There are increasing numbers of elderly persons who reside and die in institutions, yet there are few studies that analyse the effect of this on mortality in small areas and its ensuing effect on the association between material deprivation and mortality. Methods: Cross-sectional, ecological study in the Region of Madrid covering 3906 census tracts (median of 1000 inhabitants), using mortality data for 1996-2003, and socioeconomic deprivation from the 2001 census. Standardised mortality ratios

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... SMRs) were calculated for each census tract. Using the Besag-York-Mollié model, relative risks (RRs) of dying and their 95% credibility intervals (CIs) according to the deprivation index considered (with the fourth quartile, Q, being the most unfavourable situation) were calculated for deaths among: the total population; and the population excluding residents who died in institutions . Results A total of 6% of the deceased had been residing in institutions, that affected 16.5% of census sections (644) and accounted for 17% of the variability in SMRs among men and 10% among women, p<0.001. Mortality increased with socioeconomic deprivation, i.e., whereas the RRs for the total population in Q4 with respect to Q1 were 1.46 among men (RR 95% CI 1.41-1.50) and 1.12 among women (RR 95% CI 1.08-1.17), these figures rose to 1.48 (95% CI 1.43-1.53) and 1.14 (95% CI 1.10-1.18) respectively for the population excluding residents who died in institutions. Conclusions We found that deaths of residents in institutions affect variation in small-area mortality, and confound the relationship between mortality and socioeconomic deprivation. This variable should be recorded in mortality statistics so that its effect can be controlled for in subsequent analyses. Conflicts of interest: none.