A stratified, random-assignment trial of 442 cancer patients was conducted to evaluate medical, psychosocial, and financial outcomes of day hospital treatment as an alternative to inpatient care for certain cancer patients. Eligible patients required: a 4- to 8-hour treatment plan, including chemotherapy and other long-term intravenous (i.v.) treatment; a stable cardiovascular status; mental competence; no skilled overnight nursing; and a helper to assist with home care. Patients were ineligible if standard outpatient treatment was possible. No statistically significant (p less than 0.05) differences were found between the Adult Day Hospital (ADH) and Inpatient care in medical or psychosocial outcomes over the 60-day study period. The major difference was in medical costs--approximately one-third lower for ADH patients (p less than 0.001) than for the Inpatient group. The study demonstrates that day hospital care of medical oncology patients is clinically equivalent to Inpatient care, causes no negative psychosocial effects, and costs less than Inpatient care. Findings support the trend toward dehospitalization of medical treatment.