The expansion of long-term care hospitals (LTCHs) is expected to contribute to meeting the long-term care needs of the elderly with chronic diseases in a rapidly aging society. It is also expected to increase efficiency of health resource use and decrease elderly health expenditures by transferring patients from acute care hospitals (ACHs) to LTCHs. This study aimed to empirically examine how the expansion of LTCHs had influences on the length of hospitalization of the elderly in ACHs. Panel regression analysis was employed as an analytic tool using data of the National Health Insurance and the National Statistical Office from 2002 to 2006. The expansion of LTCHs was measured as location quotient (LQ) of LTCHs, denoting the share of LTCHs in a large city or province relative to the share of LTCHs at the national level. In addition, per capita GRDP (gross regional domestic product) and the proportion of population over 65 were included as control variables. The main findings are as follows. First, it was observed that LQ of LTCHs showed a statistically significant negative association with the length of hospitalization of the elderly in ACHs. Second, the negative correlation was evident among general hospitals with over 100 beds while it was not among hospitals with less than 100 beds. Third, LQ of LTCHs had more influences among the elderly over 85. In conclusion, the expansion of LTCHs seems to contribute to decrease in the inpatient cost of the elderly in ACHs and to increase efficiency in the utilization of health resources.