Inspirational treatment, star patients and family feuds. John Fitzpatrick and Lawrence Friedman on the rise and fall of an elite psychiatric clinic.

Very soon, the world-renowned Menninger Clinic in Topeka, Kansas, will close its doors. From an American perspective, this news is very significant. Until fairly recently, Menninger was America's foremost psychiatric hospital. Its staff included many leaders of the mental-health professions, especially psychiatry, clinical psychology and social work. Time-consuming psychoanalytically informed therapy aimed at gaining insight into the nature of a patient's inner emotional distress was the treatment of choice. This focus made the institution a deeply caring long-term treatment centre for people with serious mental disorders.

The Menninger Clinic began in 1919 as a family enterprise with physician Charles and his sons, Karl and Will. It was a private in-patient facility for the US elite (Hollywood celebrities, sports icons such as Green Bay quarterback Brett Favre, and even presidential advisers). Like most of "new psychiatry" facilities of its generation, Menninger embraced a holistic view of mental illness and Freud's small private new "science of the psyche".

The Menningers, like their counterparts, were mental-health missionaries. Charles and Will were congenial and diligent, but they deferred to the brilliant and turbulent Karl. He successfully recruited to Topeka a number of analysts from Freud's inner circle in Vienna and Berlin as they sought to escape from Hitler's anti-Semitic terror. Perhaps more than any other "new psychiatrist" of the 1920s and 1930s, Karl had a knack for understanding deeply disturbed patients. He became a charismatic and inspiring clinical instructor.

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By 1950, Karl had enlarged his facility into an international centre for psychoanalytic and psychiatric training and research. Consisting of the private clinic, Topeka State Hospital, and a new federal Veterans Administration Hospital his emerging non-profit Menninger Foundation exemplified a creative philanthropic partnership between locality, state and nation for mental health reform.

While Karl innovated, Will raised massive funding for his older brother's enterprises. Topeka was where the action was, outdistancing all rival "new psychiatry" centres. Young doctors, psychologists and social workers arrived from all over the world to train at one of the Menninger-affiliated enterprises.

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Yet there were problems. Will resented Karl's mercurial temperament, his self-centredness and his bull-headedness. With increasing frequency, he mended the fences that Karl splintered - with staff, donors and government. By 1965, Will felt that Karl was tormenting prudent Menninger department heads. They were all "dull plodders", Karl retorted. For the first time in his life, the younger brother (titular president of the Menninger Foundation) asserted himself against the older. Will fired Karl.

Characterising the firing as an oedipal revolt of the less-than-talented son against the real "father" of the Menninger experiment, Karl proclaimed that Will had "assassinated" him. Within months, Will was diagnosed with irreversible lung cancer. Before he died, however, he conferred power to his inexperienced son, Roy, a staff psychiatrist. It confirmed to senior staff that blood ties took precedence over experience and leadership skills and many accepted offers to work elsewhere, thus diminishing the capability of the institution to deliver high-quality care.

Roy and later his younger brother Walt, shared the vision that the Menninger Clinic was very nearly immune from realities that other prominent mental-health centres were addressing. They slighted prudent management practices, effective governance and strategic business planning. Gradually, Menninger balance sheets shifted from black to red as competition emerged from urban mental health centres that embraced the latest thinking in biological psychiatry and psycho-pharmacology.

The "new psychiatry" era of labour-intensive doctor-patient rapport and psychoanalytically informed concern with inner emotional life declined; Menninger lost patients, revenues and prestige. As health insurance reimbursements and government grants rewarded institutions that emphasised the utilisation of psychotropic drugs and cost-containment, old-fashioned business practices sealed the end of the golden age of psychiatry for the formerly elite mental health centres in America.

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Roy and Walt tried to fashion a comeback by redoubling their public-relations efforts. But financial crises persisted. During the 1990s annual operating deficits typically exceeded $5 million (?3.5 million). Jobs were slashed and the costly Menninger psychiatric training programmes were reduced. Still, red ink persisted. By 2000, the monthly deficit had risen to $1 million. At this point, deteriorating financial conditions, an absence of determined leadership at Menninger, and a resolve never to operate within the parameters of the new mental-health climate signalled the end. In September 2000, Menninger announced that it would close its doors, sell its name and shift the remains of its endowment to Baylor College of Medicine and Methodist Health Care Systems in Houston, Texas.

Of all the new psychiatry hospitals in America, soon only the small Austen Riggs Center will remain. Like practically everywhere else in the US, occasional 15-minute "medical watches" in Topeka are replacing intensive clinician-patient exploration of the nuances of their very human emotional problems. This system is partly responsible for the psychiatric reinstitutionalisation of recent years that has seen the mentally ill banged up in prison because they have slipped through the care net.

Blair's Britain could find better models than the impersonal and potentially dangerous mental-health-treatment modalities that now prevail in America. This lamentable reality was recently illustrated in Terre Haute, Indiana, where a prominent psychiatric practitioner administered med watch "therapy" to three dozen patients the same day Timothy McVeigh was executed in a nearby federal facility. It is speculation, but McVeigh is likely to have suffered from the kind of disorder - inability to empathise with others - that could have been dealt with in good psychotherapy. Ironically, Karl Menninger was very effective at rehabilitating such people.

John Fitzpatrick, who formerly worked for Menninger, directs the Family Business Resource Center in Topeka. Lawrence Friedman, author of Menninger: The Family and the Clinic (New York: Knopf, 1990), was an interdisciplinary fellow at Menninger. He is professor of history and philanthropic studies at Indiana University.

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