Grace had led a life that was enough to drive anybody mad. So, Grace being Grace, of course it did. For a time she was still able to function as a prostitute - nobody really listens to a whore, after all. But then one day she climbed to the top of the steps at City Hall, bared her breasts, and preached a sermon on universal love and the brotherhood of man. So she was slung in the madhouse.
Even making allowances for the voices in her head, the madhouse was not a particularly good place to be. To begin with, it was filthy. The food was terrible. The company was no worse than what she was used to, but the jailors - they called themselves "attendants"- were unspeakable. Some forced their charges to perform sexual acts with them. Others were in it for the pain they could inflict. We won't go into details. The very best of them were sarcastic little tyrants.
One might as well be in an old age home, one is treated so badly!
The grimmest and best-known joke Woody Allen ever made comes at the end of Annie Hall, and goes something like this: Life is filled with pain and misery and suffering, and then, all too soon, it's over. That's how it was for Grace. Life in the madhouse was unbearable. But just when it seemed things couldn't get any worse, she was released.