BACKGROUND: In India, coping mechanisms for inpatient care costs have been explored in rural areas, but seldom among urbanites. This study aims to explore and compare mechanisms employed by the urban and rural poor for coping with inpatient expenditures, in order to help identify formal mechanisms and policies to provide improved social protection for health care. METHODS: A three-step methodology was used: (1) six focus-group discussions; (2) 800 exit survey interviews with users of public and private facilities in both urban and rural areas; and (3) 18 in-depth interviews with poor (below 30th percentile of socio-economic status) hospital users, to explore coping mechanisms in greater depth. RESULTS: Users of public hospitals, in both urban and rural areas, were poor relative to users of private hospitals. Median expenditures per day were much higher at private than at public facilities. Most respondents using public facilities (in both urban and rural areas) were able to pay out of their savings or income; or by borrowing from friends, family or employer. Those using private facilities were more likely to report selling land or other assets as the primary source of coping (particularly in rural areas) and they were more likely to have to borrow money at interest (particularly in urban areas). Poor individuals who used private facilities cited as reasons their closer proximity and higher perceived quality of care. CONCLUSIONS: In India, national and state governments should invest in improving the quality and access of public first-referral hospitals. This should be done selectively-with a focus, for example, on rural areas and urban slum areas-in order to promote a more equitable distribution of resources. Policy makers should continue to explore and support efforts to provide financial protection through insurance mechanisms. Past experience suggests that these efforts must be carefully monitored to ensure that the poorer among the insured are able to access scheme benefits, and the quality and quantity of health care provided must be monitored and regulated.