In thinking about the NSW public mental health crisis, one aspect that needs to be considered is the consequences of de-institutionalisation and ‘mainstreaming’. Please see below.
Rebuilding Residential Psychiatric Care: Revisiting the Consequences of De-institutionalisation
The de-institutionalisation of psychiatric care in the 1970s and 1980s marked a profound shift in mental health policy across much of the Western world. Motivated by a combination of humanitarian concerns, economic pressures, and the promise of psychotropic medications, governments began closing large state-run psychiatric hospitals. In their place, community-based mental health services were intended to provide care within less restrictive and more humane environments. While the intentions behind this movement were admirable, the outcomes were often problematic—particularly for patients with chronic psychotic illnesses and severe functional impairments.
Central to the motivation behind de-institutionalisation was the notion that psychiatric hospital asylums cause chronic mental illness and that all patients of these institutions could live independently with support in the community. Both ideas were patently false. While the archaic practices of the asylums often did not help patients, the patients were in these hospitals because they had already developed chronic psychiatric illness. And when dispossessed of their rightful accommodation and on-site clinical and rehabilitation services a substantial number could not live independently in the community.
A central consequence of de-institutionalisation was the loss of full time clinically supervised accommodation and structured on-site rehabilitation services available for long term care. The concept of “mainstreaming” mental health care, in theory, promised integration and inclusion, but in practice often led to neglect and marginalisation. For patients with treatment-resistant psychotic illnesses, cognitive deficits, poor insight, and those with comorbid drug and alcohol conditions, the new model of care left them without adequate supports, supervision and integrated care.
Many were unable to maintain stable housing, adhere to treatment, or engage meaningfully with community services. This population, once cared for in long-stay wards, became increasingly visible among the homeless, the incarcerated, and the chronically unwell cycling through acute care services for prolonged admissions and occupying beds intended for the care of patients with new or acute conditions, thus contributing to the inadequate provision of inpatient services.
In response to these challenges, there has been a growing recognition—particularly from the 1990s onwards—of the need to re-provide residential rehabilitation services for those with the most severe and enduring mental illnesses. These efforts have not aimed to recreate the asylum model, but rather to develop smaller, community-based facilities that offer structured, recovery-oriented care in a residential setting.
One such model is the Community Care Unit (CCU), which has been implemented in parts of Australia. CCUs provide medium- to long-term accommodation with multidisciplinary staffing, including psychiatry, nursing, psychology, occupational therapy, and social work. Residents engage in daily living tasks, receive psychiatric and medical care, and participate in rehabilitation programs focused on skill-building, social functioning, and eventual transition to more independent living.
Similarly, the Transitional Residential Rehabilitation (TRR) model, and its various equivalents in other jurisdictions (such as “step-up step-down” services in the UK and “Transitional Housing Programs” in parts of the US), has emerged as a bridge between acute inpatient care and independent community living. These facilities are staffed by mental health professionals and offer a structured therapeutic environment tailored to the needs of individuals with severe mental illness who are not yet ready for full independence.
There has also been a resurgence of interest in assertive community treatment (ACT) and intensive case management (ICM), often linked with supported accommodation programs. These services attempt to wrap clinical care around housing solutions, recognising that stable housing is foundational to mental health recovery. In some regions, non-governmental organisations have partnered with health departments to provide supported accommodation with clinical input, combining tenancy management with 24-hour or visiting mental health support.
However, these services remain unevenly distributed, often underfunded, and not universally accessible. Many jurisdictions still lack sufficient residential rehabilitation options, leaving vulnerable patients at risk of hospital recidivism, homelessness, or forensic system involvement. Furthermore, workforce shortages, policy fragmentation, and a lack of integrated funding models have hampered the scale-up of effective programs.
In conclusion, the legacy of de-institutionalisation remains a double-edged sword. While it rightfully ended many of the abuses and excesses of the asylum era, it also dismantled essential infrastructure for the care of individuals with the most disabling mental illnesses. Recent decades have seen attempts to re-provide clinically supervised accommodation and rehabilitation services, and these efforts should be seen not as a return to institutionalisation, but as a necessary evolution of mental health care—one that restores dignity, autonomy, and support to those most in need. To meet this challenge, policymakers must prioritise investment in long term residential clinical and rehabilitation services as a core component of a balanced, humane, and effective mental health system.
National Association of Practising Psychiatrists
June 2025
