Objective To investigate the business case of postdischarge care transition (PDCT) among Medicare beneficiaries by conducting a cost‐benefit analysis. Design Randomized controlled trial. Setting A general hospital in upstate New York State. Participants Elderly Medicare beneficiaries being treated from October 2008 through December 2009 were randomly selected to receive services as part of a comprehensive PDCT program (intervention—173 patients) or regular discharge process (control—160 patients) and followed for 12 months. Intervention The intervention comprised five activities: development of a patient‐centered health record, a structured discharge preparation checklist of critical activities, delivery of patient self‐activation and management sessions, follow‐up appointments, and coordination of data flow. Measurements Cost‐benefit ratio of the PDCT program; self‐management skills and abilities. Results The 1‐year readmission analysis revealed that control participants were more likely to be readmitted than intervention participants (58.2% vs 48.2%; P=. 08); with most of that difference observed in the 91 to 365 days after discharge. Findings from the cost‐benefit analysis revealed a cost‐benefit ratio of 1.09, which indicates that, for every 1spentontheprogram,asavingof 1.09 was realized. In addition, participating in a care transition program significantly enhanced self‐management skills and abilities. Conclusion Postdischarge care transition programs have a dual benefit of enhancing elderly adults' self‐management skills and abilities and producing cost savings. This study builds a case for the inclusion of PDCT programs as a reimbursable service in benefit packages.