Indianapolis, IN — A new study from the Regenstrief Institute and Indiana University School of Medicine finds that nursing home residents with serious mental illness often remain in facilities far longer than necessary due to a tangle of systemic barriers — most notably a lack of affordable housing, fragmented mental health services, and persistent stigma in the community.
Published in the Journal of the American Geriatrics Society, the qualitative study draws on interviews with 28 stakeholders across Indiana, including nursing home leaders, social workers, mental health clinicians, and state officials. Researchers say the challenges they identified mirror issues in other states and likely affect hundreds of thousands of residents nationwide.
What the researchers found
Investigators reported a “perfect storm” complicating discharges for residents with serious mental illness — conditions such as schizophrenia, bipolar disorder, or severe depression with psychotic features. The most cited problem: a shortage of community-based housing options that can provide appropriate supports, with waitlists stretching a year or more in some areas.
Participants described a fractured system in which coverage is siloed — Medicare and Medicaid will pay for a nursing home stay, but arranging community services like assertive community treatment teams, case management, or 24/7 supports requires separate approvals and coordination that can take months. Landlords and some providers also balk at accepting tenants or patients with serious mental illness, despite clinical stability, due to fears of behavioral crises.
“Nursing homes are not equipped to provide the specialized mental health care that residents with serious mental illness need,” lead author Dr. Kathleen Abrahamson said in a statement. “The barriers we identified — housing scarcity, service fragmentation, and stigma — create a cycle of unnecessary institutionalization that harms both residents and the facilities themselves.”
Long stays, higher risks
The study describes residents remaining in nursing homes for 18 to 24 months or longer after their physical rehabilitation needs are met, often leading to isolation, deconditioning, and medication overuse. While the research focused on Indiana, it references estimates that roughly one in five U.S. nursing home residents — more than 300,000 people — are living with serious mental illness.
One anonymized case involved a man in his early 60s who completed recovery from a hip fracture but spent 18 additional months in a facility because no community provider would accept him without round-the-clock supports. By the time approvals were in motion, staff said his mobility and mental health had declined.
Policy gaps and potential fixes
The authors point to well-known legal and regulatory guardrails — such as the Supreme Court’s Olmstead decision promoting community integration and federal rules requiring individualized discharge plans — but say enforcement without local housing and service capacity has limited impact. Recent federal reviews have raised similar concerns, warning that inadequate community infrastructure keeps people in institutions longer than medically necessary.
To break the logjam, the study recommends expanding programs that fund community transitions, such as Money Follows the Person, and building integrated models that coordinate physical and mental health care across settings. Researchers also urge states to streamline prior authorizations and strengthen partnerships between nursing homes and community mental health providers to prevent residents from languishing while paperwork moves.
Why it matters for providers
For operators, prolonged stays for residents with serious mental illness strain staff and budgets and can slow bed turnover for other post-acute patients. Industry sources note that facilities with higher concentrations of residents with complex behavioral needs face increased costs and regulatory scrutiny, including potential audits tied to discharge planning.
The research team emphasized that the problem is not unique to Indiana and has been exacerbated since the pandemic by staffing shortages and bottlenecks in community services. While the study’s sample was limited to one state, the authors say the themes are nationally applicable.
What’s next
The paper, published October 2, 2025, calls for states and federal agencies to align financing and accountability around community transitions for residents with serious mental illness. The Regenstrief summary, posted October 31, notes the work was supported by the National Institute on Aging. Policymakers are weighing proposals to tie quality measures to successful transitions, while advocates push for more funding to expand supportive housing.
“Without targeted interventions,” the authors conclude, “nursing homes will continue to serve as de facto psychiatric facilities,” undercutting the goal of helping people live in the least restrictive setting possible.
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