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Causes and consequences

Experience and adjustment



Deinstitutionalization is a long-term trend wherein fewer people reside as patients in mental hospitals and fewer mental health treatments are delivered in public hospitals. This trend is directly due to the process of closing public hospitals and the ensuing transfers of patients to community-based mental health services in the late twentieth century. It represents the dissipation of patients over a wider variety of health care settings and geographic areas. Deinstitutionalization also illustrates evolution in the structure, practice, experiences, and purposes of mental health care in the United States.


Hospital care for mental health

In the United States in the nineteenth century, hospitals were built to house and care for people with chronic illness, and mental health care was a local responsibility. As with most chronic illness, hospitalization did not always provide a cure. Individual states assumed primary responsibilities for mental hospitals beginning in 1890. In the first part of the twentieth century, while mental health treatments had very limited efficacy, many patients received custodial care in state hospitals. Custodial care refers to care in which the patient is watched and protected, but a cure is not sought.

After the founding of the National Institutes of Mental Health (NIMH), new psychiatric medications were developed and introduced into state mental hospitals beginning in 1955. These new medicines brought new hope, and helped address some of the symptoms of mental disorders.

President John F. Kennedy’s 1963 Community Mental Health Centers Act accelerated the trend toward deinstitutionalization with the establishment of a network of community mental health centers. In the 1960s, with the introduction of Medicare and Medicaid, the federal government assumed an increasing share of responsibility for the costs of mental health care. That trend continued into the 1970s with the implementation of the Supplemental Security Income program in 1974. State governments helped accelerate deinstitutionalization, especially of elderly people. In the 1960s and 1970s, state and national policies championed the need for comprehensive community mental health care, though this ideal was slowly and only partially realized.

Beginning in the 1980s, managed care systems began to review systematically the use of inpatient hospital care for mental health. Both public concerns and private health insurance policies generated financial incentives to admit fewer people to hospitals and discharge inpatients more rapidly, limit the length of patient stays, or to transfer responsibility to less costly forms of care.

Indicators and trends

Many statistical indicators show the amount of inpatient hospital care for persons with mental illness decreased during the latter half of the twentieth century, while the total volume of mental health care increased.

A patient care episode is a specific measure of the volume of care provided by an organization or system. It begins when a person visits a health care facility for treatment and ends when the person leaves the facility. In 1955, 77% of all patient care episodes in mental health organizations took place in 24-hour hospitals. By 1994, although the numbers of patient care episodes increased by more than 500%, only 26% of mental health treatment episodes were in these hospitals. The timing of this trend varied across different states and regions, but it was consistent across a variety of indicators.

The number of inpatient beds available to each group of 100,000 civilians decreased from over 200 beds in 1970 to less than 50 in 1992. The average number of patients in psychiatric hospitals decreased from over 2,000 in 1958 to about 500 in 1978. While adjusted percapita spending on mental health rose from $16.53 in 1969 to $19.33 in 1994, the portion of funds spent on state and county mental hospitals fell from $9.11 to $4.56.


Trends toward deinstitutionalization also reflect shifting demographics and boundaries of care. For example, decreases in inpatient mental health care can be complemented by increases in outpatient mental health care. Decreases in inpatient mental health care can also be paired with increases in other forms of care, such as social welfare, criminal justice, or nursing home care. Thus deinstitutionalization is part of a process sometimes called transinstutionalization, the transfer of institutional populations from hospitals to jails, nursing homes, and shelters.

Causes and consequences


Deinstitutionalization, originally and idealistically portrayed by advocates and consumers as a liberating, humane policy alternative to restrictive care, may also be interpreted as a series of health policy reforms that are associated with the gradual demise of mental health care dependent on large, state-supported hospitals. Deinstitutionalization is often attributed to decreased need for hospital care and to the advent of new psychiatric medicines.


Ideally, deinstitutionalization represents more humane and liberal treatment of mental illness in community-based settings. Pragmatically, it represents a change in the scope of mental health care from longer, custodial inpatient care to shorter outpatient care.

The process of deinstitutionalization, combined with the scarcity of community-based care, is also associated with the visible problems of homelessness. Between 30-50% of homeless people in the United States are people with mental illness, and people with mental illness are disproportionate among the homeless.


Patient care episodes — A specific measure of the volume of care provided by an organization or system. It begins with a treatment visit to a health care facility (a hospital or residential treatment center, for example) and ends when a person leaves the facility, so it may vary by patient and visit. Over time, the volume of patient care episodes indicates the degree to which a population uses certain health care capacities. Other measures that may be used to measure volume of care include number of beds or bed-days, total number of patients served, and also more specific measures like patient-contact hours.

Experience and adjustment

Deinstitutionalization also describes the adjustment process whereby people with illness are removed from the effects of life within institutions. Since people may become socialized to highly structured institutional environments, they often adapt their social behavior to institutional conditions. Therefore adjusting to life outside of an institution may be difficult.

Defined experientially, deinstitutionalization allows individuals to regain freedom and empower themselves through responsible choices and actions. With the assistance of social workers and through psychiatric rehabilitation, former inpatients can adjust to everyday life outside of institutional rules and expectations. This aspect of deinstitutionalization promotes hope and recovery, ongoing debates over the best structure and process of mental health service delivery notwithstanding.



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American Psychiatric Association. 1400 K Street NW, Washington DC 20005. <>.

American Sociological Association. 1307 New York Ave., Washington DC 20005-4701. <>.

National Institute of Mental Health. 6001 Executive Boulevard, Rm. 8184, MSC 9663, Bethesda, MD 20892-9663. (301) 443-4513. <>.

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Michael Polgar, Ph.D.