It is still happening

Here in the US, orphanages were mostly phased out in the 1970's, as it was determined that foster care provides better opportunities for development in a more family-like environment.  Foster care is far from perfect, of course, and many children passing through the system are severely traumatized by repeated reassignments, as well as outright abuse and neglect. It is, however, far superior to the alternative which it replaced.

In most of Eastern Europe, orphan care looks like this:  Young babies and toddlers are placed in "Baby Houses", or orphanages for the pre-school set, where they live with their "groupa" and have basic needs met by orphanage staff.  The staff may be caring or abusive, depending on the orphanage, but in most places the baby houses are more or less ok.

"Kyle" as an adorable toddler with Down syndrome at a Russian baby house, 2 years ago.

As they reach school age, healthy, typical children are transferred to an older-child orphanage ("internat"), where they go to school together with their groupa-mates. Children with disabilities (whether mental, physical, or medical), however, are usually transferred to an adult mental institution.  Care at these places is usually far, far worse.  Most American animal shelters are held to a higher standard than these institutions. Children are routinely underfed and denied medical attention.  Many are drugged in order to keep them quiet, tied down to their cribs. Vulnerable and forgotten, they are frequently victimized, beaten and abused by the very people charged with their care.

"Kyle" shortly after transfer to a mental institution last year.

Fully 85% of special-needs children transferred to adult mental institutions die within their first year there.  "Kyle", whose chance to be adopted dropped to near-zero last year when Russia outlawed international adoption to Americans, has joined these statistics this week.

Baruch Dayan Emet, "Kyle"