I suspect there is a lot more to this story than is being reported. The mentally ill often refuse any assistance, and the hospital has no legal means to force such a person to accept assistance. What then?
All we are talking about is where he gets dropped off if they decide they need to drive the discharged patient somewhere. I don’t expect the hospital to do any more than provide whatever medical care they are obligated/agree to. But they took the step to drive the guy somewhere, so they essentially took on a responsibility. In that case you drop him at a shelter or other place designed to deal with the homeless. They could have just discharged him and left him in the lobby on his own recognizance. I have to think he showed up with clothes, so give him his clothes back and discharge him. I think the real issue is they didn’t want him hanging around the lobby or the neighborhood so they decided to dump him across town.
There is a lot more than is being reported. The LAPD has been accusing hospitals of doing this for at least a couple of years, but they've always denied it until videotape evidence appears. Then they apologize, blame some error in the system and promise not to do it again. Then it happens again. Here's a story about a similar incident in 2006, with a 63 year old woman dumped off on skid row in a hospital gown. The story also says LAPD is accusing the LA County Sheriff's Dept of the same thing.