Objective: This project studied the cost analysis of psychiatric hospital and then community care for long-stay patients with chronic mental illness discharged during the closure of a psychiatric hospital in Sydney.
Method: Expenditure and income data in both settings were collected. Costs were analysed on an occupied bed-day basis.
Results: The hospital setting cost more per patient per day compared with the various community costs which were one-third to one-half of the comparable hospital costs.
Conclusions: The analysis demonstrated overall that hospital care was nearly twice as expensive as care in the community setting. The factors which may have influenced, although not necessarily altered, the substance of the findings largely related to 'organisational efficiency'. The mental hospital as an older, more rigid system was likely to be less efficient than the newer community service provision which was under intensive scrutiny both clinically and financially by all interested parties.