St. Elizabeths Hospital was established by Congress in 1855 as the Government Hospital for the Insane. Its population has declined from about 8,000 patients in the early 1960s to a current total of about 1,470 mentally ill, mentally retarded and elderly patients. Another 721 former patients live in the community but continue to receive outpatient care at the hospital.

On Thursday, the District's Department of Human Services -- under a new Commission on Mental Health Services -- will assume control of St. Elizabeths from the federal government. It intends to expand community-based treatment programs.

The hospital has about 3,000 federal employes who will become city employes when the District government takes over the facility. The majority of the hospital workers are slated for eventual transfer to the city's community-based mental health care centers and related programs.

Under the transfer plan, about 600 patients are expected to be discharged from the hospital during the next four years, including 150 elderly and 120 mentally retarded persons.

By 1991, the hospital's population is expected to drop to 800, including more than 300 patients who are deemed criminally insane and have been confined to St. Elizabeths by the courts.

Because of the transfer of St. Elizabeths, the District will need to increase funding for mental health care from about $60 million in fiscal 1987 to about $120 million in fiscal 1992.

The hospital is a sprawling complex of more than 120 buildings on 336 campuslike acres in Southeast Washington. The eastern half of the grounds will be transferred immediately to the District government. The western half, with its panoramic view of the city, will not change ownership until 1991; already a debate is raging about whether to develop the site commercially or retain its use for housing former mental patients.