Background: There are limited respite services for palliative care patients and their families in the Northern Territory (NT). The high prevalence of complex chronic diseases, limited access to primary care services, and the poor living situations of many Aboriginal and Torres Strait Islander Australians result in high hospitalisation rates and pressure on tertiary health services. Palliative Care NT identified a need for a flexible, community based, culturally appropriate respite service in Alice Springs. It was of particular interest to assess the impact of the respite service on the extent to which hospital resources were accessed by this population of patients. Methods: Respite service use and hospital use data were collected over two time periods: the 12 months prior to the establishment of the service; and the first 10 months of the operation of the service. The financial implications of the facility were assessed in terms of the National Weighted Activity Unit (NWAU). Of primary interest in this study was the impact of the respite service on admissions to the Emergency Department (ED), to the Wards, and to the Intensive Care Unit (ICU). The amount of ventilator hours consumed was also of interest. Results: Overall, there was a mean cost saving of $1882.50 per episode for hospital admissions with a reduction in: hospital admissions; mean length of stay; Intensive Care Unit (ICU) hours; and ventilator hours. Conclusions: The establishment of the respite service has met an important and unmet need in Alice Springs: provision of respite where none has existed before. The service did assist with savings to the health department which could contribute to the cost of the facility over time. Two features of the respite facility that may have contributed to the savings generated were the enhanced coordination of care for patients with complex chronic diseases, as well as improved medication compliance and symptom management.