Many serious problems in deinstitutionalization result from conceptual oversights or confusion. Understanding deinstitutionalization as a process and a philosophy, as well as a fact, permits planning that will accommodate the variety of patient populations that are the products of the deinstitutionalization movement. The role and possible contributions of the state hospital in caring for chronic patients must be assessed objectively. Effective program planning for chronic patients during this period of deinstitutionalization depends on a careful and realistic definitiin of what individuals are to be treated in the community. Such planning must not only attempt to match patients and appropriate treatment settings but must aim at enhancing rehabilitation, where feasible, through a skills training approach.