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The Harcourt article argues prisons & mental hospitals are both forms of social control, and it observed similar trend between the rates of both in other Western, industrialized countries. Another study corroborates it in France. Harcourt claimed the reduction in violent crimes with mental institutions is less from containing violent people & more from keeping likelier victims (the mentally ill are more frequently victimized) away from violent criminals.
North Carolina was late to mental health deinstitutionalization, which had been a priority since President JFK. That priority reflected a worldwide movement that opposed mental hospitals as oppressive, abusive, total institutions and favored community mental health services. Insolvency (debt, expensive hospital repairs, expensive permanent residents) & legal decisions (Supreme Court ruled the mentally ill have right to live outside hospitals) motivated North Carolina to shutdown public mental health hospitals & privatize. Release patients often lacked skills to obtain services. Private startups to provide those services often failed & folded. Funds allocated to pay them mostly got reappropriated to instead rebalance the state budget during a financial crisis. The remaining funds ended up going to only the most profitable services that relied mostly on medicaid & couldn't meet the patients' needs. Medicaid didn't cover all those patients, funds to cover the uninsured were highly limited, & the state refused to expand medicaid for nearly a decade.
It seems regardless of approach, institutional centers or community services, no mental health system can succeed without the resources to run it. This seems less a we need mental institutions back problem and more a we need to fund this properly & get people treated problem.