BACKGROUND: Intermediate care (IC) services have been widely introduced in England and have the strategic objectives of reducing hospital and long-term care use. There is uncertainty about the clinical outcomes of these services and whether their strategic aims will be realised. SETTING: A metropolitan city in northern England. DESIGN: A quasi-experimental study comparing a group of older people before and after the introduction of an IC service. A quota sampling method was used to match the groups. SUBJECTS: Patients presenting as emergency admissions to two elderly care departments with falls, confusion, incontinence or immobility. INTERVENTION: a city-wide service in which a joint care management team (multi-agency, multi-disciplinary) assessed patient need and purchased support and rehabilitation from sector-based IC teams. OUTCOMES: Nottingham Extended Activities of Daily Living score, Barthel Index, Hospital Anxiety and Depression score, mortality, readmission to hospital, and new institutional care placement at 3, 6 and 12 months post-recruitment. RESULTS: There were 800 and 848 patients, respectively, in the control and intervention groups. Clinical outcomes, hospital and long-term care use were similar between the groups. Uptake of IC was lower than anticipated at 29%. An embedded case-control study comparing the 246 patients who received IC with a matched sample from the control group demonstrated similar clinical outcomes but increased hospital bed days used over 12 months (mean +8 days; 95% CI 3.1-13.0). CONCLUSION: This city-wide IC service was associated with similar clinical outcomes but did not achieve its strategic objectives of reducing long-term care and hospital use.