Observation wards have not been discussed in the Australian literature. In the United Kingdom, the few published reports suggest that they are an essential part of the function of emergency departments. This paper presents the results of a survey of 44 major Australian hospitals regarding their use of observation wards. Half the hospitals that were surveyed had such wards but variations existed in the way that they functioned. Nearly half the remaining hospitals wanted to establish an observation ward. Our concept of observation wards is discussed.