OBJECTIVES: Antipsychotics in long-acting formulations (“depot”) are often targeted for patients with schizophrenia who are at high risk of relapse and hospitalization. Little information is available on the change in the rate or cost of psychiatric hospitalization following the initiation of depot antipsychotics. This retrospective mirror-image study used a U.S. health insurance claims database to assess changes in the rate, duration, and cost of psychiatric hospitalizations following initiation of long-acting (depot) antipsychotics in patients with schizophrenia. METHODS: Patients younger than 65 who were diagnosed with schizophrenia on at least 2 outpatient visits or 1 inpatient hospitalization were identified from a U.S. commercial database (January 1, 2004 to March 1, 2008). Patients started on a depot antipsychotic (no depot injection in the prior 6 months) were studied in a “mirror image” design to assess change in psychiatric hospitalization rates, the mean duration and cost of hospitalization between the 6 months prior versus 6 months post medication initiation. Cost comparisons were conducted with paired t-test and bootstrapping methods. RESULTS: A total of 147 patients with schizophrenia were in the analysis. Compared to the six months prior to depot initiation, the rate of psychiatric hospitalization in the six months post-initiation declined from 49.7% to 22.5% (p<0.001); the mean hospitalized duration for psychiatric purposes numerically declined from 7.3 to 4.7 days (p=0.08). The change in total health care costs declined from $11,111 to $7,884 and was driven by the reduction in costs for psychiatric hospitalizations from $5,384 to $2,537 (cost offset of $-2,847). CONCLUSIONS: The initiation of depot antipsychotic therapy appears to be associated with declines in hospitalization rates and hospitalization costs. Current findings suggest that treatment with depot antipsychotics is a cost-effective option for a subgroup of patients with schizophrenia who are at high risk of nonadherence with their oral antipsychotic medication regimen.