The U Special Kids Program (USK) at the University of Minnesota provides care coordination and case management services by telephone to children with special health-care needs. We measured the effect of the USK programme on hospital resource utilization using a retrospective record review. Information on hospitalizations was collected for children enrolled in the programme for at least two years and validated for accuracy against inpatient claims data. Hospitalizations were classified as planned, unplanned or due to lack of home care. A total of 43 children enrolled in the USK programme between July 1996 and December 2006 met the study criteria. The children had multiple, complex conditions. During the period of the study, there were 61 planned hospitalizations, 184 unplanned hospitalizations and 3 hospitalizations due to lack of home care. The number of unplanned hospitalizations decreased from 74 in the first year of enrolment to 35 in the second; this reduction was significant (P, 0.007). In the subsequent years, the rate of unplanned admissions stabilized. In contrast, the rate of planned hospitalizations was relatively constant over the five-year enrolment period. Telephone-based care coordination and case management is a promising approach for children with multiple, complex health conditions.