The powerful anti-psychotic drug thorazine was introduced in 1956, and hospitalized schizophrenics began being treated with medication and discharged into their communities.
Schizophrenia is, essentially, a disease which distorts thoughts and perception.
Thoughts may well be so jumbled that the patient cannot make even a basic decision. Perception can be so altered that the patient sees and hears things that are not there. It's a myth that all people with severe mental illness need to be hospitalized. Some do, of course, require custodial care. But many more do very well with medication, family support, occupational therapy and psychotherapy.