Objective: Due to increasing health care expenditures the discussion about advantages and disadvantages of new methods for resource allocation in mental health care has been intensified. A promising model is the Regional Budget for Mental Health Care, which is currently being examined in Schleswig-Holstein. The present paper describes first experiences with the new resource allocation model. Basic conditions: An annual budget, provided for the treatment of a fixed number of patients, makes it possible to reduce inpatient capacity in favour of improved community-integrated approaches for the treatment of acute psychiatric illness. Results: In a first step inpatient capacity will be reduced by 8 percent. By the end of 2007 capacity for hospital day care shall be increased by 87 percent and a home treatment will be implemented. The previous working method, orientated to treatment setting, will be replaced by an approach specialized in diagnostic groups. Conclusions: The Regional Budget could improve the continuity and flexibility of patient care. Service providers become motivated to treat in a way, which with little resource consumption achieves a long lasting health status improvement. For health insurances the Regional Budget is an opportunity to limit cost increases.