The treatment aim of medical care for home-based patients with Alzheimer's disease is to maximize the functioning level of the patient without jeopardizing quality of life for the caregiver. Most demented elderly live in the community with their families who, until coping becomes ineffective, usually prefer to keep their relatives out of institutions for as long as possible. In the present study, the question of why some families continue to shoulder the burden of care, often beyond healthful limits, while others relinquish care to professionals is examined longitudinally in a sample of 209 caregivers. Using logistic regression techniques, caregiver characteristics and caregiver well-being, rather than patient characteristics, emerge as important predictors of placement decisions. Results suggest that practitioners, in evaluating the family's need for institutionalization, must move beyond duration of illness and current cognitive functioning to aspects of the caregiver support system.