It may be surprising to learn that serious mental illness—such as schizophrenia, bipolar disease and severe depression—afflicts about one in 20 Americans. Some of us have encountered these conditions in the experience of family members. Others see it routinely on display on city streets. By now, as Thomas Insel notes in “Healing: Our Path From Mental Illness to Mental Health,” we know much about the brain and about the ways in which it can malfunction. Yet the outcomes for people treated for serious mental illness are often poor, he says. Why?

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It may be surprising to learn that serious mental illness—such as schizophrenia, bipolar disease and severe depression—afflicts about one in 20 Americans. Some of us have encountered these conditions in the experience of family members. Others see it routinely on display on city streets. By now, as Thomas Insel notes in “Healing: Our Path From Mental Illness to Mental Health,” we know much about the brain and about the ways in which it can malfunction. Yet the outcomes for people treated for serious mental illness are often poor, he says. Why?

A psychiatrist and neuroscientist who headed the National Institute of Mental Health in 2002-15 and has since returned to the private sector, Dr. Insel is well-positioned to answer the question. In “Healing,” he outlines the treatments that currently exist, describes the obstacles that many people face, and shows how care programs might be designed to work better. The core of his argument is quickly grasped: “We’re not taking advantage of the science we have.”

Dr. Insel starts his analysis with two contrasting scenarios. Young Roger was once a neighbor of his: During Roger’s last year of high school he began hearing “alien voices.” A doctor prescribed crucial medication, but Roger stopped taking it. He became so agitated that his father had to call 911, and the police were dispatched. Hospital beds were scarce, and state law made it impossible to commit Roger to involuntary care. Psychotic and unable to care for himself, Roger ended up homeless.

Dr. Insel met Brandon at a mental-health fundraiser several years ago and learned about his history. In his late teens, Brandon had become increasingly irrational. Unlike Roger, though, he was able to embark upon a continuous and coordinated long-term plan that addressed every area of vulnerability. There was medication for his delusions and coaching for his social skills. He received employment support. Brandon, Dr. Insel says, shows what can go right. Roger’s story, a far more common one, reflects the “crisis of care.”

The statistics are depressing. Only about 16% of people with severe mental illness are receiving even “minimally acceptable” treatment. Many of the others land in jail cells or squalid street encampments, or languish in back bedrooms. Psychiatrists are heavily concentrated in high-income urban areas, with half of all U.S. counties having no psychiatrists at all. Paying for treatment can be a challenge, too: Almost 60% of psychiatrists don’t accept Medicaid, and 45% don’t accept private insurance. There are only 12.6 public hospital beds for mentally ill patients per 100,000, a quarter of what analysts estimate we need.

These stark deficiencies move Dr. Insel to investigate programs that, in their creativity and effectiveness, are worth imitating. Roger’s father, as we remember, had become so frightened of his troubled son that, like other parents in such circumstances, he ended up turning to the police. In Maricopa County, Ariz., by contrast, parents (or any concerned person) can call a special toll-free number. A dispatcher deploys a van with a mobile crisis team, including a psychiatric nurse.

The University of Washington in Seattle has perfected so-called collaborative care. A staff member is assigned to focus on “the people who may not be asking for help or might be falling through the cracks,” as the program’s director puts it. “This person’s job is to integrate medications and psychotherapy with programs aimed at meeting social needs.” In Britain, the Improving Access to Psychological Therapies program has trained more than 7,000 therapists; they provide help for anxiety and depression to nearly 600,000 patients each year, as Dr. Insel reports.

Dr. Insel emphasizes that well-designed programs for recovery should aim at “finding connection, sanctuary, and meaning not defined or delimited by mental illness.” Ideal long-term care, after initial contact, would include the sustained attention of a team, including a social worker and an occupational therapist. One goal would be to help the patient navigate a return to school or work, thus avoiding isolation and self-destructive rumination.

Because Dr. Insel is such an understated writer, it is easy to miss the audacity to be found in “Healing.” He confesses to having long “misunderstood the problem” of treating mental illness—as did most of the profession he helped to lead for two decades. “While we studied the risk factors for suicide, the death rate had climbed 33%,” he writes. “While we identified the neuroanatomy of addiction, overdose deaths had increased threefold. While we mapped the genes for schizophrenia, people with the disease were still chronically unemployed and dying 20 years early.”

The reality of this failure dawned on him a few years ago during a public lecture in Portland, Ore. He was clicking through a PowerPoint presentation highlighting the achievements of his scientists at the National Institute of Mental Health: high-resolution scans showing brain changes in people with depression and abnormal branching in the neuronal cells of children with schizophrenia.

The first question came from an exasperated father in the audience. He said that his schizophrenic son had been in and out of hospitals, had attempted suicide several times, and was now homeless. What, the man wanted to know, were all those great lab discoveries doing for his child? “My mouth suddenly felt dry,” Dr. Insel writes. “But in that moment, I knew he was right.” Nothing in the lab per se was addressing the “urgency or magnitude of the suffering.”

Dr. Insel has made the most of the revelation, traveling widely to identify the crisis of care and look for solutions. “Healing” is the product of this odyssey—and a compelling summary of all that he learned along the way.

Dr. Satel is a senior fellow at the American Enterprise Institute and a visiting professor at the Columbia University’s Vagelos College of Physicians and Surgeons.