Week 2: A System Designed to Fail — How Deinstitutionalization Fueled Homelessness
An 8-part series on the intersection of homelessness and mental health with input from Dr. Katrina Amber-Monta, a third-year psychiatry resident at Lehigh Valley Health Network (PA). Dr. Amber-Monta completed her undergraduate degree at Bennington College (VT) in 2003 where she studied music, and in 2022, graduated from Cooper Medical School of Rowan University (NJ).
When we look at the intersection of mental health and homelessness, we have to start with a critical turning point in U.S. history: the deinstitutionalization of psychiatric hospitals. Beginning in the 1960s and accelerating through the 1980s, states across the country closed large-scale mental health institutions with the promise of replacing them with community-based care.
The theory was sound—many of these hospitals were overcrowded and inhumane. But what was supposed to be a shift toward more compassionate, localized treatment became a mass discharge with no support system. Community mental health centers were never funded at the scale needed. People were released without housing, follow-up care, or access to ongoing treatment. Instead of going home, many went to the streets—or to jail.
As my friend, Dr. Amber-Monta, observes: "This deinstitutionalization caused issues for my profession also, as many psychiatrists shifted their workplace to private practice to care for the less sick and wealthy people who could pay for their services. To this day, community psychiatry remains underfunded and understaffed."
Today, the consequences are staggering. An estimated 30% of people experiencing chronic homelessness live with a serious mental illness, and more than 50% have co-occurring mental health and substance use disorders. Emergency rooms, shelters, and law enforcement have become the default response to crises that should be met with care.
In fact, the largest provider of mental health services in the United States today is the criminal justice system—with jails like Rikers Island and L.A. County Jail functioning as de facto psychiatric facilities. And nearly 1 in 5 people leaving incarceration will experience homelessness within a year, revealing just how tightly these broken systems are linked.
Deinstitutionalization didn't fail because the idea was flawed. It failed because we removed the beds without building the bridge. And decades later, we're still paying the price—in preventable deaths, overwhelmed public systems, and a homelessness crisis that continues to grow.
If we're serious about addressing homelessness, we have to treat housing and mental health as inseparable. There is no path forward without investing in both.
Until next week,
Josiah Haken
City Relief, CEO
