Objective: In a capitation payment system, the ability to project service requirements and cost is critical. The types and levels of services needed by persons with serious mental illness vary. The purpose of this study was to identify different patterns of service utilization and patient characteristics and costs associated with them. Methods: Ser vice use by 55 clients participating in a psychosocial-habilitation out patient program at a hospital-based community mental health center was tracked for one year. Treatment cost for all services was calculated for each patient. Results: Cluster analysis indicated that for persons with serious mental illness who enter community treatment, there appear to be four distinct patterns of service use: low, moderate, moderately high, and high. The groups were differentiated only by the presence of a disability (among the moderately high users) and a history off frequent inpatient treatment (among the high users). The two highest-use groups represented about one-third of the total sample but consumed more than three-fourths of the total resources. Conclusions: The lack of significant group differences on most clinical variables may make it difficult to develop capitation rates for subgroups of persons with serious mental illness. Service use may be determined by factors other than clinical need.