Three methods of peer review were examined in three public mental hospitals. A multidisciplinary committee developed admissions criteria and standards of care which were applied in each hospital. The three methods of review did not show significant differences in judgments based on the clinical records of patients or cost. The recommended model of review is the use of hospital staff providing primary review and consultants providing periodic external review necessary for quality assurance, development of the local review model, and assistance in implementing any changes required as a result of the review process. The system should form a complete feedback loop between service providers, the review committee, and facility administration with the aim of improved patient care through staff education. Psychologists, in addition to their clinical skills, brought to the review process the knowledge of psychological assessment and research skills. The research skills are necessary if the review process is to be systematic and the conclusions drawn from the process are valid. Psychologists should actively pursue involvement in the review process so that psychology will not simply be an adjunct to the assessment phase of treatment and hospitalization.