The term schizoaffective was introduced to describe the co-occurrence of both psychotic and affective symptoms. Overtime, as the diagnosis schizoaffective disorder was added to diagnostic manuals, significant concerns were raised as to the reliability and clinical utility of the diagnosis. We recruited 134 psychiatrically hospitalized subjects who had received a diagnosis of schizophrenia, schizoaffective disorder or bipolar disorder with psychotic features by their treating clinician. The subjects were also diagnosed by trained research personnel with the Structured Clinical Interview of the DSM-IV-TR, employing an explicit time threshold for criterion C of the schizoaffective disorder diagnosis. We found significant differences between the clinical and research diagnoses. Clinicians diagnosed 48 patients (36%) with schizophrenia, 50 patients (37%) with schizoaffective disorder and 36 patients (27%) with psychotic bipolar disorder. In contrast, researchers diagnosed 64 patients (48%) with schizophrenia, 38 patients (28%) with schizoaffective disorder and 32 patients (24%) with psychotic bipolar disorder. This was a statistically significant disagreement between the research and clinical diagnoses (p = 0.003) and indicates that clinicians choose the less severe diagnosis for psychotic patients. We conclude that a more stringent criterion C for the schizoaffective disorder diagnosis will address an implicit bias in clinical practice and will affect the prevalence of the psychotic disorder diagnoses.