A common term for this trend is "deinstitutionalization". There is a pretty extensive Wikipedia article under that title.
Here is a critical review of the book <em>Nowhere to Go</em>, both of which were published in the late 1980s. This book was influential in promoting the argument that deinstitutionalization contributed to a crisis of homelessness.
Here is an interesting Washington Post blog post analyzing how deinstitutionalization worked out better for populations with developmental and intellectual disabilities than for those with psychiatric illnesses.
Finally I'll quote from the abstract of an article (published in 2006) which may still reflect the consensus supported by relevant research to date:
>Although homelessness among the chronically mentally ill is closely linked with deinstitutionalization, it is not the result of deinstitutionalization per se but of the way deinstitutionalization has been carried out. The lack of planning for structured living arrangements and for adequate treatment and rehabilitative services in the community has led to many unforeseen consequences such as homelessness, the tendency for many chronic patients to become drifters, and the shunting of many of the mentally ill into the criminal justice system. it has become clear after two decades of deinstitutionalization that what is needed is a vast expansion of community housing and other services and a whole revamping of the mental health system to meet the needs of the chronically mentally ill for support and stability. In addition, mental health professionals must accept the full extent of the dependency needs of many chronic patients.