The increasing number of patients with dementia requires new forms of care management. Group living (GL) is an alternative, and two units were established in Sundsvall, Sweden, in 1984. The patients in GL used institutional care to a significantly lower extent (nursing homes, emergency hospital care, psychiatric care) after admission to GL (p < 0.001). The costs for the Municipality and the County Council changed from £49 to £42/day (p=0.21) and patient during the first six-month period in GL compared to the six-month period prior to GL. If the costs for GL are compared to the costs for nursing home care (£68/day), GL is significantly cheaper (p < 0.05).