OBJECTIVE: Guided Care (GC) is a model of proactive, evidence-based comprehensive healthcare provided by physician-nurse teams for people with several chronic health conditions. Our objective was to evaluate the preliminary effects of GC on health service utilization and costs. STUDY DESIGN: Cluster-randomized controlled trial of GC involving 14 primary care teams (49 physicians) and 904 of their chronically ill patients age 65 years or older. METHODS: Using insurance claims, we compared the health services used by patients who received GC with the health services used by patients who received usual care during the first 8 months of the study. RESULTS: After adjustment for baseline characteristics, GC patients experienced, on average, 24% fewer hospital days (95% confidence interval [CI]: 49% fewer, 13% more), 37% fewer skilled nursing facility days (95% CI: 65% fewer, 5% more), 15% fewer emergency department visits (95% CI: 38% fewer, 18% more), and 29% fewer home healthcare episodes (95% CI: 53% fewer, 8% more), as well as 9% more specialist visits (95% CI: 8% fewer, 29% more). Based on current Medicare payment rates and GC costs, these differences in utilization represent an annual net savings of $75,000 (95% CI: -$244,000, $150,900) per nurse, or $1364 per patient. CONCLUSIONS: Initial introduction of GC into primary care practices may be associated with less use of expensive health services and a net savings in healthcare costs among older patients with several chronic health conditions. Final results from the remaining 2 years of this ongoing study will be published in 2011.