Five years of intensive case management and specialized alternatives to hospitalization were provided to 72 young recidivistic, treatment-resistant, chronically thougbt-disorderedpatients. Cornpared with a two-year prestudy baseline, patients' days in the hospital during the five years were reduced by 75 percent, but this reduction was offset by a 193 percent increase in structured residential care days in the community. Patients' level of functioning as rated by the Global Assessment Scale and other measures remained essentially the same over the five years. However, use of emergency services and after-hours on-call services decreased steadily throughout the study. Comprehensive cost-analysis revealed that savings in hospital costs were offset by increased costs of community care. The authors conclude that this treatment approach effectively stabilized the treatment-resistant patients in the community but did not reduce net costs in constant dollars.