Intensive management of patients with type 1 diabetes improves control and reduces rates of long-term complications. Telephone care as an adjunct to office visits is important in the management of children with type 1 diabetes in pediatric endocrine practices in the USA. The goal of this project was to assess the personnel costs and patients' perceptions of telephone care in a moderately sized pediatric diabetes care center (301 patients with a diagnosis of type 1 diabetes). There were two parts to this study. First, telephone logs were kept by three pediatric endocrine nurses (2.2 full-time equivalents [FTEs]) and three pediatric endocrinologists (2.0 FTEs) for two 1-wk blocks. Computerized databases were used to determine the number of clinic visits in 1998. Second, a survey assessing the frequency, perceived value and consequences of phone contact with the diabetes team was distributed to 40 families at clinic visits. Mean nurse/certified diabetes educator (CDE) time spent on the phone was 12.1 h/wk, with an additional 9.7 h/wk spent preparing and documenting. Physicians spent 6.4 h/wk on the phone, and 6.1 h/wk preparing/supervising/documenting. For our 301 patients with diabetes, the weekly personnel cost for telephone care at our institution was 1367 US dollars or 236 US dollars/patient/yr. Of the families surveyed, 80% reported that they had used the phone to obtain care for their child with diabetes and 55% had paged the doctor on call in the previous 6 months. Seven patients reported that phone contact prevented a total of 13 emergency department (ED) visits and 35 office visits. Using a cost estimate of 550 US dollars per ED visit, and 103 US dollars per office visit, the cost of prevented visits was 232 US dollars/patient/yr in our center. These data indicate that telephone care is effective in reducing the cost of reimbursable care via the ED and office visits, as well as avoiding hospitalization. However, the cost of providing this telephone care is not reimbursable to providers.