In this paper the costing method and results from the UK evaluation of National Health Service (NHS) nursing-home and continuing-care hospital accommodation for elderly people are presented. Results demonstrate that, in deciding on the relative efficiency of NHS nursing-home and hospital accommodation, it should be possible to provide NHS nursing-home care at a cost which is no greater than its hospital counterpart. Cost implications of future developments should be monitored in the possible event that they are set up differently from the NHS nursing homes discussed in this paper. Despite being more costly than private-sector nursing-home accommodation, NHS nursing homes cater for a less able group of people, although some overlap exists. The implications of such results are discussed in the light of the UK Government's recent proposals to reform both the NHS and community care.