Since the introduction of the prospective payment system (PPS), anecdotal evidence has accumulated that patients are leaving the hospital "quicker and sicker." We developed valid measures of discharge impairment and measured these levels in a nationally representative sample of patients with one of five conditions prior to and following the PPS implementation. Instability at discharge (important clinical problems usually first occurring prior to discharge) predicted the likelihood of postdischarge deaths. At 90 days postdischarge, 16% of patients discharged unstable were dead vs 10% of patients discharged stable. After the PPS introduction, instability increased primarily among patients discharged home. Prior to the PPS, 10% of patients discharged home were unstable; after the PPS was implemented, 15% were discharged unstable, a 43% relative change. Efforts to monitor the effect of this increase in discharge instability on health should be implemented.