Although team-oriented geriatric assessment clinics are growing throughout the country, little documentation exists regarding their clinical efficacy, cost-effectiveness, or impact on patient functioning and well-being. This report describes a randomized controlled clinical trial to evaluate the effectiveness of a team-oriented geriatric assessment approach compared to traditional care. One hundred-seventeen subjects 65 years of age and over, meeting eligibility criteria to target frail older persons with changing medical and social needs, were randomly assigned to receive a comprehensive geriatric assessment by a multidisciplinary team (treatment) or by one of a panel of community internists who were reimbursed according to their usual and customary fee (controls). Extensive analysis of baseline information failed to identify any significant differences between groups. Over the 1-year follow-up period, treatment participants experienced 26 hospital admissions and used 670 hospital days compared with 23 admissions and 1113 days for controls (a 39.8% difference). Annual hospital costs averaged $4297 for treatment subjects and $7018 for controls. Overall institutional costs including hospital and nursing home care revealed an average saving of $2189 per person for treatment subjects compared with controls, a 25% reduction. A small proportion of subjects accounted for this difference. No significant differences were noted in patient or caregiver satisfaction with the evaluation process, functional ability, or health status. These findings suggest that team-oriented outpatient geriatric assessment provides a promising way to deliver high-quality, satisfying care to older persons without increasing (and possibly decreasing) health care costs.