Despite the considerable challenges to providing high-quality rehabilitation in a long-term care facility, growing demographic and fiscal pressures are likely to push the nursing home into the forefront of rehabilitation for the frail elderly. Model programs have been implemented in recent years that present alternative ways to increase access to skilled services and improve quality of care in nursing homes without a drastic increase in costs. The teaching nursing home program has supported projects to make longterm care facilities centers for education, innovative clinical care, and research, thus bringing nursing homes into the mainstream of the medical establishment. A majority of US medical schools have recognized the need for training in long-term care and have formed affiliations with nursing homes. The Department of Veterans Affairs has a large national system of nursing homes, which has made a significant contribution to the training of health professionals in many fields. Demonstration projects such as the Social Health Maintenance Organization and On Lok have sought to decrease the fragmentation of health care services for the elderly and bring nursing homes into a continuum of care. The adoption of the OBRA regulations is building a base for comprehensive assessment and improved provision of care in nursing homes nationwide. Nursing home rehabilitation has the potential to decrease institutionalization in the short-term resident, whereas maintenance therapy can improve quality of life and decrease the cost of caring for patients who must be institutionalized. But to achieve this potential, significant barriers must be overcome. Negative attitudes about aging and nursing homes percolate through all levels of health care from lack of reimbursement at the federal and state levels to the professional priorities that continue to favor "high-tech" medicine and stigmatize nursing homes and those who work in them, to low expectations of caregivers and the residents themselves. For nursing homes to provide the level of rehabilitative care that is now expected of them, current funding mechanisms and negative attitudes must be changed, and nursing homes must be recognized as a legitimate part of mainstream health care.