While research concerning ethical competence in medical practice is frequent, ethical competence in health care management is less often studied. This thesis focuses ethical competence and its preconditions, particularly with regard to health care managers’ identification and handling conflicts of interest. Based on the empirical analysis it also discusses what kind of ethical competence health care managers need, and how this competence can be developed in the organization. The study is based in action theory and takes an organizational pedagogical point of departure. Qualitative, semi-structured interviews were carried out twice with ten health care managers in the Stockholm region. Data were analysed using a thematic, step-wise method. The analysis revealed several examples of conflicts of interest and different ways in which they were managed. The all-embracing conflict involved weighing and prioritizing patients’ needs, patient safety, and work environment against political and economical goals. In most cases the informants did not manage to strike a balance between professional ethics and business management. The dominance of purposive/instrumental rationality tended to inhibit the managers’ ethical competence. At the same time, as shown by the analysis, some of the managers were able to use ethical competence to pursue value/belief-oriented rationality in achieving such a balance. Of great importance for success are having rational emotions and an adequate ethical language, and organizing for the task of handling conflict of interests in order to support action and provide qualifying experiences to learn from in the work processes. But the political and administrative control system also needs to clearly articulate the ethical dimensions of the managers’ task, allocate resources, and ensure that support systems and evaluation focus not only on finances but also on the value-rational aspects.