Several previous studies of hospital utilization by nonelderly rural residents suggest that local rural hospitals have been increasingly bypassed, often for care in urban hospitals. This resulted in lost volume for rural hospitals, detracting from their financial viability. It is not clear to what extent elderly rural residents also bypass local hospitals and whether this reflects regionalization of treatment for some conditions or avoidance of local hospitals assumed to provide inadequate care. This study examines hospital use by aged rural Delaware Medicare beneficiaries living in a ZIP code area that has a local hospital during Fiscal Year (FY) 1987 (N = 670). Most of these Medicare beneficiaries were hospitalized locally. Those beneficiaries who bypassed local rural hospitals usually did so because cardiovascular surgical procedures were required and were often only performed in large urban teaching hospitals. Beneficiaries using nonlocal hospitals were similar to users of local hospitals with respect to age and sex and traveled an average of nearly 42 miles for treatment. "Bypassing" here appears to be due primarily to regional specialization of care rather than abandonment of local rural hospitals by rural residents.