Background and aims Management of severe pneumonia and malnutrition relies on hospital-based treatment but practical barriers often prevent children in areas with highest disease burden from receiving hospital care. A RCT compared clinical and cost of Day Care Approach (DCA) of management with that of hospital management.

Methods Children aged 2–59 months with severe pneumonia with severe malnutrition received either DCA at outpatient clinic with antibiotics, micronutrients, diet and supportive treatment from 08:00–17:00 daily, while mothers were educated on continuation of care at home, or hospital care with similar 24-hours treatment.

Results Four hundred seventy children aged 12.2 (8.8) months were equally assigned randomly to either DCA or hospital care, 13% had hepatomegaly and 11% had hypoxemia. The durations of day care and hospital were 7.9 (5.5) and 7.1 (3.1) days, respectively. Successful management was possible for 184/235 [78.3% (95% CI 72.6- 83.1%)] in DCA and 201/235 [85.5% (95% CI 80.5–89.5%)] in hospital. Thirty-six [15.3% (95% CI 11.3–20.5%)] in DCA and 22 [9.4% (95% CI 6.3–13.8%)] in hospital required referral to hospitals. There were no deaths among DCA, however, 2 [0.9% (95% CI 0.2–3.0%)] died in hospital. The average cost of treatment per episode per child was 165 US$ for DCA and 256 US$ for hospital.

Conclusions Severe pneumonia with severe malnutrition can be treated successfully and safely at reduced cost by DCA, but as effectively as hospital care, which can have an enormous impact in countries where recourses are scarce and hospital beds are limited for inpatient treatment.