LOGANSPORT, Ind. (AP) — Hundreds of patients will be shifted from Indiana's state psychiatric hospitals into community-based care under a plan that officials say will eliminate more than 500 jobs.

The biggest changes and the layoffs will come at the Logansport and Richmond state hospitals, while units at the Evansville and Madison hospitals will be converted to care for those with serious mental illnesses.

The plan announced Thursday by the Family and Social Services Administration will have patients with chronic addictions or mental disabilities moved into home or community-based services. The moves are expected to reduce the number of patients at the six state hospitals by about 30 percent and save $15 million a year.

"Having these populations in state institutions is an obsolete way of caring for these patients," FSSA spokesman Marcus Barlow said. "It is one of those instances where you can give better care at lower costs. It will, in the end, be cheaper for the state to pay to take care of these patients in the community rather than at the institution."

The Logansport State Hospital will have 355 of its 900 workers laid off and 80 vacant positions eliminated as its current 388-patient capacity is cut by about 250. Its units for the mental disabled and those with addictions will close, and the hospital will focus on treating patients such as those incompetent to stand trial or who have completed prison sentences but still need mental health services.

The Richmond hospital will have 106 of 600 workers laid off and its patient capacity cut from 312 to 211. Its youth services and substance abuse units will close, with it focusing on patients with serious mental illnesses.

The changes are expected to occur over several months and be completed by March.

"Patients will not be moved out of the hospitals until we have places to put them," Barlow said. "No employees will be laid off until patients start moving out of the hospital."

The Family and Social Services Administration said Indiana spends about half of its mental health and addition budget on community-based services, compared to the national average of 70 percent.

Kim Dotson, associate executive director of ARC of Indiana, called community-based services "a more effective and efficient use of state funds."

"Home and community-based services allow people with disabilities to live in a far less restrictive setting, close to friends and family, with a greatly improved quality of life," she said.