This study aims to determine the extent to which Michigan rural hospitals decreased the total level of inpatient acute care services and changed the levels of various specialized and outpatient services as well as associated ancillary inputs during the period form 1980 to 1984. It is expected that many of these services either increased over this period or remained stable since many hospitals may have decided to recoup lost revenues from inpatient acute care and/or to prevent additional revenue losses. In any event, many changes in these services are expected to be a response to challenges of financial survival. The specialized and outpatient services in this study exclude inpatient acute care services. Specialized services are defined to comprise the major inpatient services in long-term care. Outpatient services comprise all major services provided on an outpatient basis. Ancillary inputs support, or might support, specialized and/or outpatient care. Note that important health professionals, such as allopathic physicians, are considered to be ancillary inputs. The variables that comprise or support specialized and outpatient services and the procedures to select them will be identified later. Hospital size, rural location, and ownership type (private or county) may be important factors associated with changes in rural hospitals (Grim, 1986; personal conversation with David Seamon and Laura Redoutey, Michigan Hospital Association (MHA, 3/15/87). This study aims to identify which of these associated factors help explain the extent of change in the variables representing specialized and outpatient services and associated ancillary inputs.