Background. This study examines whether community treatment orders (CTOs) reduce psychiatric admission rates or bed-days for patients from Western Australia compared to control patients from a jurisdiction without this legislation (Nova Scotia). Method. A population-based record linkage analysis of an inception cohort using a two-stage design of matching and multivariate analyses to control for sociodemographics, clinical features and psychiatric history. All discharges from in-patient psychiatric services in Western Australia and Nova Scotia were included covering a population of 2.6 million people. Patients on CTOs in the first year of implementation in Western Australia were compared with controls from Nova Scotia matched on date of discharge from in-patient care, demographics, diagnosis and past in-patient psychiatric history. We analysed time to admission using Cox regression analyses and number of bed-days using logistic regression. Results. We matched 196 CTO cases with an equal number of controls. On survival analyses, CTO cases had a significantly greater readmission rate. Co-morbid personality disorder and previous psychiatric history were also associated with readmission. However, on logistic regression, patients on CTOs spent less time in hospital in the following year, with reduced in-patient stays of over 100 days. Conclusions. Although compulsory community treatment does not reduce hospital admission rates, increased surveillance of patients on CTOs may lead to earlier intervention such as admission, so reducing length of hospital stay. However, we do not know if it is the intensity of treatment, or its compulsory nature, that effects outcome.