The safety of the obstetric care system in the small hospitals of northern Ontario was assessed by analysing the outcomes of all obstetric cases over a 2-year period. Information was retrieved by place of residence rather than hospital of delivery so that the overall perinatal system, including the referral patterns, would be assessed. There was little difference in perinatal loss rate (stillbirths and neonatal deaths up to 28 days per 1000 births) for residents of areas served by different levels of obstetric care. Areas served by units where cesarean sections are done regularly but which do not have specialists in obstetrics or pediatrics had a perinatal loss rate of 10.43, whereas areas served by units staffed with two or more specialists in both obstetrics and pediatrics and handling more than 1000 deliveries per year had a perinatal loss rate of 12.13. Although many of the smaller hospitals did not have the minimum capabilities suggested for obstetric units relatively safe care was being provided. These results do not support the need for further centralization of obstetric services in northern Ontario.