In this two-part series of articles, it is predicted that institutions will be phased out because of five trends: development of nonresidential community services; new conceptualizations of and attitudes toward residential services: increased usage of individual rather than group residential placements; provision of small, specialized group residences; and a decline in the incidence and prevalence of severe and profound retardation due to reduction in the birthrate of high risk groups, improvement of health services for the population generally and for high risk groups specifically, increased practice of abortion, general environmental betterment, and early childhood education. In this (second) part, the impact of the developing new service model upon the institution is discussed. [For Part I, see EJ951476.]