“Psychiatry was already going antisocial.”
Yup—the profession got taken over by mad sociopaths who thought it would be fun to torture human subjects.
The better solution would have been to keep the institutions open and hold the evil shrinks as “patients”.
I’m not sure how to take your post, but it seems certainly possible for state mental institutions to become highly wasteful. Everything becomes a “disease” that needs treatment - for a price. The prison system is partially transferred to mental health.
When Ronald Reagan was Governor of California, I believe he shut down state mental institutions for precisely this reason.