OBJECTIVE: This study proposes a model with five criteria for evaluating the effectiveness of intensive outpatient behavioral health care programs and applies this model to a brief partial hospital-crisis stabilization program. The five criteria are client selection, program attendance, service utilization and focus of treatment, client improvement, and cost-effectiveness. METHODS: The program evaluation model was tested with a sample of 285 adults with severe mental illness who were admitted for or were receiving outpatient treatment at a state- funded community mental health center. Evaluation data included pre- and postprogram ratings by clinical staff of clients' symptoms, level of functioning, and treatment readiness; current and retrospective reports of clients' symptoms based on interviews with clients; and clients' service and financial records. Clients and clinicians also provided data about the problems addressed during treatment sessions. RESULTS: Program dropouts used significant facility resources before dropping out. Clients who participated in the partial hospital-crisis stabilization program showed reduced symptoms, improved daily functioning, and improved treatment readiness. Clients who showed more improvement cost less to treat. CONCLUSIONS: The evaluation model produced the information necessary for demonstrating program effectiveness. The results support the belief that clinical effectiveness and cost-effectiveness are positively related.