Since 1997, public-sector behavioral healthcare in New Mexico has remained under continual transition. We have conducted qualitative research to examine recent efforts in NM to establish a recovery-oriented behavioral healthcare system, focusing on comprehensive community support services, clinical homes, and core service agencies. We examine how decisions made in the outer context (e.g., the system level) shaped the implementation of each initiative within the inner context of service provision (e.g., provider agencies). We also clarify how sociopolitical factors, as exemplified in changes instituted by one gubernatorial administration and undone by its successor, can undermine implementation efforts and create crises within fragile behavioral healthcare systems. Finally, we discuss findings in relation to efforts to promote wraparound service planning and to establish medical home models under national healthcare reform.