In Pakistan, despite an elaborate network of over 5000 basic health units and rural health centres, supported by higher-level facilities, primary health care activities have not brought about expected improvements in health status, especially of rural population groups. A poorly functioning referral system may be partly to blame. System analysis of patient referral was conducted in a district of Punjab province (Attock) for the purpose of identifying major shortcomings, if any, in this domain. Respondents from 225 households were interviewed. Of the households experiencing serious illnesses less than half were taken to a nearest first-level care facility (FLCF). Major reasons included dissatisfaction with quality of care offered, non-availability of physician, and patients being too ill to be taken to the FLCF. The FLCF utilization rate was less than 0.6 patient visits/person/year. The mean number of patients referred per FLCF during the previous 3 months was 6.5 +/- 5.0. Only 15% of patients were referred on the prescribed referral form. None of the higher-level facilities provided feedback to FLCFS: Records of higher-level facilities revealed lack of information on either patient referrals or feedback. There were no surgical or emergency obstetric services available at any of the first-level referral facilities. Seventy-five percent of the patients attending the first-level referral facilities and 44% of the patients attending higher-level facilities had a problem of a primary nature that could well have been managed at the FLCF. As a result of the study findings, eight principal criteria were identified that need to be satisfied before a referral system may be considered functional.