['As the cost of acute care in hospitals increases, there is an increasing need to find alternative means of providing acute care. Hospital in the home (HITH) has developed in response to this challenge. Current evidence is conflicting as to whether HITH provides cost savings compared with in-hospital care (IHC). The heterogeneous nature of HITH and the clinical complexity of patients is the greatest obstacle to making valid comparisons between the two modes of care.', 'To compare costs and outcomes of HITH to IHC in hospitals in Victoria, Australia.', 'Hospital morbidity data and medical records from Victoria, Australia.', 'A costing study of 924 randomly selected episodes of HITH care, individually matched to 924 comparable IHC episodes.', 'Unadjusted total episode costs (TEC) and averaged daily costs for HITH and IHC were calculated. Mortality and length of stay (LOS) were compared for HITH and IHC episodes. Simple linear and multiple regression were used to analyse costing data, while logistic regression was used to compare in-hospital mortality and LOS in HITH versus IHC episodes.', 'The 1848 episodes of care in the sample represented a heterogeneous range of acute conditions in 31 Victoria hospitals. HITH consisted of two distinct subgroups: pure-HITH (total episode substitution) and mixed-HITH (partial episode substitution). The cost of episodes of acute care containing a HITH component were overall 9% less expensive than IHC (P = 0.04), while pure-HITH was 38% cheaper than matched IHC (P < 0.001). The variable HITH, along with LOS and chemotherapy, explained the 60% variation in TEC. The mean cost of pure-HITH episodes was 22% lower compared to mixed-HITH (P = 0.004). The in-hospital mortality rate in HITH (3.8%) and IHC (5.2%) was not significantly different. Pure-HITH was associated with shorter LOS, while mixed HITH was strongly associated with longer LOS.'] Is hospital in the home cost saving for appropriately selected patients : a comparison with in-hospital care?