Data on 90 psychiatric patients' perceptions of the course and outcome of hospitalization were gathered using a problem-oriented system. Patients were interviewed on admission, at discharge, and at two follow-up intervals. Therapists perceptions of patients' problems and their severity were also assessed on patients' admission and at discharge. Although the absolute number of problems reported by patients increased over time, there was a significant decrease over time, there was a significant decrease in the level of distress associated with problems on both patients' and therapists' ratings. The dynamics of this improvement are discussed from the perspectives of both patients and therapists.