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While intermediate care is an international phenomenon, it is particularly developed in the UK where it is a central element of the Government's response to the care needs for older people (The National Service Framework of Older People. London: HMSO). In the UK, intermediate care services are proliferating despite lack of evidence of effectiveness. We present the findings of an ethnographic study of an intermediate care scheme in six residential care homes that examined the perspectives of three key groups--older people, care home managers and rehabilitation staff. We discovered a consensus among managers and rehabilitation staff that the scheme was successful, yet no such agreement existed amongst older people. We also found that the scheme created the conditions for the emergence of a more optimistic vision of the potential of older people, with rehabilitation assistants seeing core elements of their work in a new light. However, much of what was characterised as 'rehabilitation' was more a process of adaptation to the norms, expectations and values of the institution. Our findings point in positive and negative directions: positive in that this scheme may have generated a new culture of more personalised care amongst experienced care staff, and negative in showing the limitations of a rehabilitation scheme that is not based within a person's own living environment. Our findings have implications for policy makers, researchers and managers of services. Keywords: Intermediate care; Older people; Ethnography; Rehabilitation; Health and social policy; UK