Objective - To compare psychiatric bed usage for major psychiatric illness in a fully community-centred psychiatric service (South Verona, Italy) with usage in a more conventional hospital-centred service (Canberra, Australia). Design - Registers of hospital admissions for schizophrenia and major affective illness in the three years 1986, 1987, 1988 were examined at each site. The characteristics, socio-demography and rates of admission, the duration of index admission and the rate of readmission in the subsequent twelve months were compared. Results - The community-centred service (South Verona) admitted fewer patients with schizophrenic and major affective illness but they appeared more severely ill, stayed longer and were more likely to be readmitted. The hospital-centred system (Canberra) used hospitals for a wider range of severity of major illness including good prognosis illness. Hospitalisation in Canberra was briefer and readmission less frequent. It appears that the hospital centred service was more willing to use beds for the initiation or stabilisation of treatment. The community based service did not lead to shorter hospital stay or less frequent readmission. Differences in the treated psychiatric morbidity in the populations overshadowed the effect of design of the service on usage. This difference in morbidity, concentrated in the younger age group, remains unexplained.