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Beginning in the mid-1950s the United States undertook a policy of “deinstitutionalization” that eventually led to the closure or massive downsizing of almost every state psychiatric hospital. No single decision closed the hospitals; rather, several forces converged and made large, isolated institutions politically, legally, medically, and fiscally unsustainable.
Exposés of abuse and a new civil-rights mind-set
• 1940s–1950s magazine and television reports (e.g., Life’s 1946 “Bedlam 1946”) showed overcrowding, filth, seclusion, and use of mechanical restraints, shocking the public and lawmakers [4].
• After World War II, the broader civil-rights movement reframed people with mental illness as citizens whose liberty deserved protection. Landmark court rulings (e.g., O’Connor v. Donaldson, 1975) made it unconstitutional to confine someone who was “not dangerous and able to survive in freedom,” sharply limiting states’ ability to keep patients involuntarily [1][7].
Medical advances that made community living seem feasible
• The first effective antipsychotic, chlorpromazine (Thorazine), was introduced in 1954, followed by lithium, antidepressants, and anticonvulsants. These drugs dramatically reduced psychotic symptoms for many patients, persuading policymakers that most could live outside locked wards with outpatient follow-up [1][3].
A deliberate federal policy to replace hospitals with community care
• President John F. Kennedy’s Community Mental Health Centers Act of 1963 promised to build 1,500 federally funded centers that would offer outpatient, day, and emergency services near patients’ homes. The Act’s explicit goal was to cut the state-hospital population by 50 percent in 10–20 years [5].
• Professional organizations, civil-rights lawyers, and disability-rights activists—joined by many families—pressed for “the least restrictive alternative,” giving the political momentum to move people out.
Financial incentives that made states eager to shift care out of their hospitals
• State hospitals were financed almost entirely by state tax dollars, whereas new federal programs would pay for community care. In 1965 Congress created:
– Medicare and Medicaid, which excluded coverage of care in “institutions for mental disease” (IMDs) for most adults, but would pay for psychiatric treatment provided in general hospitals, nursing homes, or clinics;
– Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI), which gave people released from hospitals a personal income and Medicaid eligibility.
The combined effect allowed states to off-load both operating costs and legal responsibility to the federal government and local communities [1][2][3].
State budget crises and the political appeal of cutting large hospitals
• Institutional care was expensive: by the early 1970s some states spent one-third of their health budgets on hospitals. Closing wards produced immediate savings that could be used elsewhere—or simply balanced the budget—especially during recessions in the 1970s and early 1990s [2][6].
Changes in treatment philosophy within psychiatry itself
• Influenced by social psychiatry and new research showing the detrimental effects of institutionalization (“institutional syndrome”), many clinicians embraced community-based rehabilitation as therapeutically superior to life on long-stay wards [5][7].
Litigation that forced states either to improve hospitals dramatically or move patients out
• Class-action suits (Wyatt v. Stickney, 1971; Riese v. St. Mary’s, 1987) established a constitutional right to “treatment in the least restrictive setting.” Faced with costly court-ordered upgrades, governors often chose to close beds instead [1][7].
Because all of these pressures were long-lasting and mutually reinforcing, the number of state-hospital residents fell from about 560,000 in 1955 to fewer than 40,000 today, and 35 states have closed at least one of their main hospitals since 1997 [6].
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