The only hospital in New Orleans providing in-patient mental health treatment will close next month despite an epidemic of psychological problems plaguing the hurricane-ravaged city.

Even as it faces a skyrocketing suicide rate and increases in cases of depression and post-traumatic stress, the Gulf Coast city is slated to lose the New Orleans Adolescent Hospital, which has been the center for mental health care for residents young and old since Hurricane Katrina devastated the city nearly four years ago.

The shutdown "is extremely unfortunate for New Orleans and for the many children who will be left without what had been an excellent resource," said Dr. Irwin Redlener, president of the Children's Health Fund and a professor at Columbia University's Mailman School of Public Health. "I am amazed that nobody in government has found a way to step in and save that resource. But I am quite sure that this is going to have disastrous consequences for the community."

The New Orleans Adolescent Hospital, which is scheduled to close Sept. 1, had operated exclusively for children and adolescents prior to Katrina. When the storm wiped out New Orleans' Charity Hospital, NOAH was the only facility to offer in-patient mental health care. Its closure will save Louisiana $9 million, which it says it will spend on outpatient mental health programs.

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Louisiana Secretary of Health and Hospitals Alan Levine said in a statement to ABC News that NOAH is "a relic of the past" that was built to institutionalize mentally ill youth, not help them. In the wake of its closure, the state is reopening clinics around the New Orleans area. "While I understand this move has brought objections from some, it is important to point out that what we had was NOT working," Levine wrote in his statement.

The state is slated to relocate NOAH patients nearly 30 miles away to a hospital in Mandeville, La., a move critics say will hurt needy patients who relied on the local hospital for inpatient and outpatient care.