A two year follow-up of two matched groups of subjects with chronic severe mental illness was performed in order to evaluate a new psychiatric case management system. One group (n=59) received care through psychiatric case management, using an assertive community treatment model that directly involved general practitioners. The other group, matched for age, sex, diagnostic group and number of hospital admissions, received standard outpatient care. Comparing the two years before and after case management, the experimental group showed a dramatic fall in inpatient admission days while the control group admission days remained the same (median difference in admission days across matched subject pairs = 64.5, 95% C.I. from 134.5 to 16). The experimental group remained out of hospital longer before first readmission (Kaplan-Meier survival analysis, P=0.002). This type of case management programme can shorten or prevent admissions to psychiatric hospitals of patients with chronic mental illness, and increase their time before readmission.