The legal concept of the right of psychiatric patients to treatment in the least restrictive alternative has come to mean treatment anywhere but in the state hospital, as illustrated in two large communities in Ohio and Massachusetts. Oversimplified application has led to the use of treatment setting as the only measure of restrictiveness. Patients' characteristics and needs have been ignored, along with the possibility of wide variation in program quality within each class of facility. The role of the state hospital has become uncertain, making it difficult to attract and keep qualified professional staff The authors argue for an expanded view of the concept that includes consideration of patients' needs. They contend that the concept should not be used as a sole reason to avoid admitting patients to state hospitals or to continue the downsizing of public institutions.