Managers of the hospital used a $10,000 appropriation from the state to purchase a large amount of farmland on a hill overlooking the Ohio River to the north of Pittsburgh in what is now suburban Kilbuck.

Like many psychiatric hospitals, Dixmont became overcrowded during the 1920s due to the rise of posttraumatic stress disorder (PTSD) patients from World War I.

The hospital took in as many patients as they could fit until beds lined the hallways, but was eventually forced to stop accepting new admissions.

Dixmont began experiencing financial difficulties as early as the Great Depression where they could only afford to supply employees with room and board; no salary.

As the concept of deinstitutionalization and use of Thorazine progressed, large state institutions were becoming obsolete and patient numbers decreased rapidly.

By 1983, several floors of Reed Hall were empty and unused buildings such as the canteen and men's annex were demolished to prevent fire hazards.

By 1999, time and many fires had left the crumbling building useless, and the State sold the 407-acre (165 ha) property to a private owner.

In 2005, a local developer made an agreement to convert the 75 acres (30 ha) of that land that contained most of the buildings and demolition began in preparation for a shopping center that would be anchored by a Walmart Supercenter.

Subsequent excavation destabilized the hillside and landslides covered Pennsylvania Route 65 and the Pittsburgh Line railroad tracks on the Ohio River side, shutting them both down for weeks.

In addition, Pennsylvania law prohibits the state from selling grave sites, so the hospital's own cemetery, in which many of the patients were buried with simple stones marked only with index numbers, remains state-owned.

Early on, it had gas lighting, a central hot air system for heat, and more than ample supply of water from the Ohio River.

Built in the early 1900s and designed by Frederick John Osterling, this building contained the main kitchen at Dixmont, the large freezers, and storage areas where food was kept.

The $2 million Cammarata Building was the geriatric center of Dixmont and housed a significant portion of the hospital's patients towards the final years.

These included the Men's Annex (which housed many of the patients who were trusted with work details in the further reaches of the property), greenhouses, stables, barns, garages, and many cottages.

To the left of Reed Hall stood the maintenance building which housed the carpenters', electrical, and machinist shops, as well as a basketball and shuffleboard court on the upper level.