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Institutional context plays a substantive role in ethical analysis. Accordingly, efforts to apply the principles of bioethics generally and without regard for institutional context may prove difficult.

This article first addresses the aspects of two non-hospital settings - the managed care organization (MCO) and the nursing home - that make the application of hospital-derived principles of bioethics particularly difficult.

The article then considers health care providers’ complaints that extensive MCO regulations impede ethical decisionmaking and adequate care. MCO standards and regulations are value-based. Thus after identifying four categories of providers’ MCO complaints, this article evaluates the complaints under ethical norms.

First, a provider may be scapegoating regulations by claiming that the MCO plan prohibits good care. Scapegoating is clearly unethical, tantamount to a lie. Second, a provider’s understanding of MCO regulations may come from "the grapevine" - an honest misunderstanding. While misunderstandings of unclear regulations may be unavoidable, providers still have a duty to inquire into the standards of each patient’s plan. Third, the failure to provide adequate care may be attributed to incentives or disincentives built into the administration of the system rather than the actual regulations of the system. Both providers and MCO regulators have the ethical duty to respond more effectively to such failures. Finally, the MCO plan may have wrongly identified what standards are beneficial. It is important to continually balance empirical research and values in setting standards of coverage.

Health care providers in managed care do face ethical challenges. However, the regulator who sets MCO standards is also engaged in a value-based effort. If MCO standards are correctly identified as value-based, the process for establishing such standards must broaden.