This report analyzes the environmental effects associated with activities undertaken and influenced by the health care service sector. It is one part of a larger study to better understand the environmental effects of service sector activities and the implications for management strategies. Considerable analysis has documented the service sector's contribution to domestic economic conditions, yet little analysis has been performed on the broad impacts service firms have on environmental quality. For this study we developed a framework to examine the nature of service sector industries' influence on environmental quality. Three primary types of influence were identified: direct impacts, upstream impacts, and downstream impacts. In addition, indirect impacts induced by service sector activities include their influence over settlement patterns and indirect influences over other sectors of the economy. In our initial analysis, we noted that many functions performed in the service sector also are commonly found in other sectors. We have analyzed the impacts of these activities separately from those unique to the health care sector, as they present different challenges. Health care is one of the largest U.S. industries, employing one in nine workers and costing one in seven dollars generated in the economy. Functions performed in the industry that are common in other sectors include: transportation; laundry; food services; facility cleaning; heating and cooling; and photographic processing. Activities unique to the health care industry include: infectious waste generation and disposal; medical waste incineration; equipment sterilization; dental fillings; ritual mercury usage; x-ray diagnosis; nuclear medicine; pharmaceutical usage and disposal; and drinking water fluoridation. The industry has considerable leverage upstream on its suppliers, which is important to managing risks from the use of goods commonly used in the industry, including: mercury-containing products, polyvinyl chloride plastics, latex gloves, and syringe needles. We identified a number of areas for potential environmental management initiatives: controlling emissions from on-site "production" type functions; mercury use; the environmental consequences of infection control measures; pollution prevention through substitution of alternative health care services; and research and data collection.