The demand for home health care has skyrocketed in recent years. The aging population and the push for more efficient delivery of hospital services have fueled this growing demand. However, health care financing reforms have constrained the industry's growth. Home health agencies struggle to deliver high-quality services while staying within the financial limitations imposed by reimbursement changes. Telehomecare is one way to provide cost-effective care in the current environment. Personal computers and video equipment can transmit data over ordinary telephone lines and allow home health providers to monitor patients and provide care at a much lower cost than earlier technologies that required wider bandwidth telephone lines and more complex equipment. But can telehomecare yield cost-savings for home health agencies? This article addresses the costs associated with a telehomecare intervention in a large, urban, home health agency. The purpose of the study was two-fold: (1) to test the effects of telehomecare on clinical outcomes, and (2) to estimate the financial costs associated with providing telehomecare services. Our results show that, while telehomecare imposes additional expenses for care delivery, it contributes substantial savings without compromising quality. Additionally, we found that the financial benefit increases exponentially as the duration of the patient care episode increases.