago.

Mrs. Bingaman predicted that the new rules would "encourage the formation of pro-competitive physician networks."

So you expand the physician networks to bring in still more enrollees.

"The bigger the physician network, the harder it is to manage quality," she said.

The best way to do that, she concluded, was to develop an in-house physician network.

The company's contracted hospital and physician network includes thousands of physicians at 76 hospitals throughout its service area.