A five-year follow-up study of long-term state hospital patients revealed that ex-patients living alone or with family or friends are younger, have been hospitalized less, and function at a higher level than ex-patients in boarding homes. But long-term patients, generally, are marginal persons in need of community rehabilitation efforts. A residual group in the hospital was found who cannot now be placed in community facilities because of such problems as assaultiveness, incontinence in public, inappropriate sexual behavior, and fire setting. Two alternatives for the future are presented. The first is a small, core state hospital which would serve the residual group from a catchment area of one to three million people. The second alternative, which we favor, is integration of the residual group into the inpatient units of community mental health centers.