Achieving a balance between the provision of community and residential care for older people is a prime task for the aged care system This paper identifies some of the factors which appear to influence the care plan recommendations made by Aged Care Assessment Teams in Victoria, for those older people at the margin between community living and hostel care. The paper is based on data from two sources: a survey of Victorian Aged Cave Assessment Team clients which provided information on a range of health status measures for around 2,000 older people, and a regular collection of sociodemographic and care plan information provided by the same teams. Multivariate regression techniques were used to identify the factors associated with each care plan. The reason for which an older person seeks an assessment is the most powerful predictor for the alternatives of community living or hostel cave, suggesting the presence of a complex of social and systemic factors. Health related factors such as presence of dementia and hospitalisation at rime of assessment, together with age, are shown to be less important, but consistent, predictors of whether an older person is recommended for a hostel, waiting list or to remain in the community with additional services.