Introduction: Global population projections forecast large growth in demand for long-term care (LTC) and acute hospital services for older people. Few studies report changes in hospitalisation rates before and after entry into LTC. This study compares hospitalisation rates 1 year before and after LTC entry. Methods: the Older Persons' Ability Level (OPAL) study was a 2008 census-type survey of LTC facilities in Auckland, New Zealand. OPAL resident hospital admissions and deaths were obtained from routinely collected national databases. Results: all 2,244 residents (66% = female) who entered LTC within 12 months prior to OPAL were included. There were 3,363 hospitalisations, 2,424 in 12 months before and 939 in 12 months after entry, and 364 deaths. In the 6 to 12 months before LTC entry, the hospitalisation rate/100 person-years was 67.3 (95% confidence interval [CI] 62.5–72.1). Weekly rates then rose steeply to over 450/100 person-years in the 6 months immediately before LTC entry. In the 6 months after LTC entry, the rate fell to 49.1 (CI 44.9–53.3; RR 0.73 (CI 0.65–0.82, P < 0.0001)) and decreased further 6 to 12 months after entry to 41.1 (CI 37.1–45.1; rate ratio [RR] 0.61 (CI 0.54–0.69, P < 0.0001)). Conclusions: increased hospitalisations a few months before LTC entry suggest functional and medical instability precipitates LTC entry. New residents utilise hospital beds less frequently than when at home before that unstable period. Further research is needed to determine effective interventions to avoid some hospitalisations and possibly also LTC entry.