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Community hospitals have been supported by the general public and by professionals as one means of increasing choice between local, low technology, care and high technology care at the district general hospital. However, there is no information on the impact of community hospitals on district general hospital use subsequent to NHS and community care reforms. Examination of routinely gathered activity data in the Bath Health District revealed that availability of community hospital beds was associated with reduced use of central inpatient services in the city of Bath. The reduction was most apparent for medical and geriatric beds. Decrease in the use of surgical beds was small. However, total inpatient bed use (including central and community hospital beds) was higher in the population with access to community hospital beds. We conclude that community hospitals offer one option for accessible health care and, as such merit systematic evaluation of costs and benefits. This study presents some evidence that savings could be achieved through improved efficiency.