That's interesting, and it sounds like a nightmare for a normal person, but for someone whose brain is broken, isn't it precisely what is needed?
Sure, to you or me being locked in a facility and having every decision made for you would be torture. But for the patients of those facilities? Out in the real world, they just can't survive independently -- there's too much that they're expected to do that is simply beyond their grasp. They have to get a job, but they are unemployable. They have bills to pay, but because they are unemployable they have no money. There are innumerable laws, rules, and societal norms that they are expected to follow that they simply cannot understand.
The truth is, there are people out there who are incapable of managing even the basics of their own lives, and they need to be cared for somehow. Like with everything, I'm sure there's an opportunity for abuse, but I feel like the alternative - just dumping them out on the street and expecting them to figure it out on their own - is even more cruel.