This study had a dual purpose: to develop measures of change in functioning among the elderly, and to identify the characteristics of groups of homebound elderly whose functioning is significantly improved with video-telephone nursing care. As part of the evaluation of a home telecare program in Belgium, data from all 71 elders who received home telecare were examined in order to describe the nature of the relationship between the care/support received and health outcomes. The elders' functioning was measured using 8 assessment scales. Eleven measures of change in functioning were developed using multi-dimensional scaling algorithms. Use of these measures in the decision tree model made possible the identification of groups of homebound elderly who showed significant improvement following tele-nursing care in well-defined domains of functioning. The findings suggest that telecare is an alternative care model that could be integrated into existing home-care services to provide older people with integrated health services.