Fall rates and patient companion use were examined after opening a close observation unit (COU) for patients with internal medicine diagnoses. Of 2023 patients (COU, n = 145; internal medicine unit, n = 1878), COU patients had more neurologic and psychiatric problems, had a longer mean length of stay, and were discharged home less often than internal medicine unit patients. Although COU patients had higher acuity, there were no differences between groups in fall rates per 100 patient-days and no use of patient companions in the COU.