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Variations in the rates of major procedures by race and gender are well described, but few studies have assessed the quality of care by race and gender for basic hospital services.To assess quality of care by race and gender.Retrospective review of medical records.Stratified random sample of 2,175 Medicare beneficiaries hospitalized for congestive heart failure or pneumonia in Illinois, New York, and Pennsylvania during 1991 and 1992.Explicit process criteria and implicit review by physicians.In adjusted analyses, black patients with congestive heart failure or pneumonia received lower quality of care overall than other patients with these conditions by both explicit process criteria and implicit review (P < 0.05). On explicit measures, overall quality of care did not differ by gender for either condition, but significant differences were noted on explicit subscales. Women received worse cognitive care than men from physicians for both conditions, better cognitive care from nurses for pneumonia, and better therapeutic care for congestive heart failure (P < 0.05). Women received worse quality of care than men by implicit review (P = 0.03) for congestive heart failure but not pneumonia.Consistent racial differences in quality of care persist in basic hospital services for two common medical conditions. Physicians, nurses, and policy makers should strive to eliminate these differences. Gender differences in quality of care are less pronounced and may vary by condition and type of provider or service.