This paper reports on the study of a subsidy programme that was established in Quebec for alternate housing models (AHMs), which allows private and community organisations to offer housing services within the framework of a partnership with public health-care services. The research objectives were: (a) to compare how facility characteristics and services provided by AHMs and nursing homes (NHs) differ; (b) to examine the personal characteristics of residents living in AHMs; and (c) to compare residents with similar characteristics within AHMs and NHs in terms of unmet needs, quality of care, satisfaction with care and services, and psycho-social adaptation to the residence. A cross-sectional study was undertaken with individually matched groups to assess whether AHMs meet the needs of elders in a way similar to NHs. Overall, residents in both groups had moderate to severe levels of disability and about 60 per cent had mild to severe cognitive problems. While their general features were heterogeneous, the AHMs were more comfortable and homelike than the NHs. The quality of and satisfaction with care was appropriate in both settings, although AHMs performed better. Only one-quarter of residents in both settings, however, evidenced a good level of psycho-social adaptation to their residence. This partnership approach is a good strategy to provide a useful range of housing types in communities that can respond to the needs of elders with moderate to severe disabilities.