Examines characteristics of nursing facilities and the supply of certified skilled nursing beds as the new PPS is being phased in, with particular reference to differences between urban and rural settings. Finds that rural-urban differences in the supply of long-term care beds and in the characteristics of long-term facilities are less pronounced, in general, than rural-urban differences in acute care capacity. Among the differences between urban and rural nursing facilities are: the most rural counties are the most likely to have no certified nursing homes; as counties become more rural, swing beds account for an increasing percentage of Medicare SNF discharges; and long-term care facilities in the most rural counties are more likely to be hospital based. Overall, the supply of nursing facilities does not appear to be a problem in rural areas, with the possible exception of the most rural counties.