Abstract
This study examines the consequences of adding a geriatric subacute unit to the traditional health care mix offered by a nonprofit hospital. Historically, geriatric health care offerings have been limited to either acute care units or long-term care facilities. The study's findings demonstrate that the addition of a subacute unit that is operated by an interdisciplinary team is a competitively rational move for two reasons. First, it provides a continuum of care that integrates services and departments, thereby reducing costs. Second, it provides a supportive environment for patients and their families. As a consequence patients have a higher probability of returning home than patients who are assigned to more traditional modes of care.