The expansion and development of regionalized perinatal care has faltered during the past 10 years as clinical and financial polarization created by institutional and individual competition has supplanted original ethical and altruistic precepts. An integrated practice model is described for the reorganization of perinatal services on the basis of findings from nine community hospitals with level II nurseries developed and administered by a private practice group of neonatologists functioning in coordination with established university level III facilities and staff. Nine hospitals (seven private and two affiliated with a health maintenance organization) were located in urban and suburban communities in two counties within a 725-square-mile area encompassing a greater metropolitan area. Guidelines were created to define the level of care provided at each hospital. All neonates, including infants who had intended delivery at estimated gestational ages > or = 32 weeks, were at least initially provided care at their community hospital. Neonates who required assisted ventilation, surgical intervention, evaluation for suspected cardiac disease, or selective diagnostic procedures were transferred to one of the tertiary facilities. Gestational age and birth weight specific categories for the 36,014 neonates delivered in 1988 to 1989 at the community practice hospitals are delineated for need of transport from level II to level III unit, deaths, and percent survival. Retrospective comparison of the community hospitals before and after establishment of the practice demonstrated a significant decrease in infants transported to a higher level of care and increase in neonates returned from level III to II units. Associated with improved capability of these level II nurseries was a reduction in mortality of neonates with diagnoses consistent with potential viability. Strict adherence to practice guidelines for maternal transfer resulted in significant reductions in delivery of low birth weight and very low birth weight neonates at level II community practice hospitals. The safety, efficacy, and potential cost effectiveness of this community hospital practice is discussed as a viable alternative model to the current widespread competitive disorganization that now characterizes regionalization of most metropolitan perinatal services.