The establishment of the clinic was a significant and decisive event in the city's history. On the one hand, the clinic was considered a socially, medically, and structurally modern location for its time, and on the other, it was associated with the establishment of a new neighborhood, the waiting village, with a school, hotel, and post office. In 1904, the city was chosen to establish a 'state institution'. Decisive factors were its natural location, transport links to nearby train stations, and—not least—the inexpensive land.

The institution was designed and built in a pavilion system for approximately 6.75 million gold marks. The ceremonial opening of the main institution for 1,050 patients and a hospital took place on November 26, 1908, and the retirement institution for 150 patients on May 1, 1909.

Throughout its history, the complex was used, among other things, as a hospital during World War I. During the Nazi era, it was integrated into the euthanasia program of 1939. A dedicated Wehrmacht hospital was established, and the 1,884 patients of the then-state institution were murdered for being 'unworthy of life'. At the end of the war, the institution's managers and doctors all belonged to the Nazi Party (NSDAP) and clearly represented their racist and racial hygiene ideas in the healthcare system. The Red Army occupied the area and took possession of the complex on April 27, 1945. From May 1945, the Soviet hospital occupied most of the former main institution, including all administrative and business buildings.