OBJECTIVE: Schizophrenia is a chronic condition associated with a significant burden of disease and high health care costs. The Schizophrenia Care and Assessment Program (SCAP) is a naturalistic, observational study that aims to collect information on a range of treatment outcomes (clinical, functional and social) as well as detailed information on health care service utilisation and associated costs. METHODS: The Australian arm of this study involves 350 participants recruited from a large regional mental health service in outer Melbourne. Participants are assessed every six months. Health care resource data are collected via a combination of electronic systems, including a national medical and prescription claims database, a state-based patient registry and a hospital pharmacy information management system. RESULTS: The first 18-month longitudinal analysis of the complete SCAP cohort reveals that the average total cost of health care services and medications per patient during the 18 months was AUD21,287 (€12,559). The most expensive component of the total costs was inhospital treatment (71%), followed by outpatient services (17%) and medications (12%). The average cost of medications dispensed to the subjects during the 18-month period was AUD2570 (€1516). Eighty percent of the subjects had medication costs of less than AUD5000. In contrast, 2.3% of subjects had costs greater than AUD10,000 (€5900) and accounted for 10% of the total medication costs. CONCLUSIONS: While medications remain an important part of the treatment strategy for people with schizophrenia, they are only a small proportion of the overall cost of care. The most expensive component is inhospital treatment.