Lack of a methodology for describing resource use of elderly long-term care residents in Finland has been a major obstacle in the evaluation of cost and quality of care. Moreover, Finnish long-term care lacks a system for payment, budgeting and contracting that would estimate the resources needed for care. Case-mix classifications that explain resource use have been developed to meet these needs. This study focused on the validity of case-mix in Finnish long-term care facilities, in particular the RUG-III (Resource Utilization Groups) system. The RUG-III System was found to perform well, and was then used to evaluate the relative efficiency of Finnish long-term care units. The sources of inefficiency were analysed and discussed. The study also demonstrated promising initial attempts to develop a RUG-III based case-mix classification for clients in home care, using data from the United States.