ABSTRACT:In recent years econometric models used in health service planning have tended to encourage the downgrading or closure of small rural hospitals with the effect of reducing access to services and transferring costs from health authorities to consumers. These changes have occurred despite mounting evidence that people in rural communities have specific health service needs which require special attention. This study aimed to identify the perceptions of community members, health professionals and administrators regarding the health service needs in their small rural communities as a basis for developing a more comprehensive model of rural health service planning. Focus groups were held in three selected towns in Gippsland, exploring participants' perceptions of the meaning of health, health service needs, impact of health services, and the best set‐up for health services. Consistent with previous research, key findings include: a broad conceptualisation of health; the perceived overwhelming importance of doctors, hospitals and chemists; the economic and social importance of a rural hospital; and a preference for all health services being provided under the one roof, funding and program flexibility, and local involvement in health service planning and implementatio