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The issue with your proposal is that you have to provide the guy with some form of due process, and you'd need to establish what is practically an entirely separate division of the court system to do this. One of the reasons institutionalization started to wane in the 1960s was that the existence of psychiatric drugs meant that a lot of the people who were previously hopeless were now capable of leading normal lives. These people obviously didn't want to continue to be committed to a nuthouse, and the state has no interest in supporting people who are capable of supporting themselves, but there was an impasse because many of these people had lifetime insanity commitments. So the laws changed to require periodic reviews to determine if there was still reason for commitment. These reviews, of course are expensive, as you need to have a judge available, a representative of the state available, get an advocate for the inmate appointed, get testimony from doctors, etc. For every inmate, like once a year. So the goal became getting people with mental health problems either on their own or into group-home type settings where they could potentially have jobs outside and lead somewhat normal lives. This is obviously only one factor in the demise of institutionalization, but it's the relevant one for my case.
By and large, the system has worked. Historically, the main institutions for the Pittsburgh area were Mayview State Hospital and Woodville State Hospital. Mayview had over 3700 patients at its peak in and Woodville had 3200. By the time Mayview closed in 2008 it had a mere 225. By contrast, the winter 2022 homeless population of Allegheny County (the most recent year for which data is available) was 880, and only about 250 of them had severe mental illness. You could house all of the county's homeless population at just one of the old hospitals, though I'd personally want to limit it to people with mental illness, drug addiction, chronic health problems, and physical disabilities. In one fell swoop you eliminate all the people who are wither causing problems or are charity cases in need of treatment (I'd try to keep domestic violence victims separate because they are neither causing problems nor in need of treatment).
I'd propose a system where if someone gets arrested for something minor and meets certain criteria, like having a history of being homeless and committing the kinds of crimes the homeless commit, the prosecutor gives them the option of living in a voluntary residential community similar to a state hospital. The person could also be referred by a social worker if they aren't causing problems but are chronically homeless and have health problems or disabilities. If they opt in they are evaluated and either put into a treatment program or labeled long-term if it's unlikely treatment is going to help. Once in, they'll be given treatment they need and plenty of recreational activities, etc., including the opportunity to work if they so desire. They're free to leave at any time. That's the carrot. The stick is that there is a crackdown on public disorder caused by homelessness. If you don't opt in you will be prosecuted, and your social worker ain't gonna save you, because she wants you in the program. If you opt-in the program but leave before your treatment program is over or before 2 years in the case of chronics, you'll forfeit your right to go back into the program and will be dealt with by the legal system. The place would be nice but just crappy enough that no one who can live independently would live there voluntarily. I'm thinking mid-level assisted living facility.
That probably takes care of about half the homeless population. With them out of the way, we can focus on housing and employment and all the other things without them getting fucked up by the problematic people. Housing a bunch of strangers in a large dormitory is a lot easier when you know that none of them have any particular inclination to use drugs or steal from other residents or harass the women. The goal here should be to make sure that they have a place to sleep and keep their stuff and take a shower and do laundry so they can stay presentable for the the job market and either keep their jobs if they have them or go back to work if they don't. These places wouldn't have all the amenities as the institutions but there would be no restrictions on coming or going and would be more like a college dorm. The only real difference is that you're still in "the system" and any arrests or violations of drug policy (I'm thinking obvious signs of use, not mandatory searches) would have you shipped of to the institution or to jail.
It would be expensive but, honestly, if the state was willing to pay for round the clock care for over 7,000 people in Allegheny County (plus a few surrounding counties) in 1967, then doing less for fewer than a thousand should be a no-brainer. Hell, with commercial real estate in the shitter you could easily take a few floors from a downtown office complex and use that to house the normal homeless. The problematic ones would have to be on an estate with grounds somewhere out in the countryside since you can't just bottle them up like it's a prison, and that could get expensive since the sites of the old ones are now all luxury homes, but hey, they shouldn't have gotten rid of them in the first place.
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