Managers and policy makers face new and as yet unrecognised challenges--particularly loss of control--through the application of new information technologies in healthcare. Whilst informatics and telemedicine are important developments, the potential for adverse organisational and societal effects should be recognised and anticipated. Health organisations are frequently seen as circumscribed networks, and these in turn form local alliances with related organisations. Information technologies are frequently construed as relating to operational systems within organisations, not least electronic patient record systems and diagnostic systems. These can then be linked to new generation health business systems, to provide accurate management information at low additional cost. However, this pair of assumptions is now seriously flawed, due to the effects of the latest developments in health informatics and telemedicine. In particular, telecommunications and Internet technologies render ineffectual previous external barriers of distance and national boundaries, whilst within the organisation the combination of knowledge bases with information technologies creates tendencies towards internal autonomy. Organisational and national policy control of health care face direct and radical challenges through perverse effects of otherwise beneficial developments, and early action is needed.