Background. The elderly population consumes a large share of medical resources in the western world. A significant portion of the expense is related to hospitalizations. Objectives. To evaluate an intervention program designed to reduce the number of hospitalization of elderly patients by a more optimal allocation of resources in primary care. Methods. A multidimensional intervention program was conducted that included the re-engineering of existing work processes with a focus on the management of patient problems, improving communication with outside agencies, and the establishment of a system to monitor quality of healthcare parameters. Data on the number of hospitalizations and their cost were compared before and after implementation of the intervention program. Results. As a result of the intervention the mean expenditure per elderly patient was reduced by 22.5%. The adjusted number of hospitalizations/1,000 declined from 15.1 to 10.7 (29.3%). The number of adjusted hospitalization days dropped from 132 to 82 (37.9%) and the mean hospitalization stay declined from 8.2 to 6.7 days (17.9%). The adjusted hospitalization cost ($/1,000 patients) dropped from $32,574 to $18,624 (42.8%). The overall clinic expense, for all age groups, dropped by 9.9%. Conclusion. Implementation of the intervention program in a single primary care clinic led to a reduction in hospitalizations for the elderly patient population and to a more optimal allocation of healthcare resources.