As the nation embarks upon health reform, many questions remain unanswered. Important among them is the fate of public hospitals, which have historically cared for the uninsured. Under health reform, public hospitals will face marketplace competition to serve newly insured people. Can public hospitals change, so that they can survive and thrive in a competitive environment? This article describes lessons learned from a decade of funding by the California HealthCare Foundation to improve clinical care in California’s public hospitals. It also identifies factors that will influence California’s public hospitals in the coming months and years.