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This study investigated inpatient psychiatric units in small rural hospitals to determine their characteristics, the availability of community-based services after discharge, and the impact of the new Medicare payment system on these units.Unit managers in all rural hospitals with fewer than 50 beds that had a psychiatric unit in 2006 (N=74) were surveyed on the telephone.On average these units had ten beds and 230 admissions per year. Medicare was the major payer (median of 84%). Typical staffing includes no more than one staff member from each category: psychiatrist, psychologist, social worker, counselor or therapist, and nurse practitioner. Common diagnoses reported were depression (74% of units), schizophrenia or other psychoses (42% of units), and dementia or Alzheimer's disease (57% of units).Hospital staff reported little difficulty obtaining postdischarge care, and most staff clinicians provided outpatient services locally. Thus mental health services infrastructure appears better in these communities than in most rural communities, but it may be weakened by recent closures reported by some units, caused, in part, by changes in Medicare reimbursement.