The past decade has seen a great expansion of the day-hospital element in geriatric and psychiatric care, and the merits of such therapeutic agencies have been described quite often—but with little reference to the economic benefit to the community. We have described an enquiry into the true cost of a typical ‘intermediate’ day hospital and introduced valid comparisons with other methods of caring for the elderly sick or frail: these comparisons inevitably led to the inclusion of the acute general hospital when considering the integrated health and welfare service which we require. The surprising financial implications should be recognized as we enter another era of stringency which must restrict development of the National Health Service.