This study analyzes whether elderly patients who are black or from poor neighborhoods receive worse hospital care than other patients, taking account of hospital effects and using validated measures of quality of care. The authors compare quality of care provided to insured, hospitalized Medicare patients who are black or live in poor neighborhoods as compared with others, using simple and multivariable comparisons of clinically detailed measures of sickness at admission, quality, and outcomes. The study looked at patients 65 years of age or older who lived at home prior to hospitalization for congestive heart failure, acute myocardial infarction, pneumonia, or stroke. It took place at acute care hospitals in 30 areas within five states. The authors found that within rural, urban nonteaching, and urban teaching hospitals, patients who are black or from poor neighborhoods have worse processes of care and greater instability at discharge than other patients. However, this worse quality is offset by patients who are black or from poor neighborhoods being 1.8 times more likely to receive care in urban teaching hospitals that have been shown to provide better quality of care. Because these patients receive more of their care in better-quality hospitals, there are not overall differences in quality by race and poverty status. Death rate did not vary by race or poverty status. The authors conclude that quality of hospital care for insured Medicare patients is influenced both by the patient's race and financial characteristics and by the hospital type in which the patient receives care.