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When Pam Hyde was appointed director of the Ohio Department of Mental Health in 1983, she inherited a two-tiered state mental health system, consisting of 17 state hospitals and 53 community mental health boards. The state hospitals, which were responsible for inpatient care, had an average population of 4,000 patients per year, while the (outpatient) community system served approximately 140,000 active cases at any given time. However, the smaller state hospital system received 51 percent of the state's mental health funds, compared to 29 percent for the community system. Hyde wanted a new, unified system of care that would give most of the funding and much more decision-making power to the local boards. The case presents Hyde's task: to design a system that would transfer responsibility for inpatient care to the local boards, but still retain the state hospitals as inpatient service providers. It describes Ohio's previous experiences in contracting out inpatient mental health services, and how they helped shape Hyde's draft legislation. The last part of the case presents reactions to Hyde's draft from key constituent groups, such as unions and mental health boards.