Summarizes RAND's progress in developing an evaluation instrument that can capture the multidimensional functioning of nursing home patients. It traces the several steps through which the questionnaire has evolved. The final product is a fieldable instrument with levels of reliability adequate to define outcomes in several domains: Activities of Daily Living, Affect, Cognition, Social Activity, Pain/Discomfort, and Satisfaction. Inter-Interviewer (test/retest) reliabilities are generally 0.8 or greater. This instrument is the basis of an ongoing study in predicting the course of nursing home patients. The goal is to offer a new system of payment for long-term care based on rewarding the achievement of predicted outcomes.