A population-based, retrospective analysis of Medicare Part A and Blue Cross hospital insurance claims data was used to determine whether hospice home care cost savings to third-party insurers are substantial and result from the substitution of less expensive home care visits for more costly hospital inpatient days. The study was carried out by comparing the third-party payments of Cuyahoga County residents who died of cancer and were served by a hospice home care program (n = 152) with the insurance payments of cancer patients who never received hospice home care (n = 1,397). The data strongly supported the research hypothesis. The relative use of hospital days decreased more than 50% and the use of home care visits increased 10-fold when dying patients shifted from conventional care to hospice home care. This change in use represented a relative savings of about 40%, ranging from $1,089 per patient during the last 2 weeks of life to $2,676 per patient during the last 12 weeks of life. These results were not accounted for by group differences in age, type of cancer, or personal preference for home care.