The recognition of the serious problems of state hospitals that dominated public policy in the 1960s has been largely overshadowed in recent years by a preoccupation with the problems of deinstitutionalization. The current backlash against the community movement threatens to legitimize once again the state hospital as an acceptable solution to the problems of the severely mentally ill. The author argues that state hospitals are deficient not simply because they provide an inferior quality of care but because they provide the wrong kind of care for most of their patients. He suggests that most state hospitals be completely replaced by a fundamentally different system.