Despite problems with research designs, sample sizes, differing areas of focus, and various research instruments, psychiatry can be encouraged by studies pointing to the following: Partial hospitalization can offer a viable alternative to inpatient hospitalization with less stigma and less family burden for patients. Such patients fare as well or better than their inpatient counterparts. When families or stable living situations are not available, the most acute patients can be treated and housed in a supervised living situation. Social and familial roles can be maintained. Partial hospitalization is helpful in reducing length and expense of full-time hospitalization when used as an transition to more traditional outpatient treatment and community life. This does not lead to increased rates of readmission or to exacerbating other symptoms or pathology. Partial hospitalization has grown steadily in the past 20 years. The question is no longer whether partial hospitalization works, but "what kind of patient can be best treated by partial hospitalization?" Innovative programs are sprouting. The 1980s bring fiscal, educational, and clinical challenges to partial hospitalization programs everywhere.