BACKGROUND: The economic costs of depression are significant, both the direct medical costs of care and the indirect costs of lost productivity. Empirical studies of antidepressant cost-effectiveness suggest that the use of selective serotonin reuptake inhibitors (SSRIs) may be no more costly than tricyclic antidepressants (TCAs), will improve tolerability, and is associated with longer therapy duration. However the success of depression care usually involves multiple factors, including source of care, type of care, and patient characteristics, in addition to drug choice. The cost-effective mix of antidepressant therapy components is unclear. AIMS OF THE STUDY: Our study evaluates cost and antidepressant-continuity outcomes for depressed patients receiving antidepressant therapy. Specifically, we determined the impact of provider choice for initial care, concurrent psychotherapy, and choice of SSRI versus TCA-based pharmacotherapies on the joint outcome of low treatment cost and continuous antidepressant therapy. METHODS: A database of private health insurance claims identifies 2678 patients who received both a diagnosis of depression and a prescription for an antidepressant during 1990-1994. Patients each fall into one of four groups according to whether their health care charges are high versus low (using the median value as the break point) and by whether their antidepressant usage pattern is continuous versus having discontinued pharmacotherapy early (filling fewer than six prescriptions). A bivariate probit model controlling for patient characteristics, co-morbidities, type of depression and concurrent treatment is the primary multivariate statistical vehicle for the cost-effective treatment situation. RESULTS: SSRIs substantially reduce the incidence of patients discontinuing pharmacotherapy while leaving charges largely unchanged. The relative effectiveness of SSRIs in depression treatment is independent of the patient's personal characteristics and dominates the consequences of other treatment dimensions such as seeing a mental health specialist and receiving concurrent psychotherapy. Initial provider specialty is irrelevant to the continuity of pharmacotherapy, and concurrent psychotherapy creates a tradeoff through reduced pharmacotherapy interruption with higher costs. DISCUSSION: Longer therapy duration is associated with SSRI-based pharmacotherapy (relative to TCA-based pharmacotherapy) and with concurrent psychotherapy. High cost is associated with concurrent psychotherapy and choice of a specialty provider for initial care. In our study cost-effective care includes SSRI-based pharmacotherapy initiated with a non-specialty provider. Previous treatment history and other unobserved factors that might affect antidepressant choice are not included in our model. IMPLICATIONS FOR HEALTH CARE PROVISION: The decision to use an SSRI-based pharmacotherapy need not consider carefully the patient's personal characteristics. Shifting depressed patients' pharmacotherapy away from TCAs to SSRIs has the effect of improving outcomes by lowering the incidence of discontinuation of pharmacotherapy while leaving largely unchanged the likelihood of having high overall health care charges. Targeted use of concurrent psychotherapy may be additionally cost-effective. IMPLICATIONS FOR HEALTH POLICIES: The interaction of various components of depression care can alter the cost-effectiveness of antidepressant therapy. Our results demonstrate a role for the non-specialty provider in initiating care and support increased use of SSRIs as first-line therapy for depression as a way of providing cost-effective care that is consistent with APA guidelines for continuous antidepressant treatment. IMPLICATIONS FOR FURTHER RESEARCH: Further research that improves our understanding of how decisions regarding provider choice, concurrent psychotherapy, and drug choice are made will improve our understanding of the effects treatment choices on the cost-effectiveness of depression care. We have suggested that targeted concurrent psychotherapy may prove to be cost-effective; research to determine groups most likely to benefit from the additional treatment would further enable clinicians and healthcare policy makers to form a consensus regarding a model for treating depression.