The poorhouse population exploded in the early 1800's and conditions in the poorhouses ranged from barely tolerable to horrific. They were often run by people who got their jobs as political favors. The operators often did as little as they could get away with in exchange for a paycheck, and the governing bodies often did as little as possible to keep costs down and discourage over-use. The operators were particularly incapable of caring for mentally-ill residents. Dorthea Dix reported finding women chained and kept in pens in some poorhouses. The insane patients, criminals, and alcoholics frightened, and sometimes injured, the frail elderly living in the same rooms.
Ending up in a poorhouse was everyone's nightmare. Songs like "Out from the Poorhouse" illustrated the public perception. In that song, a man bemoans the fact that he gave his children his farm and all his savings and they sent him to the poorhouse instead of taking care of him.
The poorhouses were becoming enormously expensive. "Ohio, which is not especially afflicted with pauperism, pays more than half the money obtained by the state taxation for the welfare of her criminals and paupers; and the estimate does not include the public charities of her cities, or any township aid." (The Atlantic Monthly, 1881)
One way to control cost and deter use was by segregating the poor. New York City purchased Blackwell's Island (now called Roosevelt Island) in 1828 as a remote spot for their paupers. On Blackwell's Island they built a penitentiary for criminals, men's and women's almshouses for the poor elderly, hospitals for those who were poor and ill (Charity Hospital, Smallpox Hospital, and the Hospital for Incurables), a workhouse for the able-bodied poor, and a lunatic asylum for the poor who were mentally-ill. (NYC Corrections History)
In response to the growing concerns about abuse and squalid living conditions, nine states (Massachusetts, New York, Rhode Island, Pennsylvania, Illinois, Ohio, Michigan, Wisconsin, and Kansas) created state-run "Boards of Charities" in the mid-1800's to oversee and report on the local poorhouse operations. These boards, precursors to today's Departments of Welfare, were supposed to inspect and control the poorhouses, and the reports they produced led to some efforts to improve conditions and to "classify" residents to separate the insane from the sane, and the dependent elderly from the able-bodied.
The growing costs, combined with the rising concerns about quality, arose from the inherent conflicts between the desire to provide good care to those who were truly needy and to reduce the cost to the taxpayers.
"Generally, the county officials lean to the side of mercy; the quality is not strained, since it costs them nothing; for, be it noted, there are two sets of principals in the business, the county directors or supervisors, who manage the almshouses, and are responsible for their expenses, and the justices of the peace and poor overseers, who commit paupers to the almshouses, and have nothing more to do with them. It is for the interest of the poor directors and supervisors to have as few paupers in the almshouse as possible; it is for the interest of justices, who are paid for each order they write, and of overseers, who depend for reelection upon the suffrages of the poor but warm hearted populace, to show a liberal spirit. And, as Sydney Smith has observed, everybody is full of humanity and good nature when he can relieve misfortune by putting his hand into his neighbors pocket. Who can bear to see a fellow-creature suffering pain and poverty, when he can order other fellow-creatures to relieve him? The result of all this is that, practically, most States give almshouse lodging to any one having a settlement who can bring himself to ask it." (The Atlantic Monthly, 1881)
There was a lot of debate about society's role in caring for the poor, but by the mid-1800's, many felt that the "deserving" poor, like children, the insane, and the elderly, should get better treatment than the "undeserving" poor, like alcoholics and those who were healthy but shiftless or lazy. Reformers like Dorthea Dix convinced legislatures to develop better facilities to care for the mentally ill, and they were gradually moved out of poorhouses. Laws prohibiting children from residing in poorhouses were passed, and the children were moved into orphanages.
That left poor, dependent, elderly adults who had no place else to go as the last group of the "deserving poor" who needed a place of their own, but the poorhouse was still the only public facility available for them. They were sometimes treated slightly better than the "undeserving" inmates, as in New York and Boston where the elderly were eventually separated from the rest of the poorhouse population. Nevertheless, they were still in a poorhouse. (New England Magazine, 1898)
In spite of the problems of the poorhouse system, most people seemed convinced that building large institutions was the best way to deal with those who needed help of one kind or another. In the newly industrialized society these institutions built to "efficiently" care for the poor, the sick, and the elderly bore an eerie resemblance to factories. They were large, warehouse-like buildings that housed dozens, or even hundreds, of people. "Inmates" slept in huge dormitories, with their beds beds neatly organized into rows, and ate at huge tables in a dining hall where meals could efficiently be served.
"The poor and the insane customarily were relieved within the family [in the Colonial era], the orphan was apprenticed to a household, the criminal, after being fined and perhaps whipped, was then returned to his residence. The 18th century community had recourse to institutionalization only when some extenuating circumstance--such as debilitating illness or violent insanity--made no alternative arrangement feasible. These ad-hoc institutions that came into being during the colonial era resembled the household both in routine and construction."
"In the decades after 1820, America turned with unprecedented enthusiasm and energy to the construction of custodial institutions for the poor, the insane, the orphan and the criminal. Institutionalization now became the first rather than the last resort. The institution and not the household became the preferred setting...Americans during these years also seem to have shared a confidence in the ability to design an environment and construct a setting in which these faults could be eliminated and the causes of dependency thus eradicated...And, understandably, with the beginnings of a factory system, the institutions built after 1820 were more influenced by and more nearly resembled the factory; whereas those built before 1820 more nearly resembled the household." (Abe Bortz, 1970)