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As a result of federal legislation implemented in 1982, hospital beds that are used to provide both long-term care and acute care are now proliferating rapidly throughout the country. Termed swing beds, such beds are currently restricted to rural areas. However, due largely to the impacts of Medicare DRG reimbursement, pressure is mounting to expand the swing-bed approach to urban settings. Swing beds appear to fill a significant gap between the relatively intense medical needs of post-acute care patients (now discharged earlier) and the capacity of our current nursing home delivery system to meet such needs. The evolution of swing beds is marked by an unusual blend of experimentation, scientific investigation, and public policy response to community and personal health care needs. This article summarizes that evolution, highlighting research findings and key policy developments. It concludes with the current status of the national swing-bed program and issues pertinent to future directions.