This paper describes the Tennessee Children's Plan, a program phased in between 1991 and 1993 that implemented a coordinated service system for children, youth, and families. A study involving children and youth (birth through 21 years) who were in the custody of the State of Tennessee investigated the effectiveness of coordinated service systems in reducing utilization rates of psychiatric hospitals. Results of the study indicate that between 1991 and 1995, the total number of children in custody increased by almost 3,000 to 11,131, with 35 percent of the children having a documented mental health need. Use of restrictive, residential psychiatric placements increased from 1991 to 1995. These data indicate that the Children's Plan, while decreasing the use of psychiatric hospitals, has shifted children to longer-stay residential treatment centers. Any cost savings that might have been incurred through decreased use of hospitalization has been more than taken up through this increased use of residential treatment centers. Furthermore, a significant proportion of the children in state custody experience multiple and long-stay institutional experiences. (CR)