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This paper examines some of the differences between individual outpatient and individual inpatient psychoanalytic psychotherapy to illustrate that individual therapy on an inpatient unit is a qualitatively different modality from its outpatient counterpart with consequences for work with schizophrenics. The paper explores the manner in which the unique parameters of inpatient work interact with, sustain, and exploit the pathology of schizophrenic patients. Its focus is, specifically, on the handling of the boundary disturbances which characterize schizophrenic psychoses, and the manner in which the fluidity of boundaries is reinforced and the tendency toward symbiotic relatedness enhanced on an inpatient unit. As a result, a central fantasy develops in many schizophrenic inpatients, one wherein the therapist is transformed into the omniscient, omnipotent early mother. This fantasy, which can be considered an institutional transference, helps explain the frequently observed phenomenon that many patients show substantial symptomatic improvement while in the hospital, only to have their symptoms return after discharge.