Quillette has another sample of the boy-did-we-make-a-mistake in the 60s and 70s with deinstitutionalisation article. This one plays up the "Cuckoos Nest" slant, which occurs about a third of the time, I think. These articles are accurate insofar as they note that there are lots of people with mental illness on the street now, causing problems.
The hospital I used to work at has about involuntary 100 patients at present. At its peak it had about 3000.
How much do you think 30 more hospitals would cost? The current one goes at about $100M/year, operating costs. Of course, you'd have to have more buildings, just for openers.