Background: Different forms of service organisation may be expected to affect costs. I is important to understand the distribution of costs amongst providers of mental health care, so that the effect of service developments on budgets can be better anticipated and planned.

Aims: This study explored the association between different forms of mental health service organisation and costs. It tested the impact on costs of services with high degrees of integration between health and social care providers, and of services targeting at people with more severe mental health problems.

Methods: 260 service users in 4 districts in the north of England were interviewed and costs identified for each person. The districts comprised examples of four types of service configuration. Use and non-use was compared by type of service, and after suitable transformations, costs were also compared between districts and between types of service. The sample was large enough to discern a difference of 50 ( 80) per week with 80% power and 5% significance.

Results: Costs were closely related to severity. People in targeted services had higher mean costs ( 136, SD 191 versus 92, SD 106; p=0.001). The costs of targeted services in this study were very similar to those of psychosis-only services in a London study. Integrated services were predicted to have lower inpatient costs (p=0.003), lower PCG costs (p=0.003) and lower total health and social care costs (p=0.024). Differences between use and costs of specific services were largely attributable to imprecise definitions and supply-side factors.

Discussion: While the sample is not representative, the a priori distinctions made in selecting the districts were reflected in service use and costs. This study suggests strongly that targeting services at people with more severe mental health problems seems likely to increase mean health and social care costs per service user. It also suggests that integration maybe associated with lower costs. Since both targeting and integration are increasingly common mental health policies, it is important to recognise that they may have opposing effects on costs.