Background. In contrast to many other countries, the Netherlands left the initiative in deinstitutionalizing mental health care to the traditional providers of mental health services. The goal of this study is to determine the effect of this policy on the allocation of mental health care resources to services.

Method. All 20- to 64-year old users and their use of community- and hospital-based services between 1990 and 1999 were retrieved from the Groningen case register. Service utilization was combined with the direct unit costs of these services for the 1999 price level. Changes in the population as to size and age were taken into account.

Results. In 1999 the direct costs of mental health care were €268 per adult inhabitant of the register area, which is 9% higher than in 1990. Costs increased most in the early 1990s before deinstitutionalization policy took effect. From 1993 and onwards the reduced length of stay in the hospital was the main cause for the decreased costs of in-patient care. These savings equalled the increased expenditures for day-treatment, sheltered residences and home-treatment, even though the unit costs of these types of community care are much lower than the unit costs of admissions. This was not caused by an increasing number of new clients, but was a result of longer periods of care during a larger number of years.

Conclusions. These findings are in accordance with Dutch mental health care policy, which aims at prolonged care and aftercare outside the hospital whenever possible.