This paper reviews the contribution of qualitative methods to health services research (HSR) and discusses some of the issues involved in recognizing quality in such work. The place of qualitative work is first defined by reference to Archie Cochrane's agenda for HSR and the limitations of the recent focus on randomized trials as the standard method. Health care practice involves large elements of improvisation which cannot be captured by evidence-based approaches. Qualitative methods offer ways of understanding this improvisation and of identifying more efficient and effective practices, as well as considering the traditional topics of equity and humanity. The methodological procedures of qualitative work reflect a long-established inductive tradition in scientific practice. The logic of grounded theory provides a contemporary specification. In its application, it is quite different from the methodological anarchy of postmodernism. The use of qualitative research and the theoretically stated generalizations which arise from it inform reflective work by health service managers, planners and clinicians.