Data on a sample of 890 Veteran's Administration long-staying psychiatric patients were studied to develop a classification system that explains actual daily resource use. Disturbed patients with lengths of stay of less than three years and those with psychotic conditions who are not withdrawn represent the two groups found to use significantly more resources in their daily care. The Long-Stay Psychiatric Patient Classification (LPPC) System, with six categories, explains 11.4% of the variability in per diem resource use and can be used for case-mix adjustment of payments for psychiatric care.