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A psychiatric investigation was carried out on patients aged 65-80 years who were admitted to the medical wards of six general hospitals in an industrial urban area of West Germany. In all, 626 patients were screened for cognitive and affective disorder using a short standardized interview, and at the second stage all those with abnormal responses, as well as a subsample of the apparently normal patients, were examined in greater detail. After correction for inaccuracies of screening, the frequency of psychiatric illness in this patient population was estimated as 30.2%, made up of 9.1% with organic brain syndromes and 21.1% with functional mental disorders. Comparison with field-study data for the same background population showed that the hospital patients were at increased risk for mental disturbance. At follow up after one year, outcome in terms of mortality, admission to long-term care and dependency on others was worst for patients with organic mental disorder, even after matching for age and initial severity of physical impairment. Functional mental illness was also associated with a relatively poor outcome in terms of dependency. The mental status of elderly medical patients appears to be important for the prognosis.