This essay is based on a pilot study that examined the effects of managed care on the treatment of children and families, with special attention to community mental health. We embarked on the pilot study to test the accuracy and generalizability of our impression that family therapy and other systemic practices have been marginalized in ordinary clinics and agencies, and to understand the reasons why. We interviewed managed care providers, researchers, family therapy trainers, and clinicians in the Northeast. Our findings led to seven themes that support our impression that, even though there is a consensus about the need for coordinated family-based services, there is a disconnection between state policies, contractual requirements and what is actually occurring at the implementation level. This study suggests that our knowledge of human systems may be in danger of being disqualified and lost, with damaging consequences for the care of children. Yet, as systemic thinkers and practitioners, it is our belief that ethical and effective treatment need not be at odds with care that is cost-efficient. The direction of our future research will be to study whether the involvement of all stakeholders at all levels of planning and training leads to systemic family-based practices that consistently save costs and provide high-quality care.