This study estimates the benefits and costs of a free clinic providing primary care services. Using matched data from a free clinic and its corresponding regional hospital on a sample of newly enrolled clinic patients, patients' non-urgent emergency department (ED) and inpatient hospital costs in the year prior to clinic enrollment were compared to those in the year following enrollment to obtain financial benefits. We compare these to annual estimates of the costs associated with the delivery of primary care to these patients. For our sample (n = 207), the annual non-urgent ED and inpatient costs at the hospital fell by $170 per patient after clinic enrollment. However, the cost associated with delivering primary care in the first year after clinic enrollment cost $505 per patient. The presence of a free primary care clinic reduces hospital costs associated with non-urgent ED use and inpatient care. These reductions in costs need to be sustained for at least 3 years to offset the costs associated with the initially high diagnostic and treatment costs involved in the delivery of primary care to an uninsured population.