Rising costs continue to plague healthcare and mental healthcare. The latest variation of managed care techniques has been to try to reduce medication costs by instituting formulary restrictions. To date, the results have been spotty at best, with a suggestion of a ballooning of more general mental healthcare costs, as well as possibly worsening of quality of care. New challenges are looming in terms of the results of the CATIE study comparing typical and atypical antipsychotic medication, as well as the beginning of Medicare D medication coverage. In the midst of the uncertainty and complexity, the psychiatrist administrator has the ethical challenge and chance to make a major difference. By keeping the well-being of patients first, but also addressing the needs of the institution, payor, and other stakeholders, the psychiatrist administrator can ethically find ways to reduce costs and increase quality. One such product could be medication algorithms that also incorporate costs, side effects, and general healthcare.