ABSTRACT:This research illustrates the importance of a hospital to the economic health of a community. A simulation model of a rural community in Oklahoma is used to demonstrate how the implementation of the DRG reimbursement policy has impacted a rural community, and to project how the closing of the hospital would impact the economy of the community. The results indicate that rural hospitals play a vital role in the economics of their communities. The closing of a rural hospital has a devastating impact on the community, while the DRG reimbursement policy has had a significant impact on the community.