Examines trends in the delivery of skilled nursing facility (SNF) services in rural areas during a period of dramatic change in Medicare payments for both acute and post-acute care, focusing on the role of rural hospitals in providing SNF services as they respond to the new reimbursement environment. The authors examined changes in the number and types of facilities providing this level of care, and computed comparative statistics on Medicare utilization, case mix, ancillary service use and per diem costs across the three different institutional settings where inpatient skilled nursing services can be provided-freestanding SNFs, hospital-based units, and swing beds in acute care hospitals.