The objective of this paper is to estimate the impact of managed care on psychiatric hospitalizations and length of stay of medically indigent residents in Puerto Rico. A quasi-experimental design and three waves of data from a random community sample were used. Results indicate that, after 2 years, managed care had minimal impact on the number of psychiatric hospitalizations; while the mean length of hospitalization decreased after implementation of managed care, this change was not significant. Based on the data in this study, the managed care initiative developed as part of health reform in Puerto Rico did not appear to affect rates of psychiatric hospitalization and produced only a nonsignificant reduction in the average length of psychiatric hospital stays. Additional research is needed to determine trends in mental health care provision in Puerto Rico based on more recent data.