After a care episode in a hospital, elderly patients often face delays in transitions to permanent residence. Poor care coordination burdens both the patients and the healthcare system. Whereas different models for coordinating geriatric patients’ care and discharge planning have been developed, evidence on their cost-effectiveness remains scant. In this study, we evaluated the associations of an integrated care model on health and social care costs and service utilization among geriatric patients admitted to a hospital in a Finnish city with c. 68,000 citizens. Elderly patient cohorts admitted before (N = 709) and after (N = 364) the implementation of the integrated care model were compared restrospectively. The new model consisted of changes in regional care criteria, discharge planning, coordination between inpatient facilities, and the daily work of nursing staff. Patients treated in the new model spent, on average, 7.4 days less in institutionalized care during one year, and the total annual cost of care decreased by 967€ per patient. A regionally coordinated care pathway from hospital admission to permanent residence may improve the cost-effectiveness of elderly care. Coordination and monitoring of outcomes at regional level is essential to avoid fragmentation of care and suboptimization among different care providers serving the elderly.