Unfortunately, all group housing has this effect on people. Even young babies in orphanages do worse in group settings compared to one on one care.
There is something inherently damaging when we put people on an assembly line and remove their individuality and personhood. We can see this over and over again in many different settings.
I have lived in several states that already just give disabled people apartments and have caregivers check in as needed. This system already exists and works really well. It lets the disabled person pick out a living situation that works with them and their needs. It lets them have a home.
Disability is very complex and often people have many disabilities. A person with diabetes and food allergies could die living in a group home. Many group homes are not very accessible for certain disabilities. And many disabilities have accomodations that directly contradict each other. For instance, you may need a wide hallway for a wheelchair, but a different resident needs to sit down in the hallway if they feel faint and may block the hallway for a chair. Or a person with a seeing eye dog may conflict with a person who has a severe dog allergy. Both people deserve housing that fits them individually.