The first Health Services Facility was started in 1988, to provide the elderly with medical care services in Japan. The facilities have encouraged home care and their numbers have been increasing rapidly. In order to examine the effects of the facilities on medical expenditure for the elderly, cross-sectional and follow-up surveys were conducted with epidemiological analyses of the data from all 47 prefectures in 1990, 1993 and 1996. Multiple regression models were performed using several costs that used medical expenditure for the elderly as the explanatory variables. Furthermore, correlation coefficients between the changes in admission rates, duration of hospitalization, and the change of the numbers of beds in the facilities were calculated. The results are as follows. 1) There was a positive correlation between the cost of the facilities and medical expenditure for the elderly, but the effects have been decreasing with increased construction. 2) There was no relationship between the numbers of beds in the facilities and admission rate to the hospitals, but there was a correlation with the duration of hospitalization.