The Veteran-Directed Care (VDC) program facilitates independent community living among adults with multiple chronic conditions and functional limitations. Family caregivers value the choice and flexibility afforded by VDC, but rigorous evidence to support its impact on health care costs and use is needed. We identified veterans enrolled in VDC in fiscal year 2017 and investigated differences in hospital admissions and costs after initial receipt of VDC services. We compared VDC service recipients to a matched comparison group of veterans receiving homemaker or home health aide, home respite, and adult day health care services and found similar decreases in hospital use and costs from before to after enrollment in the groups. Veterans enrolled in Veteran-Directed Care had indicators of higher chronic disease burden and more functional limitations than veterans enrolled in other purchased care service programs but experienced similar decreases in hospital use and costs from before to after enrolling in services. Further investigation into trends of nursing home use, identification of veterans most likely to benefit from VDC, and relative costs of operating VDC versus other purchased care programs is needed, but our results suggest that VDC remains a valuable option for supporting veterans and caregivers.