A multistate nursing home data base was used to compare resource use by residents on Alzheimer's Special Care Units (SCUs) and on other nursing home units. Overall, staff time expended per resident was less on SCUs. However, facilities with an SCU used considerably more staff time than facilities without. Unexpectedly, after accounting for case mix, SCU residents actually used the same amount of resources as other residents in facilities with an SCU. SCUs appear to be an attractive alternative for caring for demented nursing home residents. In assessing their cost effectiveness, appropriate comparison groups will be crucial.