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BACKGROUND: Shawnee Hills, Inc., formally began the transition to critical pathways in January 1996. The goal was to design and implement a service delivery model with clearly defined clinical paths and appropriate and functional technical support systems. No specific goal date for full implementation was designated; however, the intent was to move into the new system in a manner that allowed both consumer and employee participation in the planning process and to accommodate the organization's transition from a fee-for-service to a capitated model of contracting for services. The target date for completion of phase one, research and initial planning, was March 1, 1996. Although there were a number of benefits anticipated in adopting the critical paths method (CPM), the primary rationale was threefold: (1) standardizing the quality of care and treatment, (2) cost containment, and (3) better positioning of the organization for success within a capitated funding environment. A review of the publications indicated that the CPM had proved to be effective in other healthcare fields. In addition, the goals and approaches inherent within the CPM were consistent with the organization's total quality management (TQM) philosophy and operational practices. METHOD: By using the approach common to the organization since the adoption of the principles and practices of TQM in early 1992, a team was appointed with the mission of reengineering the clinical services delivery model. Unlike previous instances, however, this team was comprised largely of senior leadership, and two staff members were assigned on a full-time basis. A more detailed review of publications was conducted and, where possible, identification of critical pathways developed within the mental health field in other states were secured. Focus groups were used to address "best" or "preferred" practices for specific populations and age groups. Team members provided an orientation to the process, along with the opportunity to critique proposed pathways and models for service delivery as they were drafted to all employees through participation in ongoing staff development efforts. The center leadership was kept informed and was provided additional opportunities for input through regular presentations to the Quality Council that meets on a weekly basis. RESULTS: The first phase of the transition, research and initial planning, was completed on March 1, 1996. To date, the team has adopted or developed initial drafts of proposed clinical pathways for frequently occurring diagnoses within adult and child mental health, adult and child substance abuse, and specific to early childhood for the mental retarded or developmentally delayed. A model for clinical pathways was developed incorporating the JCAHO requirements to address assessment, care, and education at the major junctures of service delivery. In addition, the team formulated recommendations specific to priority areas for each major pathway and the approach to be taken in the transition from a fee-for-service to a capitated environment. A service delivery model built around acute care and continuing care was outlined, but remains a work-in-progress at this time. Finalizing the model and the completion of the clinical pathways for specific diagnostic groupings are two priorities for the second phase, product development-continued planning and transition, now underway. CONCLUSIONS: Although the effort is very much outcomes-oriented, data are not available at this early stage in the process. (ABSTRACT TRUNCATED)