Revolving Door of Despair: The Failure of Deinstitutionalization in B.C.’s Mental Health System

On a damp winter morning, I watched familiar faces cycle through the emergency room, not because of sudden physical illness, but because there was nowhere else for them to go. People in psychiatric crisis sat hunched in chairs, rehearsing their stories, over-explaining every symptom and fear in the hope that if they said the “right” words, someone might finally take them seriously. They clutched discharge papers like fragile promises of care that rarely came, aware that being too calm meant being sent away, and being too distressed meant police, not treatment. Those who needed long-term support are not met with stability or care; they’re trapped in a system where survival depends on convincing someone, anyone, that they are suffering enough to deserve a look.

This crisis didn’t appear overnight. It traces back six decades to the beginning of Canada’s deinstitutionalization movement, when large psychiatric hospitals across the country began closing their doors. The province promised a new era of compassionate, community-based mental health care. The vision was hopeful: treatment in neighbourhood clinics, recovery supported by housing and outreach teams, dignity instead of isolation. However, the infrastructure never caught up to the promise. Long-term beds disappeared faster than services were built, and the lack of resources in the province left the next generation moving through a revolving door of short-term care that stabilized symptoms but never lives. Although the deinstitutionalization of mental health care in Canada eliminated unethical practices and aimed to improve the quality of care, the lack of funding, workforce shortages, and inadequate planning in British Columbia have produced a crisis-driven system where high-need, mentally ill patients cycle between homelessness, contact with law enforcement, and short hospital stays rather than accessing reliable, ongoing care.

Community Care: What’s Going On?

Riverview Hospital, once British Columbia’s largest psychiatric institution, was a world of its own. At its peak, it housed and employed more than 4,630 people (Ronquillo 13). It reflected early 20th-century beliefs that people with mental illness needed to be separated from society for both their own safety and the public good (Chow and Priebe 4). Many patients spent decades at Riverview receiving custodial and often coercive treatments, including electroconvulsive therapy, experimental drugs, insulin-induced comas, and forms of “hydrotherapy” that involved exposure to extreme hot or cold water, treatments that would be viewed as unconscionable by today’s medical standards (Daflos). The institution mirrored not only the medical thinking of its time, but the deep social inequalities that determined who ended up behind its doors. As historian Colin Grittner explains, behaviours that were dismissed in men as “a quirky character trait” have led to a woman being committed to an asylum. Class shaped outcomes as well, since before universal health care existed, “the more money you have, the better the treatment one can afford” (Grittner).

Figure 1. The Crease Clinic building at Riverview Hospital, a four-storey reinforced concrete structure within what was once the province’s largest psychiatric institution.

However, by the early 1960s, a significant shift in psychiatric philosophy began to take hold across Canada and much of the Western world—the movement toward deinstitutionalization. The idea was to replace institutional care with community-based mental health services that would integrate people back into society (Ronquillo 12). In theory, this shift was meant to correct the moral and medical failings of the previous model.

The Rise of Transinstitutionalization

Instead of building a functioning system of community care, British Columbia’s transition from psychiatric institutions created a different problem known as transinstitutionalization, where people were not freed from institutions but simply moved between them (Sealy 230). When Riverview Hospital began emptying its wards, the number of psychiatric beds in the province fell from thousands to only a fraction of their former capacity within two decades (Sealy & Whitehead 250). The need for mental-health care did not disappear with those beds; rather, it moved elsewhere. Research shows that days of care in psychiatric units inside general hospitals eventually exceeded the levels once provided by dedicated psychiatric hospitals (Sealy 235). The institutional system did not end. Instead, it simply relocated from psychiatric hospitals into general hospitals and emergency rooms.

This lack of infrastructure gradually transformed the mental-health system into a cycle of crisis, brief stabilization, and rapid discharge. Between 1994 and 2003, the average length of stay in specialized psychiatric hospitals fell by more than 75% because facilities were under pressure to discharge people quickly (Sealy 232). By 2008, the pattern was unmistakable. Patients were being released after an average stay of only fifteen days, which often occurred before they were medically or socially stable and nearly 20% were readmitted within a month (Read 25). Short stays, quick discharges, and frequent readmissions became defining features of care.

The Cost of Saving Money

Deinstitutionalization was driven in large part by the desire to reduce spending on mental-health care. However, when those institutions closed, the costs didn’t disappear—they were funneled into other areas. Between 1994 and 1999, the operating cost of psychiatric hospitals and hospital psychiatric units in B.C. dropped from $424.28 million to $234.93 million. Over the same period, expenditures for community psychiatric services also fell from $208 million to $200.89 million (Sealy & Whitehead 254-255). Even though the province saved nearly $190 million by closing and downsizing psychiatric facilities, it did not redirect those savings into community care, in fact, that budget dropped $7 million. Rather than reinvesting the money saved from hospital closures into housing, outreach teams, or long-term treatment programs, the province allowed those funds to leave the system altogether.

One of the clearest examples of this cost-shifting is the role police now play as first responders to psychiatric crises. A report from the Vancouver Police Department found that 31% of all call’s officers responded to involved individuals experiencing mental illness, and responding to these calls cost the city an estimated $9 million annually. (read 25). In effect, police officers became first responders for psychiatric emergencies, a role for which they are neither trained nor funded. As one study explains, “individuals who seek help voluntarily from emergency wards in BC are often deemed ‘not sick enough’ to qualify for limited acute care resources. The same study found that, in large part because of these barriers, over 30% of people with serious mental illness had contact with the police while making, or attempting to make, their first contact with the mental health system” (Adelman 5).

Figure 2. Vancouver Police Department officers responding to a call at East Hastings Street and Columbia Street in the Downtown Eastside.

Without stable care, people with serious mental illness often slip into homelessness, where both their vulnerability and the public costs rise sharply. An estimated 30-35% of Canada’s homeless population lives with a mental illness (Read 25). Once someone becomes homeless, the system pays even more. In British Columbia, caring for a person experiencing both homelessness and mental illness can cost the public over $55,000 a year, or roughly $10,900 per month for a hospital bed alone (Gaetz 5). These numbers challenge the economic logic that justified deinstitutionalization in the first place. What was framed as a policy to save money turned out to be a financial boomerang, slinging the bill straight into other sectors.

The consequences of inadequate psychiatric care ripple beyond individual suffering and impose enormous costs on the economy. A healthy population is the engine of a healthy economy, and when big chunks of that population are struggling, the price tag skyrockets. Mental illness isn’t some rare anomaly, it’s practically a national routine as one in five Canadians experience a mental illness in any given year, and by the age of forty, half the population will have experienced one (Centre for Addiction and Mental Health). Odds are, if you’re reading this, you or someone you know has been there. Mental-health care isn’t just about preventing the most severe crises. It’s also about the everyday struggles, the anxiety that makes someone call in sick, the depression that keeps a parent from getting out of bed, the burnout that quietly eats away at productivity. When that many people are unwell or unsupported, it’s bound to lower productivity across society. As Dr. Kwame McKenzie, CEO of the nonprofit Wellesley Institute, explains, “If you have an unhealthy workforce, unhealthy parents or unhealthy children, your workforce and your economy is weakened, and it costs literally billions of dollars — unless we can get it right” (Zafar).

The Access Crisis

The promise of community-based care was built on the assumption that psychiatrists would be there to deliver it. However, in B.C., the shortage of psychiatric specialists has become one of the most persistent obstacles to effective treatment. In a Canadian Journal of Psychiatry study on real-time access to psychiatric care, 70% of psychiatrists in Vancouver reported that they could not accept new referrals, and only 9% could offer an appointment, with the median being thirty-one days (Goldner et al. 476). Province-wide, the picture isn’t any brighter: “wait time from Family Physician referral to psychiatric treatment in BC exceeds five months.” (MNP). When someone is in the grip of psychosis or suicidal despair, “See you in six months” might as well be “Good luck.”

Figure 3. A row of tents set up along the sidewalk outside the 3030 Gordon Project building, a supportive-housing facility for people experiencing homelessness. 

Behind these shortages lies a structural problem that goes beyond workforce numbers. British Columbia’s Medical Services Plan (MSP) fundamentally undervalues psychiatric work. Under the current 2025 fee schedule, psychiatrists receive $247.37 for a consultation and $211.58 for an hour of psychotherapy (Psychiatry MSP Billing Codes). Whereas in 2013, it was $215.79 and $164.55, respectively (Medical Services Commission). When you account for twelve years of inflation, rising complexity in psychiatric cases, and the increased administrative workload placed on them, the real value of this pay has barely moved. Meanwhile, our neighbours to the east, Alberta, are rolling out a much warmer welcome. Their payment models make psychiatric practice more viable and attractive. The ability to bill in smaller time increments and support through Alternative Relationship Plans (Government of Alberta). This allows for revenue that B.C. simply does not match. The result? A pay gap wide enough to see from space: psychiatrists in Alberta average $395,000 a year, while their counterparts in B.C. earn about $282,000 (Campbell).

Unlike other countries where mental health services are comprehensively covered, Canada’s universal health-care system stops short of true universality when it comes to psychiatric care. The Canada Health Act (CHA) guarantees coverage for “medically necessary” hospital and physician services, yet much of modern mental-health treatment, such as psychotherapy, counselling, and long-term community support, falls outside that definition. Here’s where things get even stranger: health-policy researchers Mackenzie Moir and Bacchus Barua note that, “After adjustment for age, Canada’s expenditure on health care as a percentage of GDP ranks as 2nd highest and its health-care expenditure per capita (out of 28)” (Barua and Moir 39). Those twenty-eight countries are part of the OECD, which includes big names like Austria, Denmark, the UK, and New Zealand, the very countries Canada loves comparing itself to. Yet the same report notes that, “Canada has significantly fewer physicians, acute-care beds, and psychiatric beds per thousand compared to the average OECD country” (Barua and Moir 39). In other words, we’re paying premium prices for bargain-bin access. Not to mention that Canada spends more on its universal health-care system than most OECD countries, but despite this spending, Canadians typically face poorer access and fewer available resources than people in many other comparable countries (Barua and Moir 40).

A Different Path Forward

It’s become clear that neither institutional care nor community care alone can meet the needs of people in B.C. Ben Kelly, who works at Portland Hotel Society, a nonprofit that supports marginalized people in the Downtown Eastside, believes that our system is not the most effective, but bringing back large psychiatric institutions wouldn’t either. The real solution lies not in choosing one model over the other, but in reforming the entire approach.

The first step into a better modern psychiatric approach is to restructure the way we think about mental health. B. C’s health care system was originally created with a focus on physical health. As Sarah Kennell, national director of public policy at the Canadian Mental Health Association, puts it, “In a country that really values a universal, publicly funded system, we can no longer continue to view mental health as not on par with physical health” (Raycraft). One of the main arguments that it isn’t funded the same is that the known connection between physical and mental health is relatively new. However, that logic doesn’t hold anymore. As UBC psychology professor Lesley Lutes says, “There’s actually 40 years of evidence globally showing that integrating mental and behavioural health into health care, specifically primary health care, works. It works incredibly well.” (Hartwig).

Despite the evidence, at the heart of B.C.’s mental-health crisis is one issue that drives every other failure: a chronic lack of funding. Funding is by far the most significant barrier, as every other failure in the system flows directly from it, the decision that shapes every visible breakdown in the system. On average, B.C allocates roughly 6.3% of there annual health budget towards mental health, whereas other countries such as France or Germany allocate 15% and 11% respectively (Canadian Mental Health Association). At some point, either you or someone close to you will need mental-health support, and cost may be the very thing that stops you from getting it. As the Canadian Institute for Health Information explains, “Canadians were more likely to cite cost as the reason they did not access mental health services when they needed them (Canada: 15%; CMWF average: 11%), particularly among those previously diagnosed with a mental health condition (34%).”

Figure 4. The entrance to the outpatient department at Royal Columbian Hospital: Mental Health and Substance Use Wellness Centre.

Making Outpatient Care the Real Front Line  

Outpatient care should serve as the true front line of B.C.’s mental-health system, yet it remains one of the province’s weakest and most fragmented layers. Outpatient care is everything that happens outside a hospital or less a than night’s stay inside one. In a strong this is where early signs are spotted and treated before they grow. However, in B.C., this front line barely functions as a line at all. According to A Pathway to Hope, the province’s mental-health roadmap, the current system leaves people bouncing between waitlists, referrals, and gaps so wide that many fall into crisis long before they reach treatment (British Columbia, Ministry of Mental Health and Addictions 24). The catch is that, yet again, the issue is financial. Nearly all provincial mental health spending goes toward emergency or hospital-based care, leaving very little for prevention. As a report states, “Currently, across an array of ministries, the provincial government spends approximately $2.5 billion annually on mental health and substance use services with 95% of that spent on specialized, hospital-based or downstream services. This means only a small percentage is spent on early intervention, prevention and long-term recovery initiatives” (British Columbia, Ministry of Mental Health and Addictions, 12).

Strengthening outpatient care matters even more when it comes to young people experiencing the first signs of psychosis, an age group where timely treatment can change the entire course of a life. Psychotic disorders usually begin between fifteen and twenty-five years old (Kessler et al. 6). When treatment starts early, the benefits are measurable. The Mental Health Commission of Canada states that “If we just reduced the number of people experiencing a new mental illness in a given year by 10% – something that is very feasible in many illnesses among young people, after 10 years we could be saving the economy at least $4 billion.” It isn’t just clinically smart but a solution that plainly pays for itself.

Figure 5. Healing Spirit House at 2721 Lougheed Highway in Coquitlam, a 38-bed inpatient facility providing specialized mental-health assessment and treatment for youth.

Modernizing Inpatient Care

            No mental-health system can succeed without a reliable inpatient backbone to support those whose needs exceed basic services. Inpatient care means staying in a hospital for crisis-level treatment overnight.  A report by the British Columbia Schizophrenia Society and the British Columbia Psychiatric Association found that over an 11-year period, there was a 29 % increase in psychiatric admissions in B.C., but no corresponding increase in beds, resulting in extended emergency-room “boarding,” rushed discharges, and discharge to homelessness (4). Strengthening inpatient care will allow outpatient teams to work effectively because they have somewhere to send the patients who need intensive treatment. Without this support, even the best community programs collapse under the weight of severe cases they were never designed to manage. As Kinneth Balucos, a youth support worker who works at Strive Living Society, explains that it’s very difficult for some of the people he works with to function alone on a day-to-day basis.

Yet improving inpatient care is only half the battle—what happens after discharge matters just as much. Patients are often discharged as soon as the crisis settles. Step-down units are designed to stop that spiral. Instead of pushing people from a hospital bed straight into chaos, these units offer a calm, structured space. Evidence from Ontario shows that when patients receive care in a natural setting where they live through Assertive Community Treatment (ACT) teams, hospital use drops and people stay stable far longer after discharge (Redko et al. 283). ACT teams are essentially clinics on wheels. They bring psychiatrists, nurses, and social workers directly to the person, whether they’re in an apartment, an SRO, or a shelter. They meet people where they are, literally, and walk with them through the daily challenges that can make or break recovery.

Any mental-health plan that ignores housing is doomed to fail because treatment simply cannot take hold when people are living in shelters, single room occupancies (SRO), or on the street. Homelessness acts as a constant disruptor: sleep deprivation, lack of safety, unpredictable routines, and inconsistent access to medication all wear down any progress made in the hospital the moment a patient is discharged. A Canadian randomized controlled trial found that when people with serious mental illness were provided with stable housing, their psychiatric hospitalizations dropped and their use of emergency services declined significantly (Kerman et al. 6). The reason is simple. A bed that is always there, a door that locks, and a room that stays the same from one day to the next. When housing is secure, therapy works better, medication works better, and people stay connected to care. When housing is missing, the system spends its time treating the fallout of homelessness rather than the illness that put them there.

What Now?

Deinstitutionalization was never meant to be abandonment, yet for too many people in B.C., that’s precisely what it became. The plan originally promised liberation, but now it reveals abandonment. What would it look like to finally deliver what was promised? It would come in the form of a clinic where a psychiatrist has time to see a new patient the same week they’re referred. It would look like a support worker walking with someone to their first housing appointment instead of handing them a sheet of phone numbers. It would look like a young person in early psychosis getting help before their life collapses, not after. It would look like fewer police cars parked outside SROs and more nurses walking through their hallways. It would look like people not aging on waitlists. It would look ordinary. Quiet. This isn’t about turning back the clock but finally building the care system we imagined decades ago. The challenge with mental health care is that no single blueprint fits everyone. It’s a moving target, and effective treatment means staying flexible and updating our approach as people’s needs evolve.

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