This study addresses the cost of rural health care de livery where veterans do not have ready access to ter tiary Department of Veterans Affairs Medical Centers (VAMCs) but where local community health care is available. The study sample was 209 patients referred for tertiary care to a VAMC 50 miles distant from the referring rural VAMC. The cost of tertiary referral VAMC care was retrospectively compared with the cost had the patients received the tertiary care in the local community hospital located in the immediate vicinity. In addition, the cost of travel resulting from the remote access was also computed. Findings indicate that a sav ings of $309,293 could have been obtained had a local community hospital provided the tertiary care utilizing the Health Care Financing Administration Medicare rate. Data generated by the methodology of this study are expected to provide a baseline for policy decisions relating to alternative pathways for tertiary care in the Department of Veterans Affairs.