PurposeDuring the latter part of the twentieth century, mental hospitals, originally built to provide asylum from the excesses of “community care” in the 1800s, began to be perceived as themselves damaging. Therapeutic communities within traditional hospitals offered a hopeful alternative. This paper aims to provide a succinct historical critique of the developments.Design/methodology/approachNarrative and historical review.FindingsAttempts at reform met with varying degrees of success. Some communities closed down in the wake of public scandals while others were eminently successful. Organisational change presented social and psychological threats which were difficult to overcome. Leadership was an important factor in determining the outcome.Originality/valueThis paper gives an insight into the social‐psychiatric approaches and organisational theories of the time. It is published in the belief that many of the themes remain relevant today.