In this paper we develop a hermeneutic approach to the concept of competence. Patient competence, according to a hermeneutic approach, is not primarily a matter of being able to reason, but of being able to interpret the world and respond to it. Capacity should then not be seen as theoretical, but as practical. From the perspective of practical rationality, competence and capacity are two sides of the same coin. If a person has the capacity to understand the world and give meaning to the situation, he or she is able to make decisions, and is thus competent. People can fail in the area of practical rationality. They can feel ill at ease, uncomfortable or not at home in the situation. Under such conditions, they appear as incompetent, and urge caregivers to respond in such a way that their competence can be raised. The issue is not how to measure their incompetence, but how to help them to become more competent, that is to get a practical grip on their situation and to be able to live out their lives in such a way that they develop their identity in relations with others. From a hermeneutic point of view, assessing a patient's capacity implies focusing on the patient's way of meaning making and regarding her behavior from the perspective of practical rationality. The focus should not be on the assessment as a matter of fact, but on improving capacity. This requires allowing the patient to experience the world meaningfully and affording her, in the context of a supportive and trustful institutional environment, the possibility of developing a personal narrative where her choices are expressed verbally or non-verbally.