For this study, a sample of 1,689 patients classified as “charity” and “bad debt” cases in 1986 were identified from 27 general acute care hospitals and one tertiary hospital in Indiana. Half of the hospitals were in rural areas and 57 percent were small (less than 150 beds). Most of the patients (87.2 percent) incurred uncompensated amounts under $2,500, and 40 percent of the cases were below $500. About 72 percent of the patients with uncompensated care were from the same county as the location of the hospital (range from 30.9% to 100.0%). The majority of the cases (79.4 percent) with over $5,000 in uncompensated care were treated in urban hospitals. The average age of these patients was 27.2 years. Fifty-four percent of the patients were single, 60.7 percent were female, and nearly all (83.0 percent) were discharged to home care. Only 44.6 percent of the patients with uncompensated care had no insurance; 46.8 percent had some form of commercial insurance which covered part of the charges for care. The most common diagnosis for these patients was pregnancy and childbirth (22.8 percent), with injury and poisoning second (10.7 percent). The cases with $5,000 or more in bad debt (about 4 percent of the cases) account for 28.3 percent of the total uncollected amount. Bad debt represents a cost of doing business. Any national effort to contain health care costs must address this problem.