Rural communities have not kept pace with the recent dramatic changes in health care financing and organization. However, the Medicare provisions in the Balanced Budget Act of 1997 will require rural providers to participate in the new systems. Case studies revealed the degree of readiness for change in six rural communities and charted their progress along a continuum, as reflected in three sets of activities: the development of networking; the creation of new strategies for managing patient care; and the adoption of new methods for contracting with health insurers. Some communities had constructed highly integrated systems, whereas others were just beginning to change their billing practices; a few were signing contracts for capitated care, in contrast to those that were resisting discounts in current fee structures. These six rural areas still have considerable ground to cover before their health care organization and financing reach the levels achieved by urban communities.