General medical hospitals and freestanding psychiatric hospitals usually function independently. The authors review the relative strengths and weaknesses of the two settings and suggest a plan for a rational coordination of services. In an efficient integrated system, the general hospital would provide emergency psychiatric services and treat patients with combined medical and psychiatric conditions. The freestanding facility would offer inpatient and outpatient services, as well as partial hospitalization and transitional living arrangements, to psychiatric patients without medical complications. All facilities would share professional staff and data processing capabilities and would have common policies and procedures, reducing the cost of treatment and facilitating patient transfers.