County hospitals are important providers of inpatient and outpatient services in poor rural areas. They have a higher proportion of well-qualified personnel than township health centres and they are better equipped. They provide specialist services for patients referred by lower level facilities and they deal with the more complex inpatient cases. In addition, those who can afford to pay use them as a first point of contact with the health care system. In 1992, 16 per cent of outpatient visits in rural areas were at the county level, and in poor rural areas the proportion was slightly higher (MoPH 1994). This article describes how the economic and institutional reforms of the 1980s have influenced the management of county hospitals. It uses one county hospital to illustrate how this has led to unnecessary increases in the cost of services. The aim is to identify measures that can be taken to improve the performance of county hospitals in the future.