BACKGROUND: Over recent decades, institutional psychiatric care has shifted its focus from traditional inpatient treatment to a variety of more advanced outpatient services. Within this context, a new "crisis home" programme (CHP) was launched in Zurich on 1 January 2005. With this programme, mentally ill patients can avoid hospitalization by living with a host family for a certain time period while receiving standard outpatient care. In this study we addressed the question of whether the quite substantial financial advantages of the Zurich CHP over traditional inpatient care are achieved at the expense of a reduced quality of care. SAMPLE AND METHODS: Between 1 January 2005 and 30 June 2007, a total of 33 patients enrolled in the Zurich CHP with an average stay of 19 days at host families. The vast majority of the patients (85%) were moderately to severely ill at study entry. Of these patients data were collected in a standardized way on the basis of five rating instruments. The statistical data analysis included cross-comparisons with corresponding inpatient data. RESULTS: Results showed that (1) the CHP works well in a routine setting and provides cost-efficient interventions for patients in acute crises; (2) the financial advantages of the Zurich host family programme over traditional inpatient care do not lead to a reduced quality in patient care; (3) patients suffering from severe mental illnesses clearly benefit from this programme, thus avoiding hospitalization. CONCLUSIONS: The Zurich CHP is a cost-efficient alternative to traditional inpatient treatment. Specifically, our results suggest that this type of acute crisis intervention should be established as a standard psychiatric care service.