A causal model has been developed relating patient-days per thousand population and its components, hospital admission rates and average length of stay, to demographic characteristics of New Mexico counties. Data from the U. S. Census I960, the New Mexico State Department of Business Research, and the annual Guide Issue of “Hospitals,” the Journal of the American Hospital Association, have been used to estimate parameters of this model. Analysis of the model suggests that the supply of hospital beds is a major determinant of utilization in an area. In those areas where alternative health services are lacking or inadequate, an increase in the supply of beds significantly alters both the admission rate and the average length of stay. Socioeconomic factors such as income level, educational level, and ethnic composition have surprisingly little effect on the use of hospital facilities in New Mexico, a fact that probably reflects the major changes that have occurred in financing hospitalization during the past several decades. At the same time, hospital utilization rates appear to be highly sensitive to even small changes in the age structure of the population. Urbanization also affects the use of short-term general hospitals primarily due to the increased availability of hospital services to urban populations. The findings suggest that inpatient hospital care is substituted for ambulatory care normally provided by physicians in areas where the physician-to-population ratio is low. In general, the findings of this study clearly demonstrate the value of causal models in ascertaining the effects of demographic factors on the use of health care services and in planning for future demands on the system.