Acting Sergeant Paul Alden, of Waimate, said the 24-year-old Waimate man was found on Tuesday morning hiding among bushes behind the Waimate Museum.
He believed the man had hitchhiked from Invercargill to Waimate, Acting Sgt Alden said.
The man was allowed 10-minute breaks from the Invercargill site, but on this occasion did not return when supposed to.
Southern District Health Board spokesman Brad Strong described the incident as an "unusual circumstance".
He would not say if the man was a risk to public safety, when the hospital first became aware he was missing, what the hospital did when it was realised he was missing, or when staff notified police.
In a statement he said he was unable to discuss individual cases due to privacy.
The vast majority of mental health inpatients received care in an open environment where they were free to receive visitors as well as come and go as they wished, he said.
"On rare occasions, clients have been mandated by the courts or their clinical needs are such that an increased level of close support or security are needed for their and others’ protection.
"Our staff is well trained to support those clients and we have more secure, locked nursing wards for their care."
He would not say if anything would happen with the security process in place as a result of the incident, or how often people left the unit when they were not supposed to.
