Heart failure causes substantial morbidity and mortality in the United States and accounts for a higher proportion of Medicare costs than any other disease. Most of these costs result from the high rate of hospital admissions and protracted length of stay associated with episodes of acute decompensation of heart failure. Thus, effective clinical strategies to obviate hospitalization and readmission can result in substantial savings. A specialized heart failure observation unit, in which patients receive rapid, goal-directed emergency care for heart failure symptoms, can be a critical component in this effort, providing intensive therapeutic monitoring and education. In institutions with specialized heart failure observation units, patients are triaged to this setting shortly after presentation to the emergency department (ED), and clinic referrals can be directed to this unit after minimal ED evaluation. Aggressive follow-up is also arranged at discharge. Recent additions to the therapeutic armamentarium and future advances in diagnostics and monitoring will continue to improve patient care and prevent avoidable hospitalizations.