One thousand males transferred from a general medical hospital into 40 community nursing homes were classified by their physicians as to expectations of outcome within six months and measured on physical functioning at the time of their transfer. They were followed up six months later and retested on functional status. Subjects were classified on follow-up as improved, the same deteriorated, or dead. They were also classified as discharged from the nursing home, still in the home, or readmitted to the hospital. Nursing homes were measured every six months on structural variables. Outcomes of the patients were related to the nursing home characteristics by multivariate analysis of variance, controlling for expected outcome, age, and diagnoses of cancer and chronic brain disease. Homes with more RN hours per patient were associated with patients being alive, improved, and discharged from the home. Better ratings on meal services were related to being alive and improved. A higher professional staff-to-patient ratio, better medical records, and more services were related to being discharged from the nursing home.