The primary objective of this study was to test the hypothesis that inpatient care which emphasized structured, patient education, self-care and social support from a care partner (the Cooperative Care Program) is a cost-effective alternative to the more expensive staff-intensive, traditional hospital care; and that such care can be substituted without resulting in poorer outcomes with regard to subsequent health status or use of services. The effects of this program on patient and physician acceptance, patient knowledge and treatment and health status, were evaluated by means of an experimental design with comparable groups of patients assigned to experimental (cooperative care) or control (usual hospitalization) group status. Follow-up analyses of both groups of patients for a 12-month time period concluded that there were comparable and equally positive post-hospitalization experiences, with greater than 90% of both groups of patients functioning well with respect to a series of measures of functional status. There was no evidence that Cooperative Care patients were re-hospitalized more often or needed more emergency, home care or other types of services. There was, on the other hand, evidence of the positive effect on patient understanding, adherence to treatment, satisfaction, and self-management.