This study compares the costs and quality of episodes of care for two common childhood illnesses, urinary tract infections (UTI) and otitis media (OM), across providers practicing in rural, small town, and urban counties in Alabama in 1992. The data source is Medicaid claims data for children under age 8 who were treated for these conditions. The study found that episodes cared for by rural providers were less expensive than episodes cared for in other locations, both because fewer rural episodes included outpatient facility charges and because fewer ancillary services were provided in rural settings. Researchers also found that, even controlling for physician characteristics and patient demographic and utilization factors, rural episodes were significantly less likely to include two process measures of quality of care: fewer rural UTI episodes included urine cultures, and fewer rural OM episodes included follow-up visits. This study suggests that, as a group, rural physicians may have a favorable cost profile but a potentially unfavorable care content profile, compared with other physicians. Both practice profile data and explicit care recommendations need to be available to physicians so they can monitor, defend, or alter their clinical practices.