OBJECTIVES: Patients with unrecognized bipolar disorders (UBP) are often treated for depression prior to being correctly diagnosed, thus delaying appropriate drug therapy. This study compared hospital use, attempted suicides and one-year post-treatment costs of UBP patients relative to patients with major depressive disorders (MDD) and recognized bipolar (RBP) patients. METHODS: Data from the California Medicaid program for the period October 1994 to January 1999 were used to identify 25,308 adult patients who initiated a new episode of antidepressant therapy. RBP patients received their initial diagnosis of bipolar disorders or used mood stabilizers on or before the initiation of antidepressant therapy. UBP patients initiated antidepressant therapy with an initial MDD diagnosis, then received a bipolar disorder diagnosis or initiated mood stabilizer therapy at a later date. Multivariate models were used to estimate the marginal risks and costs associated with UBP patients relative to RBP or MDD-only patients. RESULTS: RBP and UBP patients represented 15.4% and 6.3% of all antidepressant users, respectively. UBP patients had higher rates of hospital use (12.5%) and attempted suicide (0.88%) than RBP patients (11.2% and 0.29%) or MDD patients (7.5% and 0.18%). Multivariate results indicated that UBP patients were three times more likely to use hospital services (p<0.0001) and 3.2 times more likely to attempt suicide (p=0.0004) than MDD patients. RBP patients were twice as likely to use hospital care (p<0.0001) than MDD patients. UBP was associated with higher 1-year outpatient costs relative to RBP patients (+$200; p<0.05), but was not associated with higher inpatient or total costs. RBP was associated with lower one-year outpatient costs ($109; p<0.05) but higher inpatient costs ($634; p<0.001) and total costs ($508; p<0.01) relative to MDD patients. CONCLUSIONS: UBP is both common and costly. More effort is needed to provide early and correct diagnosis, and to effectively treat these patients.