INDIANAPOLIS -- Gov. Mike Pence announced a plan to build a new hospital focusing on mental health and drug addiction.

The 159-bed Indiana Neuro-Diagnostic Institute is planned to be open on the campus of Community East Hospital sometime in 2018.

“This new institute will serve as the centerpiece of our ongoing commitment to improve mental health care and address the scourge of addictions in Indiana,” Pence said in a statement. “This new institute is another part of our strong commitment to improving health care in Indiana and to caring for our most vulnerable fellow citizens, including those living in poverty, with disabilities and impaired from psychiatric illnesses, brain diseases and addictions.”

It is expected to cost about $120 million, financed through 20-year taxable bonds.

The institute will serve as a hub for resources for mental health care and addiction treatment, Pence said.

It will treat 1,500 patients per year.

Pence said in talking with law enforcement officials, it became clear the state needed to do something bold about mental health care.

"The reality is, as prosecutors across Indiana have told me, is oftentimes the only place they can send someone who’s caught up in drug addiction or mental health issues is to jail," Pence said. "As you heard today, it's heartbreaking to think that 50 percent of inmates incarcerated in Indiana prisons today struggle with either mental health issues or substance abuse issues. The state of Indiana's prisons, sadly, are the largest provider of mental health services in our state. And that's just got to change."

Watch Rafael Sanchez's full interview with Gov. Pence in the video player above.

He also said he believed the state, and the country, went in the "wrong direction" in the 90s by closing large mental health facilities.

"Indiana, decades ago, joined virtually every other state in the union and we moved away from a commitment to institutional care for mental illness," Pence said. "It's hard to look at the impact of mental health in our communities and not think that the country went in the wrong direction from institutional care. There were problems with that system that needed addressed. But when you see the incidence of mental illness among our homeless, when you see the burden that it places on our hospital emergency rooms, when you see the prevalence of mental illness and substance abuse in our prison population – all of that says it's time to rethink our commitment to mental health."

Construction is set to begin in April 2016.

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