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In this article we examine the impact of Medicaid managed care on safety net organizations in New Mexico and their ability to maintain their traditional mission of charity care. We address two particular areas of concern that have arisen in the literature on Medicaid managed care. First, analysts have debated under what circumstances safety net organizations are better positioned to survive under market competition without abandoning their social orientation. Second, analysts have suggested that populations in rural areas may be more disadvantaged under Medicaid managed care due to its intensification of already‐existent barriers to access. By comparing the differential ability of safety net organizations in rural and urban New Mexico to buffer their patients from potentially harmful effects of Medicaid managed care, we identify factors that place these safety nets particularly at risk. We find that a rural location, lack of affiliation with a larger organization, and lack of recourse to charitable funding are 'risk factors' determining who sinks—and who floats—in this new competitive health care system, [privatization of health care, Medicaid safety net organizations, managed care, resistance, ruralurban]

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