Schizophrenic patients in Mannheim, West Germany, were studied to determine whether psychiatric treatment in the community reduces duration and frequency of rehospitalization, whether it has an impact on symptomatology and behavior, and whether it can be provided less expensively than hospital care. The findings showed a relationship between increased psychiatric outpatient treatment and lower levels of inpatient care as well as between psychiatric aftercare and reduced symptomatology and disease-related behavior. The cost of community care was found to be substantially lower than that of hospital care for less disabled patients, but it exceeded the cost of hospital care for the more severely disabled.