New Report: New York’s Deinstitutionalization Era Is Over

The state is rebuilding psychiatric care after years of strain on NYC systems 

NEW YORK, NY – In 2014, former Governor Andrew Cuomo launched the “Transformation Plan” to overhaul New York’s mental health system. The plan prioritized reducing inpatient psychiatric services and shifting care to community-based programs. By the time Cuomo resigned in 2021, the state had lost more than 700 state psychiatric hospital beds. Critics warned that the state's efforts to deinstitutionalize shifted the burden and costs to New York City by straining other systems like homeless shelters and jails. 

In a new Manhattan Institute report, senior fellow Stephen Eide updates his 2018 analysis on the “Transformation Plan” and its impact. He finds that although the plan remains official state policy, Governor Kathy Hochul’s shifting priorities signal the end of deinstitutionalization. The state has gained 300 psychiatric beds since Hochul took office, which marks the first net gains in decades.  

Eide argues that city systems, especially jails, remain under pressure but the picture is more promising than it was in the late 2010s since Hochul stabilized New York’s psychiatric hospital bed supply. 

To guide policymakers in this new era of mental health, Eide offers the following recommendations:  

1. Continue to replenish bed capacity in state psychiatric centers and general hospitals. 
2. Stop using rising demand for mental health services as a metric of success and instead focus on levels of need or patient severity. 
3. Ensure the state takes greater responsibility for untreated serious mental illness, reducing the burden on city government. 

Click here to read the full report.