OBJECTIVE: The effects of risperidone treatment on health care utilization and treatment costs were examined among patients with treatment-refractory schizophrenia or schizoaffective disorder. METHODS: Data from the Santa Clara County Mental Health Department were used to measure inpatient and ambulatory services and outpatient medications related to the treatment of mental disorders. Data for 139 patients were analyzed for periods before and after initiation of risperidone treatment. A mean +/- SD of 14 +/- 2.1 months of data were available in both the before and after periods, for a mean total study period of 28 months. RESULTS: The patients' mean age was 40 years (range, 18 to 78 years), and 46 percent were women. After the start of risperidone treatment, days in acute care inpatient facilities were reduced by 26 percent, and days in residential treatment were reduced by 57 percent. These reductions were accompanied by an increase in the use of lower-cost services, such as community living, treatment planning, and partial hospital-day treatment. There was a 3.4 percent increase in total psychiatric health care costs after initiation of treatment with risperidone. CONCLUSIONS: Overall, risperidone treatment resulted in a shift or resource utilization from provider-delivered services to pharmaceutical care without a significant change in total health care cost.