Rising health care costs at a time of economic stagnation, federal cutbacks to Medicare, and an obsession with budget deficits at all levels of government have contributed to a sense of urgency to reform the Canadian health care system. Accompanying these economic and political motivations for reform, has been a shift in our understanding of health and well-being that lays less emphasis on the institutionalization and medicalization of health care. As part of its wellness approach to health, the Saskatchewan government in 1992 announced the closure and conversion of 52 small rural hospitals to wellness centres as part of a shift from institutional care to community based care. While the health costs and benefits of this shift are contested, the paradox is that closing rural hospitals may have unrealized health and social costs because of the psychological and community importance of hospitals to the meaning of place. This paper begins with a review of the meaning and importance of local institutions for communities. It is clear from this starting point that the debate about the economic and health benefits and costs of rural hospital closures is a limited basis for understanding hospital closures. Finally, the history of Saskatchewan hospitals and a narrative of the recent closures of rural hospitals drawn from a sampling of provincial newspapers and oral discussions highlights the need to understand the hospital closure in terms of its impact on health irrespective of the medical impacts.