Nowadays, a number of people consider institutions for child care and child treatment as bad, while on the contrary families are considered to be good at all times. In this paper, this assumption has been discussed. The development of residential child and adolescent psychiatry as a sort of institutional treatment is described. The actual possibilities are mentioned. A clinical lesson illustrates that in times of economical prosperity financial, professional and social principles can be transformed into good care and treatment, while in periods of economical decline tension arises between these principles. In the last decades governments of the United States and of Great Britain have made radical choices. In other countries, like the Netherlands, there is a search for a middle course. In the Netherlands, residential child and adolescent psychiatry is one of the most intensive and specialized forms of child treatment. A limited capacity for about 1,400 patients requires a selective use of it. Differentiating clinical functions as well as differentiating needs for care and treatment of infants, children and adolescents offers a model for this selective use.