BACKGROUND: Assertive outreach is a central strand of Government mental health policy in England. Are different long-term models of mental health care which include assertive outreach associated with different service user outcomes and cost? METHOD: We conducted a multi-site 5-year follow-up study of people with severe mental illness. From 0 to 18 months all three sites had Intensive Case Management (ICM) teams practising assertive outreach. From 18 to 60 months one team sustained ICM, one team merged and another was disbanded. All 131 original ICM team clients were the study participants. Outcome was measured in terms of sustained engagement with statutory mental health services, psychiatric symptoms, social functioning, resource use and cost. RESULTS: All 120 live participants were traced. Only four people had no service contact; when contacted by a researcher they appeared to be coping well. No incidents of serious violence were discovered. No differences existed between teams in the mean total symptom or total social functioning change scores at follow-up, after controlling for baseline differences. No differences existed in mean cost between teams during the first 18 months. Mean (standard deviation) annualised costs varied considerably in the 18-60 month period: sustained team Pound Sterling13,734 (10,820); integrated team Pound Sterling11,037 (13,603); disbanded team Pound Sterling5,742 (7,007) (F=4.4, 105 df, p=0.015). CONCLUSION: Continued specialist assertive outreach service models have higher costs than non-specialist services for no apparent benefit. In the long term new assertive outreach services should have procedures in place to transfer people to lower intensity and lower cost care.