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Now known as Lyon's View, the new name was taken from William Lyon who made his home on the grounds before the development of the hospital.
On March 31, 1874, the daughters of William Lyon, Mary Lyon Craig and Louise Lyon Barnes, conveyed approximately 300 acres of the Lyon property to the State of Tennessee for the establishment of a "Hospital for the Insane," which would be directed by Charles McClung McGhee, P. D. Sims and John G. King. Shortly thereafter, the State began construction and operation of the mental health institute that continues to occupy a large portion of the site today.
1886 saw the opening of the East Tennessee Hospital for the Insane (now Lakeshore Mental Health Institute) in Knoxville with the transfer of 99 patients from the Nashville hospital.