State mental health authorities confront many challenges in the post‐deinstitutionalization era, especially in assuring appropriate treatment for the most seriously and persistently mentally ill. This paper identifies current problems in the community treatment system, which stem from lack of coordination between the deinstitutionalization process and development of the Community Mental Health Centers program, and from the effects of reimbursement mechanisms on client residential placement. Two New York State program initiatives, Intensive Case Management and Supported Housing, are described to illustrate state efforts to address these problems by reforming the community treatment system. There is an important state role in determining treatment priorities and in contributing to the evolution of models for community treatment.
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