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Background. Diabetes can be effectively managed in general practice (GP). This study used record linkage to explore associations between diabetes care in GP and hospitalisation. Methods. Data on patients with type 2 diabetes were extracted from a Division of GP diabetes register (CARDIAB) for 2002-05 and were linked to the New South Wales Admitted Patient and Emergency Department (ED) Data Collection to create a unit record data collection containing demographic, clinical and health service records. Rates of admission and ED presentation per patient-year of follow up were calculated for the year following CARDIAB record. Results. The study included 1178 diabetic patients with 2959 patient-years of follow up. Their mean age was 65.7 years and duration of diabetes was 5.9 years. All-cause admission and ED presentation rates were 0.7 and 0.2 per patient-year of follow up respectively and length of admission 3.2 days (s.d. 11.7 days). Admission was associated with age, duration of diabetes and prior admission. The number of processes of care recorded for each patient-year was associated with admission. Admission and length of stay were not associated with achievement of clinical targets. Conclusions. These data suggest that receipt of processes of care, rather than clinical targets, will prevent admission. One explanation may be that continuity of care in GP provides opportunity for early intervention and treatment. What is known about the topic? Diabetes is a serious public health problem that is largely managed in primary care. Health care planners use health service use (hospital admissions) for diabetes as an indicator of primary care. Guidelines for diabetes care are known to be effective in reducing diabetes-related complications. What does this paper add? This paper created a linked data collection comprising demographic and clinical data from general practice and administrative health records of hospital admissions and emergency department presentations. The paper explores the associations between processes of primary care and control of diabetes and cardiovascular risk factors, and use of health services for a general practice population with diabetes. What are the implications for practitioners? The study suggests that processes of care and not technical control of diabetes and cardiovascular risk factors are important in preventing hospital admission. Continuity of care in general practice that ensures implementation of processes of care provides opportunity for early intervention and treatment. [ABSTRACT FROM AUTHOR]