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On January 6, 1930 the Oahu Asylum closed and the U.S. Army moved the 549 patients to the new Territorial Hospital in Kaneohe.
Even at its opening in 1930, the newly named Territorial Hospital was over-crowded, Overburdened facilities have been the situation ever since. It was not yet been possible for the Legislature to provide sufficient appropriations so that adequate buildings and staff could be maintained by the hospital, in spite of great advances in the hospital program itself. In 1939, the control of the Territorial Hospital was changed from the Board of Health, where it had been since its opening, to the newly formed Department of Institutions.