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CORRESP
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      Writer's
        Direct Line: (614) 628-0788

      Writer's
        E-Mail Address: mas@cpmlaw.com

    September
      11, 2006

    Mr.
      Jeffrey P. Riedler

    Assistant
      Director

    Securities
      and Exchange Commission

    450
      Fifth
      Street, N.W.

    Mail
      Stop
      03-04

    Washington,
      D.C. 20549

              Re:

              AdCare
                Health Systems, Inc.

              Amendment
                No. 4 to Form SB-2

              File
                No. 333-131542

    Dear
      Mr.
      Riedler:

    Today
      we
      filed our fourth Amended Registration Statement for AdCare Health Systems,
      Inc.
      (“AdCare”) pursuant to EDGAR. As a courtesy, we are enclosing three (3) marked
      copies and three (3) clean copies of amended Registration Statement on Form
      SB-2
      of AdCare which incorporates, among other things, changes made to the
      Registration Statement as a result of comments contained in your letter of
      July
      6, 2006. The numbered paragraphs in this letter correspond to the numbered
      comments in your letter and the comments are provided in italics before each
      answer.

    Graphics

              1.

              We
                note that a page of graphics now appears between the cover page and
                the
                summary and as an alternate back cover page for the selling shareholders
                prospectus. If you retain these pages you will need to explain, on
                the
                appropriate page, what this facility is, what the graphics purport
                to
                show, whether this facility is unique or representative of all your
                facilities and any other information necessary to provide an appropriate
                context for the photos.

    We
      have added captions to the graphics contained on the inside front cover and
      inside back cover of the Prospectus in which we more fully identify the
      properties and indicate the extent to which they are representative of other
      properties of the company.

        Mr.
          Jeffrey P. Riedler

        September
          11, 2006

        Page
          2

    Summary

    About
      Us, page 2

              2.

              Please
                expand the discussion in the fourth and fifth paragraphs to include
                the
                percentage of your aggregate revenue and net income attributable
                to each
                of your segments in each of the last two fiscal years and interim
                period
                to date. You currently state, in the fourth paragraph, that 92% of
                your
                revenue in the management and facility/based care segment is derived
                from
                facilities which you own and operate, but you do not indicate what
                time
                period you are referring to.

    We
      have expanded the disclosure in the fourth paragraph of Summary to indicate
      the
      period referenced and to indicate the percentages of our revenue and income
      (loss) derived from our facility/based care segment and our home-based care
      segment.

              3.

              Please
                provide factual support for the claims you make in the eighth paragraph
                on
                page 2. Mark the supporting data to show the location of the information
                you are relying on and tie the support to the specific claim in the
                prospectus that the data is intended to support. In this regard,
                please
                note that you should limit your discussion of the size of the “senior
                living facilities market” to the specific portion(s) of the market that
                you operate in.

    We
      have supplementally provided backup for the factual statements made in the
      paragraph in question. Also, please note that pursuant to your request, we
      have
      segregated from the $140 billion Senior Housing and Care Industries market
      that
      portion of the market in which AdCare operates. Also, please note that while
      our
      initial source came from the American Senior Housing Association, the
      information provided by the American Senior Housing Association that publication
      was citing the attached supplemental information by the National Investment
      Center for Seniors Housing and Care Industries. We have changed our reference
      accordingly.

              4.

              You
                use the terms “fully integrated” and “fully integrated senior living
                company” in the first and ninth paragraphs of page 2, but it is unclear
                what these terms mean. Please either delete them, or explain what
                they
                mean.

    We
      have deleted the terms “fully integrated” and “fully integrated senior living
      company.”

    Cash
      Flow, page 26

              5.

              Refer
                to your response to comment 9. We note in your revised discussion
                for the
                comparative annual periods that you attribute the cash provided by
                operating activities in 2004 primarily to the sale of Marion Hearth
&
                Home. Please explain to us how the sale of assets described here
                is an
                operating activity. Further include a better discussion of why the
                cash
                generated from operations decreased so significantly between the
                periods.

        Mr.
          Jeffrey P. Riedler

        September
          11, 2006

        Page
          3

    The
      original statement relating the cash provided by operating activities to the
      sale of Marion Hearth & Home was an error, which has been corrected to read
      that, “[d]uring 2004, the cash provided by operating activities was primarily
      the result of high occupancy in our properties and successful accounts
      receivable collection activities.” We have also expanded the discussion of
      issues relating cash produced by operating activities on page 29 of the
      registration statement.

    Alternate
      Prospectus

              6.

              For
                each non-natural person listed in the table, please identify the
                natural
                person who possesses investment and voting rights over the securities
                owned by that entity. Also, tell us whether any of the selling persons
                are
                broker/dealers and if so, the circumstances under which they obtained
                the
                shares they are selling.

    The
      requested information has been included on the Alternative Prospectus
      page.

    Financial
      Statements, page F-1

    Consolidated
      Statements of Changes in Owner’s Equity, page F-5

              7.

              Please
                refer to your response to prior comment 13. Your response appears
                to
                indicate that you are relying on footnote eight of paragraph 14.
                Please
                note that the exposure draft discussed in this footnote is a proposed
                exposure draft, and has not been approved. Additionally, please note
                that
                exposure drafts are not authoritative literature. As such, it is
                not
                appropriate to base your accounting on this guidance. Further, it
                does not
                appear that the payments you made to acquire the additional equity
                interests would fall under the types of transfers of net assets or
                exchanges of equity interests between entities under common control.
                Refer
                to paragraph D11 of SFAS 141. Please revise your financial statements
                to
                account for these payments using purchase accounting, or provide
                further
                support for your accounting treatment. Also tell us the amounts paid
                and
                how you calculated the amount recorded in this line item. Refer to
                paragraphs 14 and A6 of SFAS
                141.

    The
      Company has restated the financial statements to use purchase accounting with
      respect to these payments. These payments relate to the obligation to purchase
      minority interests in Van Wert, the subject of the questions in comment 8,
      below. In connection with the restatement at the adoption of SFAS 150, these
      payments have been accounted for as a component of the liability for the forward
      purchase contract. In 2004, these payments totaled approximately $85,000 and
      have been reflected as a reduction of the liability carried at December 31,
      2003. The amount paid for the interests was calculated to equal the payment
      made
      by the interest holders to acquire the interests initially. Please see the
      response to comment #8 below for more information concerning this
      item.

        Mr.
          Jeffrey P. Riedler

        September
          11, 2006

        Page
          4

    Note
      1. Description of Business, page F-8

              8.

              Refer
                to your response to comment 14. We are unable to agree with your
                assertion
                that this represents an embedded derivative based primarily on the
                fact
                that the contract is not able to be net settled or effectively net
                settled
                due to the lack of a ready market for these subsidiary shares. It
                does
                seem to us that this obligation represents a put option by the majority
                owners based on the fact that, once the offer is tendered, you will
                be
                obligated to purchase any shares that they request at that time. This
                instrument would seem to clearly fall within the guidance of paragraph
                11
                of SFAS 150. Please revise your financial statements to reflect the
                appropriate accounting for such instruments, or explain to us why
                you feel
                that this guidance does not
                apply.

    The
      Company agrees that the accounting guidance in paragraph 11 of SFAS 150 applies
      to the offer to purchase the minority interests that the Company has agreed
      to
      make no later than October 2008 to the minority interest holders of Van Wert.
      In
      addition, the equity interests acquired in 2003 and 2004 relate to repurchases
      of minority interests in Van Wert. The Company has restated the consolidated
      financial statements to apply SFAS 150 and SFAS 141 to these transactions.
      In
      applying the previously referenced accounting literature, the Company relied,
      in
      part, on the guidance contained in paragraph 20 of the status section of EITF
      00-6. The Company measured the fair value of the minority interests at inception
      of the investment and compared that to the carrying value of the minority
      interests at the date of the application of SFAS 150, October 2003. The
      difference was reflected as a fair value adjustment to the real property in
      the
      amount of $250,000 with the remainder recorded as goodwill. The Company
      performed an impairment analysis at each date, December 31, 2004 and 2005
      and determined no impairment charge should be recorded. Please refer to Note
      2
      to the consolidated financial statements on pages F-9 through F-12 for further
      details about the impact of this restatement. Changes were also made to pages
      F-2 through F-7. An excerpt containing the above-noted pages is attached hereto
      as Exhibit A.

    Note
      4. Discontinued Operations, page F-19

              9.

              Please
                refer to your response to comment 12. It remains unclear to us how
                the
                consummation has been completed in this transaction. Your assertion
                in
                this response that the transfer of title is perfunctory seems inconsistent
                with statement in this note that seems to infer that the purchaser
                has the
                “option to vacate the property prior to July 1, 2006,” which would seem to
                invalidate the sale. Please reconcile this apparent inconsistency
                and
                clarify any other terms of the agreement that might indicate that
                consummation is not complete such as what happens if the buyer defaults
                on
                the payment of the land
                contract.

        Mr.
          Jeffrey P. Riedler

        September
          11, 2006

        Page
          5

    The
      Company has concluded that the land contract does not meet all criteria outlined
      in SFAS 66 relating to the definition of consummation. As a result, the Company
      has restated the consolidated financial statements to reflect the application
      of
      the deposit method of accounting to the land contract transaction. Please refer
      to Note 2 to the consolidated financial statements for the details of the impact
      of this restatement. Changes were also made to pages F-2 through F-7, F-21,
      F-22
      and F-23. An excerpt containing pages F-2 through F-7 is attached hereto as
      Exhibit A. An excerpt containing pages F-24 through F-25 is also attached hereto
      as Exhibit B.

    Note
      6. Note Receivable, page F-21

              10.

              Please
                refer to your response to comment 16. Your disclosure in the document
                states that you “received an unsecured promissory note.” Your discussion
                in your response seems to be predicated on the fact that the note
                is
                really secured by the property in questions. Please revise your disclosure
                to clarify how this unsecured note is supported by the
                property.

    Note
      7 on page F-24 has been revised to delete the term “unsecured” and the process
      to estimate the reserve has been described in more detail.

    Very
      truly yours,

    CARLILE
      PATCHEN & MURPHY LLP

    Michael
      A. Smith