Hospice care differs from traditional medical care in that it aims to optimize the quality of the patient's remaining life rather than to maximize its duration. The Hayward Hospice project, begun in November of 1977 as a pilot project to evaluate whether hospice quality care could be provided within manageable costs and thus be included as a health plan benefit, is presented. Several features are described such as the unique location within an acute care medical facility, patient referrals by any of the staff physicians, and high acceptance by patient, family, and physician. Psychological consultation with the Hayward Hospice project is described, focusing on requests for evaluation and differential diagnosis, staff inservice education programs, and strategies for helping staff members cope and maintain their morale under the stress of providing services for terminally ill individuals. (Author)