Institution superintendents began asking the states to pay for indigent custodial care, arguing that this would relieve communities of their poorhouses and almshouses. Providing persons with disabilities with safety and shelter, they argued, was the best they could do. This was the beginning of what David Vail later described as the dehumanizing process. Unlike the early training schools, the new institutions no longer encouraged interaction with the community. They were located in rural areas and away from the view of most people.

As the institutions grew in size, superintendents became more concerned about how economical they could make their facilities and less concerned about helping residents return to the community. The superintendents of these institutions worked toward self-sufficiency, to reduce their interaction with and dependence upon government support. Many institutions had their own power plants, laundries, and farms.