The rural hospital is a vital component of the rural health care delivery system and an important institution in rural communities. In recent years, considerable concern has been expressed over the future of these institutions, many of which have experienced serious difficulties in maintaining financial viability. The problems facing many rural hospitals today result from a number of interrelated factors, both internal and external, that determine the environment within which the rural hospital operates and affect its performance. This is the first of a two-part series that: provides an objective review and critical analysis of what is known and what is not known from the existing body of research on the performance of rural hospitals; identifies and examines the influence of the major external factors which affect viability; and outlines potential options and strategies for strengthening the viability of these institutions. Part I addresses the issues of scope of services and quality of care in rural hospitals.