In 1996, Stockholm County decided to reduce the costs of health care in order to release resources for upcoming medical needs. The method was both structural changes and transfer of low technology care from hospitals to other settings. The effects of interventions on service quality for patients and organisational performance of departments of internal medicine, orthopaedics and surgery were evaluated. Three cross-sectional studies were performed for comparison over time. Details on all individuals who visited A&E departments during 1 week in May 1997, May 1998 and May 1999 were recorded prospectively, and 16246 visits were registered. From 1995 to 1999 the total number of visits increased by 21% according to annual statistics. The utilisation of emergency care rose by 40/1000, and was not associated with the growth of population by 4.5%. Hospitals responded to peaks of demand by stringent prioritisation. Median waiting times were unchanged, but mean waiting times were prolonged over time, in particular for younger, not-referred patients. There was a direct correlation between waiting times and number of visitors. Total length of stay at A&E departments was related mainly to the waiting time for the first examination by a physician and cycle time for X-rays. Increased number of visits strained the capacity of hospitals and led to temporary loss of service quality for patients. The expected chain-reaction of integrated care did not take place, since providers outside hospitals were resistant to the shift of responsibility. Hospitals were utilised as primary care centres. The sub-optimal integration and fragmented care with an inappropriate balance between providers seems a universal problem.