The Minnesota Pre-Admission Screening/Alternative Care Grants Program screens those at risk of nursing home placement and funds services that will allow the elderly to be cared for at home. Information was collected for a 1-year period on client placement, health and functional status, informal support, use of health and formal services, and care-giver characteristics for 214 clients screened during the last quarter of 1984. A two-equation model was hypothesized to examine the formal service decisions of case managers and the amount of informal care provided for elderly clients at risk of institutionalization. A system of two simultaneous equations was estimated using a two-stage least-squares approach. The findings suggest that case managers allocate formal services based primarily on client need. The amount of informal care provided to clients did not affect significantly the decisions of case managers and is not determined significantly by the amount of formal services received by the elderly in the community. The lack of substitution between formal services and informal care reinforces the findings of previous research.