Madhya Pradesh has made remarkable progress in facility based management of severe acute malnutrition, and has developed a model that is being replicated in many states. India has uniquely high prevalence of both stunting and wasting, implying that both severe acute malnutrition and severe chronic malnutrition co-exist. This study sought to explore design issues of nutritional rehabilitation centers in order to inform its effectiveness in settings where the prevalence of chronic poverty and malnutrition is high. Our analysis attributes the limited success (marked by poor cure rates and high non-responder rates) to high prevalence of chronic malnutrition, particularly in nutritional rehabilitation centers located in pheripheral areas. There is a failure to recognize severe chronic malnutrition as an epidemiological entity and gear wide-ranging programmatic and social interventions.