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By 1989, more than 1,100 hospitals in rural communities throughout the United States were using hospital beds as swing beds to provide both long-term and acute care. In this study, the quality of long-term care in swing-bed hospitals was compared with the quality of nursing home care, using patient outcomes along with both process and structural measures of quality. Several methodological and conceptual points on measuring and analyzing the quality of long-term care are discussed in this article. Data were analyzed on approximately 2,000 patients in four different primary data samples, three of which were longitudinal involving multiple follow-up points. An analysis of changes in patient status over time, hospitalization rates, rates of discharge to independent living, services provided, and certain structural indicators showed that (1) relative to nursing home care, swing-bed care is more effective in enhancing functional outcomes and discharge to independent living and in reducing hospitalization for long-term care patients, and (2) nursing home care appears more desirable than swing-bed care for long-stay, chronic care patients with no rehabilitation potential. Swing-bed hospitals have gravitated largely to admitting postacute long-term care patients. They do not typically compete directly with community nursing homes for chronic care patients. The greater effectiveness of swing-bed care for patients with near-acute long-term care needs suggests that this approach should be considered in urban communities and that we should scrutinize our current tendency to place in traditional nursing homes many patients who have at least some rehabilitation potential.