BACKGROUND: Inpatient care in the United States accounts for one third of the health care expenditures. There exists a well-established trend towards fewer inpatient admissions and shorter lengths of stay for all inpatient care, which can be attributed to cost containment efforts through managed care and advances in treatment technologies. However, different illnesses may not necessarily share the same pattern of change in inpatient care utilization. In particular, mental health and substance abuse (MHSA) care has experienced a particularly dramatic growth of specialized managed behavioral organizations, which could have led to an even faster decline. AIMS OF THE STUDY: This study contrasts the trends of MHSA inpatient care in U.S. community hospitals with medical inpatient care over the years 1988 to 1997. It also analyzes the trends for subgroups of MHSA stays by diagnostic groups, age and primary payer. METHODS: We use the National Inpatient Sample (NIS) from the Health Care Cost and Utilization Project (HCUP) to estimate both number of inpatient discharges per 1,000 population and average length of stay over the years and relate the two indices. Inpatient MHSA stays are categorized into subgroups by age, primary payer of the care, and diagnostic group. We use the Clinical Classification Software (CCS) to distinguish between affective disorders, schizophrenia and related disorders, other psychoses, anxiety and related disorders, pre-adult disorders, and alcohol-, substance- related mental disorders and other mental disorders. Trends of population adjusted discharges and length of stay were tested using a weighted least squares method. RESULTS: Population-adjusted MHSA discharges from community hospitals increased by 8.1% over the study period, whereas discharges for all conditions decreased. Within MHSA discharges, the 20-39 and 40-64 age groups experienced significant increase relative to other age group; the increase was particularly high for affective and psychotic disorders, which are only partially offset by a decrease for other diagnostic groups. Hospitalization for both MHSA and medical conditions displayed trends towards shorter lengths of stay, but with the decline for MHSA stays steeper (40%) than for all stays (21%). The reduction in length of stay not only applied to the privately insured, for which managed behavioral health care had the highest penetration rate, but held for all other payers as well, although the rate of decline is higher for private insurance than for other insurance. Inpatient stays with pre-adult disorders displayed the greatest percentage decline for both population-adjusted discharges and average length of stay. IMPLICATIONS FOR HEALTH CARE PROVISION AND USE: Different pattern of utilization emerged for MHSA inpatient care as compared to hospitalization for all medical care over the years 1988-97. The more rapid decline in length of stay for MHSA stays than for all stays may have been a result of greater incentive for cost containment and therefore more intensive care management, and advances in treatment technology, especially medication. However, the fast decline in length of stay may also have led to repeat hospitalization as a result of premature discharges for patients with affective or psychotic disorders. Some financial incentives, such as case-rates or DRG-type payments to hospitals could have contributed to such adverse effects. Increases in discharges for severe disorders could also be a consequence of shifts from long-term facilities (for which no comparable data are available) to community hospitals, although the largest absolute and relative increases were for affective disorders rather than schizophrenia or other psychoses, the two disease subgroups that make up the majority of the institutionalized patients. International comparisons, assisted by new data, may help disentangle the effect of institutional change and that of development in treatment technology or practice pattern.