A hospital outpatient pharmacy's planning and implementation of pharmaceutical services for a capitated geriatric care program are described. The hospital's director of pharmacy and pharmacy ambulatory care manager proposed providing distributive and clinical services for enrollees in Independent Living for Seniors (ILS), a program designed to help elderly persons to continue living at home instead of in nursing homes. ILS receives pooled monthly payments from Medicare and Medicaid; a copayment is required of enrollees not eligible for Medicaid. Medical and social services are offered, primarily through adult daycare centers. Nurses at the centers monitor ILS enrollees regularly and help them manage their medications. After a year of negotiations with the program, the outpatient satellite of the hospital's inpatient pharmacy began providing services; one pharmacist was assigned to ILS. Problems with medication stock at the daycare centers were corrected. Conservative supplies of stock drugs (mostly nonprescription items) and medications to meet patients' needs between daily pharmacy deliveries were established. A new computerized medication administration record was developed. Once distributive services were in place, a pharmacy and therapeutics committee began establishing a formulary. The pharmacist functions as part of an interdisciplinary care team, providing education on drug use and managing costs; he reviews all patients' charts every four months and meets weekly with ILS staff to recommend changes in drug therapy. The cost of services provided by the hospital outpatient pharmacy averaged $77 per patient per month in the first year, compared with about $120 for the previous vendor. A hospital's ambulatory care pharmacy improved the pharmaceutical services provided to a capitated geriatric care program.