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This paper describes a participant observation study carried out on a ward for elderly functionally ill people in a large psychiatric hospital in the Midlands, England. My initial interest was in observing the process of institutionalization, and attempts made to counter this process. As the project developed I became interested in four specific cultural domains: the use of space, particularly the ward office; the relationship between ward staff and ‘outsiders’ or ‘others’; the functions of staff handovers; and the characteristics of the physical setting. In my conclusions I describe the relationship between space and the use of space, and the structure of authority and communication on the ward and between the ward and the outside world. I also discuss the functions of handover in terms of the transfer of responsibility, and the psychological process which, it seems to me, underlines the split between ‘good’ and ‘bad’ others. I suggest the possibility that this line of research might be extended, and that a synthesy between sociological insight and group dynamic theory might offer a fruitful way forward.