(FORTUNE Magazine) – Nick Franklin isn't your typical executive. He earned his spurs not in marketing, manufacturing, or finance but in the rough-and-tumble of campaigns and elections. Prior to becoming a senior vice president of $10-billion-a-year PacifiCare Health Systems, the nation's fifth-largest HMO, the 55-year-old Franklin chaired the Democratic Party of New Mexico, ran unsuccessfully for the U.S. Senate, and worked as a private lobbyist. To this day, his idea of entertainment is a cable TV shouting match between Washington pundits. "I'm a news junkie," he admits.

In many companies, that wouldn't qualify Franklin to do much more than bloviate at the water cooler. But at PacifiCare, based in Santa Ana, Calif., he's a star. He oversees his company's dealings with the U.S. government, the fractious entity that is both PacifiCare's biggest customer (through Medicare) and its biggest regulator. At the moment, Uncle Sam also happens to be the most powerful critic of PacifiCare's industry, which has so antagonized patients (and voters) that "HMO reform" is a new rallying cry, especially for Democrats.

All of which explains why PacifiCare spends a lot of money on lobbying: It's a matter of self-preservation. Under the direction of Franklin and his colleague Pat Simmons Douglass, director of government relations, the company contributes generously to candidates, to their parties, and to the growing number of other groups that aim to bend the policy debate in a direction favorable to HMOs. All told, PacifiCare invests about $2 million a year advancing its interests in Washington. It's Franklin's job to make sure the company gets a reasonable return on that money. In effect, he is the manager of the company's political portfolio.

Most major corporations have their own Nick Franklins in one form or another. Some are embarrassed to admit it, for fear of repelling customers who find the purchase (or attempted purchase) of government good will distasteful. But much as businesses may hate federal regulation, they have to deal with it. Government's reach is so deep that any company failing to play the game can quickly find itself at a competitive disadvantage.

Moreover, the variety of ways companies can put dollars to work in Washington has exploded in recent years. Businesses can still try to cozy up to particular politicians by contributing directly to their campaigns. These days, though, many companies find it more cost effective to reach the policymakers they hope to influence by contributing to their political parties too. Both the Republican and Democratic national committees, as well as each party's House and Senate campaign committees, have menus of donor programs that pledge increasing levels of access to party bigwigs in return for increasing levels of contribution. These programs make explicit a long-understood principle of American governance: Money buys access, and more money buys more access. (The tables that appear later in this story are the first comprehensive listings ever published of the parties' major donor programs.) Corporations also seek advantage by taking their case directly to voters through a plethora of other devices, such as targeted advertising. Companies need experts like Nick Franklin to help them allocate limited Washington-bound dollars among this almost unlimited range of options.

Normally companies prefer to conduct this aspect of their business out of public sight. But at FORTUNE's request, PacifiCare has been unusually candid, allowing a rare look at how one company operates in Washington's influence market. Warning: This material contains passages that may be offensive to small children, lawmakers, and the few citizens still struggling to hold Washington in high esteem.

Franklin's solemn duty as a political professional is to insist that money doesn't buy votes. Perhaps not. But money certainly buys access, and access is influence in Washington, where lawmakers and executive-branch appointees have only so much time and tend to parcel it out to the highest bidders. The fastest, surest way to see important people is to deliver a check to their campaign, their party, or their favorite cause. Just ask Johnny Chung.

PacifiCare, an average-sized dispenser of cash in the capital, plays the game cleverly. Like almost every corporation with issues before the government, it has a political action committee (PAC)--a political bank account from which PacifiCare executives direct payments to candidates' campaign coffers. About 250 PacifiCare employees fill this kitty voluntarily (but with management's strong encouragement), and Franklin and Douglass decide where the money goes. In the current two-year election cycle, PacifiCare's PAC will shell out roughly $100,000 to more than 50 candidates, 70% to Republicans, who are friendly to the embattled HMO industry, and 30% to Democrats, who are less so.

At one time that was the beginning and the end of the Washington story for corporations. No longer. Peter Kennerdell of the Public Affairs Council, a Washington-based society for government-relations executives, estimates that PAC contributions now represent only between 1% and 10% of the amount that corporations pay out for politics. Much of the rest comes straight from corporate coffers and goes to a variety of efforts that fall under the heading of "soft" money.

Here's where we have to define some terms. "Hard" money donations come from PACs and individuals and go directly into a candidate's campaign. A PAC can give no more than $5,000 per election, and an individual is limited to $1,000. Fundraisers quip that it's called "hard" money because it's so difficult to collect enough. "Soft" money, on the other hand, can be given in unlimited quantities by corporations, labor unions, and individuals as long as it isn't used by any candidate directly. It goes to the parties for identity-building programs on the state and local levels, such as get-out-the-vote drives and generic advertising.

At least, that's what it's supposed to go for. In reality, both parties have stretched the loophole so much that the biggest collectors of soft money these days are the organizations that raise money to elect candidates to the U.S. Congress. In other words, Washington lawyers have managed to transform a state and local funding mechanism into a honey pot for House and Senate candidates. That doesn't exactly make one optimistic that the campaign finance system can be reformed.

In any case, this year PacifiCare will contribute nearly $100,000 to soft-money programs sponsored by a variety of party committees. In return, PacifiCare is guaranteed face time with the most powerful lawmakers in the land. For $25,000 in soft contributions, the company became a member of the National Republican Congressional Committee's Congressional Forum and gets private, monthly dinners with the chairmen and key GOP members of top House committees. For $15,000, it joined the Democratic Congressional Campaign Committee's Speakers' Club and receives lunches and small dinners with senior House Dems. And for a specially negotiated mix of $20,000 in soft and hard money, it became part of the Democratic Senatorial Campaign Committee's Leadership Circle, which entitles it to monthly breakfasts as well as three weekend retreats with top Democratic Senators.

How well these investments can pay off was evident at a recent Washington dinner reception attended by Douglass. The affair was one of the quid pro quos that come with membership in the House Republicans' Congressional Forum, and it gave Douglass the chance to chat with Congresswoman Sue Kelly of New York. Kelly was there as a member of the House's Small Business Committee, whose chairman and GOP members were scattered among the lobbyists that night just as the soft-money program had promised. Happily for Douglass, Kelly was also a member of the House's health-care task force, which was at that very moment drafting legislation that would have changed the federal rules governing HMOs. The conversation that evening led to a more intensive discussion the next day in Kelly's Capitol Hill office. "I don't think we convinced her," Douglass recalls. "But she was very interested and wanted to know about the way we run our HMO." No corporate pleader could hope for more.

Useful as the donor programs are, there are lots of other ways corporations can spend money to attract an audience of key lawmakers and decision-makers. Supporting research institutes, for example, can ensure not only that favorable policy research is conducted but also that a company's lobbyists get up close and personal with sympathetic lawmakers. PacifiCare is one of many companies that give to the Democratic Leadership Council, an advocacy group for pro-business Democrats, and its think tank, the Progressive Policy Institute. For a $10,000 payment to each group, Franklin and his people are guaranteed the ear of senior Democrats, such as Senators Joe Lieberman of Connecticut and John Breaux of Louisiana, who aren't lackeys of big labor.

Although budget pressures at PacifiCare have eliminated hope for a permanent Washington office, Franklin wants to have at least some troops always on the ground. So for starters the company pays $900,000 a year to its main trade association, the American Association of Health Plans. The AAHP helps coordinate much of the industry's lobbying. PacifiCare will also spend $130,000 this year on consulting and accounting firms that will compile the masses of research it needs to make its case to lawmakers.

The company also retains two big-name lobbying firms, the Dutko Group and the Wexler Group. Dutko costs $12,500 a month, Wexler a couple of thousand more, and Franklin says they're worth every penny. Both firms are headed by Democrats--Dan Dutko is a former congressional staffer and Anne Wexler worked in Jimmy Carter's White House--but both have adapted well to the age of Gingrich and Republican majorities. One of Dutko's partners, Gary Andres, is a hugely effective fundraiser and top adviser to House Republicans. The Wexler Group includes an expert on health policy, Dale Snape, formerly of the White House budget office, as well as a lobbyist, Cynthia Berry, who is close to the Senate GOP. "Good public affairs firms can deal with the Republican and Democratic sides of both chambers," Franklin explains.

No matter how much personal contact Franklin can maintain, however, every politician ultimately answers to the voters. That's why PacifiCare and other corporations have been pouring money into all manner of new and extremely nontraditional election-time enterprises designed to make their case to, or through, the voters.

The fastest growing of these tricks-up-the-political-sleeve is targeted advertising. Faced with the prospect of an anti-HMO onslaught led by President Clinton, PacifiCare ponied up $25,000 to join a specially formed pressure group named the Health Benefits Coalition. In turn the coalition, which boasts a thousand business members, bought advertising in carefully selected markets to label the President's Patients' Bill of Rights a big-government bungle that would increase health costs.

You probably remember some of the ads. The nastiest was a radio commercial that featured an actor in the role of a bumbling surgeon with the voice of Senator Ted Kennedy, who creates what turns out to be Frankenstein's monster. Not long after the ad ran, polls around the country began to reflect the view that maybe Clinton shouldn't push so hard for more federal controls after all.

That was the air war against the Patients' Bill of Rights. PacifiCare is also prepared for a subterranean battle. For $50,000 it retained a "grassroots" lobbying company called Direct Impact. The northern Virginia firm developed and maintains a list of PacifiCare patients whom it calls "champions," arranged by congressional district. These are fans of the company who are willing to call or write their Congressmen whenever PacifiCare asks them to. Other health-care companies have done the same spadework at the behest of the AAHP. If the need arises, Direct Impact can coordinate all of their voices into a single constituent blitzkrieg.

Efforts like these mark a gigantic shift in the way Washington works. So much money goes to narrow interest groups such as the Health Benefits Coalition--and the NRA and Sierra Club--that they can overwhelm opposing candidates with negative ads. "These groups can spend considerably more than we [political parties] can," says Congressman Martin Frost (D-Texas), who heads the House Democrats' campaign committee. "We advise our candidates to make sure they have enough in the bank to counter last-minute attacks."

During the next few weeks--the final stretch to this year's midterm elections--Franklin will really earn his pay. He must vigilantly track lawmakers rushing to complete legislation, and also be ready to whip out his checkbook for pols hungry for campaign cash. He recently forked over $5,000 in soft money to the Republican Party in return for an invitation to an intimate reception with Gingrich and a slew of California GOP heavyweights, including Ed Royce and David Drier, who is next in line to chair the powerful House Rules Committee. For a company as exposed to federal meddling as PacifiCare, that was a command performance.

The hard part is knowing when it's safe to stop giving. The Democrats are pressing for more funds as part of their last-ditch Unity campaign. Republicans have at least two multimillion-dollar fundraising drives under way--Majority '98 and a new, clandestine effort called Operation Breakout, which is meant to neutralize the AFL-CIO's massive issues-oriented campaign.

PacifiCare keeps money in reserve to sate such 11th-hour requests. It hasn't any choice. "We have a political problem today because we have an image problem," concedes Ben Singer, PacifiCare's vice president for public relations. "In polls, we're right down there with the tobacco companies."

Franklin is philosophical about what he can really accomplish. Corporations can't buy outcomes, he repeats. They can gain access and then, if they're smart, develop credibility with decision-makers who can help them--or at least give them a fair hearing--down the road. "We're in the information business," he says.

But some people's information can be more potent than others'. Clinton's Patients' Bill of Rights, you may remember, looked like a sure thing earlier this year. Now, after the campaign waged by PacifiCare and its allies, the bill has no chance of passage before the end of this congressional session. Not bad for government work.

REPORTER ASSOCIATES Cora Daniels, Dustin Smith