The advent of managed care has mandated attempts to shorten hospital stay, and to provide care in an outpatient setting. This can be particularly difficult to accomplish when dealing with patients with chronic illnesses. We present a team model of care for pediatric patients with chronic illnesses, which has been successful in promoting early discharge, while maintaining overall low cost. The CRH Pediatric Unit at Thomas Jefferson University Hospital cares for patients up to one year of age with a variety of chronic illnesses. Over the past year, 92 patients have been admitted to the unit. Chief diagnosis for these patients include: 23 patients with BPD (25%), 17 with feeding disorders (18%), 10 with neonatal abstinence syndrome (11%), 6 with failure to thrive (7%), and the remaining 39% of patients with a wide variety of primary illnesses, including chronic infections, congenital heart disease, severe apnea and bradycardia, and severe neurologic disorders. Hospital charges are approximately one third of those for an acute intensive care unit, and about one half of those for a regular pediatric bed. The unit is managed by one attending physician and one pediatric nurse practitioner, with active involvement of rehabilitation and nutritional support services. Primary attention is given to patient discharge. Meetings with parents (or designated caregivers) are frequent, and medical and nursing staffs work closely to prepare them in the care of their child at home. Close work with social work and home health care agencies occurs to ensure an expedient and safe transfer to home. Additionally, case managers from insurance companies are kept actively involved, so that they can help in coordinating continuing care. Thus far, the average length of stay (LOS) has been 20±22 days. Included in this population are 9 patients on mechanical ventilation for BPD. 4 of whom have been successfully discharged to home, and one to foster care. This length of stay data compare favorably to another chronic facility in the Philadelphia region which, for a similar patient population in 1995, had an average LOS of 53±48days (P<.01). We conclude that chronic neonatal and pediatric illnesses can be effectively managed through an aggressive team approach.