I examined the factors that led to the rise and fall of psychiatric hospitals and its impact on two select groups of individuals: adults and older adults with severe mental illness. To explore the reasons behind these fluctuations, the State of Texas was used as a case study. Additionally, the fluctuations occurred for different reasons in public vs. for-profit investor-owned psychiatric hospitals. Using an investor-owned psychiatric hospital organization as a case study, I investigated the differences in factors that influenced the growth and/or demise in public vs. investor-owned psychiatric hospitals. Evolution and devolution of psychiatric hospitals was assessed during select time periods: 1700 to1930, 1940 to1970, 1980 to 2000, and 2000 to present. Time period selections were relevant to the important drivers of the span of time that influenced the psychiatric hospitals. Historical review and trend analysis was used to identify the total number of psychiatric hospitals and/or total number of psychiatric hospital beds and psychiatric hospitals by type. Analysis showed there was a cyclical pattern of evolution and devolution of psychiatric hospitals and each cycle altered the form, function, and role of the psychiatric hospital along with altering the location of care for adults and older adults with severe mental illness. The research results suggest a long-stay residential facility, specializing in evidence-based treatment for adults and older adults with severe mental illness, to counter the dire shortage of psychiatric hospital beds.