The purpose of this study was twofold: to examine the patient characteristics at discharge from an acute psychiatric unit that were associated with an increased likelihood of rehospitalization within the following six months, and to examine the relationship between rehospitalization and the nature of psychiatric aftercare in a well- integrated hospital and community based psychiatric service. The study reviewed the extent of psychiatric rehospitalization following the closure of large numbers of institutional psychiatric beds. At six months after discharge 38% of the patients had been readmitted to an institution, most commonly a hospital. Despite the provision of an integrated hospital and community health service with excellent welfare support, dissatisfaction with finances independently exerted an influence on the risk of readmission. Implications for future research and treatment planning are discussed focussing on the complex integration of health and welfare services.