Home

In Madness Returns, it is unclear how much of this hallucination is based on reality: although Alice did experience many forms of treatment at Rutledge. There are signs of blood on the walls and people floating, which probably hadn't really happened as well.
It is possible that Alice remembers Rutledge (or a least some of it) worse than it actually was. Another interpretation is that this hallucination is not a memory of Alice's actual past experience in Rutledge but rather her fears of what would happen to her and what treatments she would endure if she was forced to return.