Background: Risk/Profit-sharing finance mechanisms constrain costs; encourage clinical and financial efficiency, affecting many operations, and impacting service quantity and quality because small healthcare providers manage insurance risks less efficiently than larger healthcare providers and insurers. Such effects may exacerbate disparities in access to or availability of healthcare services in small communities of indigenous populations and/or which have material resource scarcities.

Approach: A comparative case study of two rural Kentucky hospitals' contracting and management processes was completed as part of a managed care and reimbursement class. The authors interviewed executives, administrators, managers, and clinicians, and reviewed manuals and procedures in many different departments to define and describe the impact of managed care contracting imperatives on hospital structure and function.

Major Points & Rationale: Insurance risk assumption by health providers affects all operations, including: Admissions, financial, accounting, nursing, discharge planning, and collections. Nurses who understand the financial, managerial, and clinical implications of managed care operations can participate more effectively in managed care contracting and better mediate its impact on bedside care.

Conclusions: This case study report provides important insights into the clinical, financial, and managerial consequences of managed care operations in two rural hospitals. Similarities and differences in how these hospitals addressed their managed care operations will help inform nurses involved in the managed care operations in other settings, enabling them to participate more effectively.

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