We were interested in studying the possible concurrent changes in the psychiatric inpatient population during a rapid phase of deinstitutionalisation, and severe economic recession with a record level unemployment rate, and after the amendment of the mental health legislation. Although there were 4540 fewer beds in the psychiatric hospitals in 1993 compared to 1990, the rate of patient admissions remained the same. There was a significant increase in readmissions (P < 0.001) to the psychiatric hospitals, and particularly in multiple (three or more) readmissions among new inpatients (P < 0.001). The prevalence of inpatients with major depression increased by 0.2/1000 in the whole cohort and by 0.12/1000 among first-timers from 1990 to 1993 (P < 0.001). In addition, the rate of involuntary admissions decreased significantly (P < 0.001).