There is, globally, an often observed inequality in the health services available in urban and rural areas. One strategy to overcome the inequality is to require urban doctors to spend time in rural hospitals. This approach was adopted by the Beijing Municipality (population of 20.19 million) to improve rural health services, but the approach has never been systematically evaluated. Drawing upon 1.6 million cases from 24 participating hospitals in Beijing (13 urban and 11 rural hospitals) from before and after the implementation of the policy, changes in the rural-urban hospital performance gap were examined. Hospital performance was assessed using changes in six indices over-time: Diagnosis Related Groups quantity, case-mix index (CMI), cost expenditure index (CEI), time expenditure index (TEI), and mortality rates of low- and high-risk diseases. Significant reductions in rural-urban gaps were observed in DRGs quantity and mortality rates for both high- and low-risk diseases. These results signify improvements of rural hospitals in terms of medical safety, and capacity to treat emergency cases and more diverse illnesses. No changes in the rural-urban gap in CMI were observed. Post-implementation, cost and time efficiencies worsened for the rural hospitals but improved for urban hospitals, leading to a widening rural-urban gap in hospital efficiency. The strategy for reducing urban-rural gaps in health services adopted, by the Beijing Municipality shows some promise. Gains were not consistent, however, across all performance indicators, and further improvements will need to be tried and evaluated.