Rural hospitals represent almost half of all short-stay nonfederal general hospitals in the United States, but have been more severely affected than their urban counterparts by changes in reimbursement, regulation, and technology. Two hundred and six rural community hospitals closed during the first nine years of the 1980s, and the rate of closure is accelerating. Using secondary data sources to examine the structure, role, and content of rural hospitals, small rural hospitals are described and compared to larger and nonrural hospitals. Rural hospitals differ systematically from other hospitals in the United States, with smaller daily censuses, lower occupation rates, shorter lengths of stay, and disproportionately high shares of Medicare patients. They are dominated by very small institutions, with more than 1,000 rural hospitals having fewer than 50 beds. Small rural hospitals offer a core of basic services to the populations they serve. Emergency, obstetric, and newborn services are virtually ubiquitous in rural hospitals of all sizes, and they are also more likely to offer long-term nursing and home care services than urban hospitals of similar size. The inpatient diagnostic and procedural mix of these institutions demonstrates that they provide care for common medical and surgical conditions of low complexity. Rural hospitals are also relatively inexpensive, representing only 6 percent of total expenditures for hospital care. Given their central role in supporting the provision of health services to rural areas, the apparent appropriateness of the conditions they treat, and their relatively modest cost, it would seem reasonable to use federal policy to stabilize our previous investment in these institutions.