The value of increasing patient access to primary care depends on whether primary care services are an effective substitute for more costly specialty and inpatient care. This study examined whether strategies designed to increase patients' use of primary care services resulted in decreases or increases in the use and cost of other kinds of health services. Encounter, demographic and cost data were extracted from the Department of Veterans Affairs administrative data sources for the period 1995-1999. For this analysis, data were collected from 15 Community-Based Outpatient Clinics (CBOCs) offering primary care from Veterans Integrated Service Networks (VISNs). The study examined medical visits of veterans who had used VA medical services in the previous six-month period and who lived within a catchment area of a new CBOC. The control group consisted of veterans residing outside the CBOC catchment area. Change in distance to primary care services was a significant predictor of change in primary care visits. An increase in primary care encounters was associated with a decrease in specialty medical encounters and was not associated with an increase in physical health admissions, or outpatient costs. Overall, the results provide evidence that health systems should be able to implement strategies that increase access to primary care services without driving up health costs.