European countries are facing population ageing as a long-term challenge for the community perspective. The population ageing is primarily caused by a longer life span and lower mortality rate. Consequently, a significant growth of public expenses for long-term care is expected, which represents a challenge for the financial system sustainability. The difference in the management policy and financing of long-term care system in European countries is a result of different government polices, differences in economic growth, cultures and different historical backgrounds. The primary responsibility for system management in almost half of the researched European countries is on a state level, whereas for the second half of the countries it is split between the centre (government) and periphery (regional, local) level. The decentralization results in an increased orientation towards the needs of respective regional or local units. In Croatia the system management is primarily centralized, even though some parts of the system are governed from the county level, for example government of decentralized homes for elderly people, in which the state transferred its consitutional rights to the counties and the City of Zagreb. The system in European countries is largely financed from the public resources, whereas in Croatia it is financed almost entirely in that way. The most important source of private financing are cash benefits, while the voluntary insurances can be considered marginal. There is a strong trend in certain countries towards privatization and market system orientation, and private care providers have emerged as a result of market competition. The consequence of such policy is a rapid growth of private sector of long-term care providers. There are three major models of financing: a) through public programmes, that is, from taxes or long-term obligatory social insurances; b) according to the hybrid model where the public financing is complemented by receiver income flow and the real estate owned by the long-term care receiver and c) through social assistance. In this paper following measures are proposed for the improvement of the system efficiancy in the Republic of Croatia: 1) further decentralization of the management system, which would enable a more efficient fullfilment of the needs of respective regions or counties for the services of long- term care, because their specific needs would be taken care of; 2) market orientation of the system, i.e. the possibility for the private sector to compete for public funds, which would result in a development of private sector related to long-term care; 3) the increase of the share of total expenses of long-term care of the GDP, taken into account the fact that it is lower than the average share of the considered European countries.