Changes in health care policies, demographics, and technology have presented new opportunities for the delivery of medical care services and information to rural communities. Telemedicine-the use of electronic information and communications technologies to provide and support health care when distance separates the participants-has significantly impacted the delivery of rural health care services. This paper presents an overview of the telemedicine technologies, government involvement in support of telemedicine, and issues that need to be addressed in designing an economic framework to evaluate the net benefits of telemedicine to rural communities and consumers. Federal and state governments have invested millions of support dollars in the form of equipment, infrastructure, and incentives for consumers and providers to expand the use of telecommunications in medical care. Since disbursement of these funds is already underway, it only makes sense to develop a method to determine both where and whether an additional dollar of funding for telemedicine development would be of the greatest benefit to society. If telemedicine can prove itself as a useful method for improving the likelihood of survival of rural hospitals, then, in the interest of rural development, it may be a technology worth investing in; i.e., the social benefits, measured as the sum of the private and public benefits, may outweigh the costs. According to its supporters, telemedicine systems have the potential to simultaneously address several problems characteristic of health care in rural areas, including access to care, cost containment, and quality assurance. Access can be improved by linking providers in remote areas with specialists in metropolitan centers or peers in rural areas. Telemedicine not only enables a wider range of services to be offered in the local community but may have the added effect of improving physician retention in isolated areas, one of the primary challenges in maintaining access for frontier medical centers. Telemedicine can promote cost containment through the substitution of lower-cost rural providers and facilities. Ideally, improved quality will be achieved by the ready availability of consultations and referrals. These are the potential benefits of telemedicine implementation, but they have not yet been verified by research in a field setting. An evaluation framework for telemedicine needs to be capable of modeling changes in the behavior of health care consumers (i.e., altered visitation patterns), recognizing differences in quality of service, and finally, quantifying the value of these changes. This is no small task, and obtaining the required data will likely require the cooperation of many parties, including health care providers, patients, hospital and program administrators, and policymakers. These are the same groups that could benefit greatly from a better understanding of how telemedicine technologies affect health care delivery, but a meaningful framework for analysis needs to capture the many aspects of telemedicine implementation.