State hospitals are experiencing a resurgence, with several states investing billions into safety-net hospitals that serve both the civil and justice systems. This growing investment in public psychiatric care contrasts with the challenges the private sector faces in converting the increasing demand for services into viable business opportunities. The shift is reshaping the landscape of mental health treatment, with state governments stepping in to fill the void left by underfunded private-sector initiatives, particularly in light of the ongoing mental health crisis state funding.
This situation is rooted in the legacy of the Kennedy-era deinstitutionalization movement, which aimed to reduce the number of patients in large psychiatric institutions and shift care to community-based settings. While the intention behind deinstitutionalization was to provide more humane and effective care in less restrictive environments, the reality has been far from ideal. Over the past few decades, public and private investment in psychiatric hospitals, which care for the most severely mentally ill, has consistently fallen short of meeting the demand for services. At the same time, community-based behavioral health and social services have not received enough funding to either manage patients effectively in lower-acuity settings or prevent individuals from reaching the point of requiring inpatient care. This ongoing issue underscores the need for further mental health crisis state funding.
As Nelson Jarrin, Senior Vice President of State Policy at the Texas-based Meadows Mental Health Policy Institute, explains, the current situation reflects a shift from one extreme to another: “The pendulum might have swung from a point where we had too many beds and too many people institutionalized in the 1960s to another extreme where the community investment has not been there to keep people out of a fewer number of beds.” The lack of sufficient investment in both institutional and community care has created a crisis that state governments are now scrambling to address, driven by the need for sustained mental health crisis state funding.
The most significant gap in care has been the shortage of psychiatric beds for individuals involved in the justice system, known as forensic patients. These patients, who are either awaiting trial or deemed incompetent to stand trial, require specialized care that many private psychiatric hospitals are unwilling to provide. Forensic care has historically been a specialty of state-run hospitals, and the need for these services has skyrocketed. In Texas, forensic patients now make up the vast majority of individuals in state psychiatric hospitals, a dramatic shift from three decades ago when most patients were there for civil reasons, such as those in need of mental health treatment unrelated to criminal charges. This shortage of forensic psychiatric beds highlights a key area where mental health crisis state funding is most urgently needed.
The situation is dire. In Texas, there is currently a 2,200-person waitlist for forensic psychiatric beds. To alleviate the pressure, some private organizations have stepped in to assist, but these partnerships are rare and often limited to low-level forensic patients. For example, Baptist Hospitals of Southeast Texas received $64 million to add 72 beds to an existing campus, and the University of Texas Southwestern Medical Center is involved in the development of the Texas Behavioral Health Center in Dallas. However, most of the funding allocated by the state is dedicated to expanding state-run facilities and increasing the number of forensic psychiatric beds. This reliance on public funding to meet the demand for psychiatric care highlights the limitations of the private sector’s involvement in this space and underscores the importance of mental health crisis state funding.
A notable example of public investment in psychiatric care can be found in Oklahoma, where the state has partnered with Oklahoma State University (OSU) to build a 330-bed psychiatric hospital on the OSU-Oklahoma City campus. The facility, set to open in 2026, will provide 275 adult beds and 55 pediatric beds and will replace the aging Griffin Memorial Hospital. The project, which costs $147 million, is being funded in part by the American Rescue Plan Act (ARPA) of 2021, a stimulus funding initiative designed to help states recover from the COVID-19 economic downturn. The new hospital will not serve forensic patients, but it will include urgent care and outpatient services, providing a crucial resource to individuals in mental health crises before they enter the justice system. This project is another example of how mental health crisis state funding can be leveraged to improve psychiatric care systems.
This approach reflects a shift in how states are approaching psychiatric care. The focus is no longer solely on institutionalization, but on creating a continuum of care that includes acute treatment for individuals experiencing mental health crises, followed by stabilization and reintegration into the community. Slatton-Hodges, ODMHSAS Commissioner, points out that the era of warehousing individuals with mental illness in large institutions is over. Instead, the goal is to provide care at the right level, preventing individuals from falling into the criminal justice system by offering more accessible mental health services. Mental health crisis state funding plays a critical role in this transformation.
However, this shift also underscores the limitations of private investment in psychiatric care, especially for adults. Slatton-Hodges notes that while private investment in pediatric psychiatric facilities tends to be more robust, adult psychiatric care remains an underfunded and less profitable area for the private sector. The high rates of uninsured individuals seeking psychiatric care make it difficult for private companies to see a viable business opportunity in this space. The lack of financial incentives for private health systems to invest in adult psychiatric care means that state governments are increasingly stepping in as the primary providers of these services. This further emphasizes the need for ongoing mental health crisis state funding.
Washington State provides another example of the growing role of the public sector in meeting the demand for psychiatric care. The Washington State Department of Social and Health Services (DSHS) purchased a facility previously operated by Acadia Healthcare Co. Inc. in Tukwila for $30 million. This facility will now serve exclusively civil patients who have resolved their forensic care and are transitioning back into the community. By taking over the facility, DSHS has added much-needed beds to the state hospital system while ensuring that the facility continues to serve a purpose in the local health care economy. This is yet another example of how state investments and mental health crisis state funding are critical in expanding the availability of care.
As the demand for psychiatric care continues to rise, it is clear that state governments will play an increasingly central role in meeting the needs of individuals with mental health issues. While public-private partnerships can help address some of these challenges, the private sector has struggled to keep pace with the growing demand for psychiatric beds and services. As a result, states are stepping in to fill the void, investing heavily in both state-run facilities and partnerships with public universities to strengthen the psychiatric care system. The future of psychiatric care will likely be shaped by a combination of public investment and private sector innovation, but for now, state governments remain the last line of defense for individuals with complex behavioral health needs. The importance of sustained mental health crisis state funding cannot be overstated in this effort.
