One function of contemporary psychiatric emergency services is to divert patient admissions from state hospitals. Underlying this mandate are a series of untested assumptions about the positive effects of admission diversion. The author examines these assumptions using data on inpatient admissions from a crisis intervention service. Although the service was successful in preventing first admissions to the state hospital, the rate of recidivist admissions increased. Inpatient treatment in general or private hospitals did not result in shorter lengths of stay or fewer bed days than state hospital treatment. Because patients could be sent to any of several hospitals, some located far from the catchment area, continuity of care and treatment in the local community were not advanced by diverting admissions from the state hospital.