OBJECTIVES: Determine whether there was a reduction in hospital utilization following the implementation of an open access policy for atypical antipsychotic medications for a publicly funded drug program in Newfoundland and Labrador. METHODS: The inpatient records of patients discharged from hospital in 1995/96, 1998 and 2000 with an ICD-9 diagnosis of schizophrenia were reviewed to determine the factors influencing total days hospitalization and readmission rates. Cox proportional hazards models were used to identify factors associated with LOS and logistic regression to determine early readmission. RESULTS: Six hundred forty-five patients admitted in 3 study years had 1,625 episodes of care totaling 47,098 days. The number of hospital days increased by 1229 days in 1998 and 602 days in 2000 when compared to baseline (1995/96). The study populations were similar with respect to sociodemographic factors, psychiatric status and level of care provided. The proportion of patients discharged on an atypical agent from an index admission increased from 15% at baseline to 71% in the final year and the average LOS increased from 31 days to 39 days. Requiring electroconvulsive therapy (ECT), switching from a conventional antipsychotic to an atypical agent during the admission, requiring seclusion, or having thought disorder was independently associated with a significantly longer LOS. Leaving against medical advice (AMA), or being suicidal on admission decreased hospitalization. Fifty percent of the population was readmitted in 215 days in 1995/96, 221 days in 1998, and 223 days in 2000. Independent of the class of antipsychotic prescribed on last discharge, leaving AMA and number of previous admissions significantly increased the risk of readmission within 1 year. CONCLUSIONS: The number of patients with schizophrenia admitted to hospital decreased but the LOS increased with no change in readmission rates. The expectations that the associated higher costs would be offset by decreased hospitalization for schizophrenia were not achieved.