The real story was much more of horror and much less of fable

It was in Chechnya (not in Ingushetia) and in winter of 1995 (not the summer of 1996):

During the first Chechen war, the psychiatric hospital in Shali in the south of the republic, which is the subject of the film, became one of the most potent symbols of the inhumanity of the conflict after dozens of patients were left to their fate by staff fleeing the bombing.

The last surviving patients lived in freezing rooms full of their own excrement. They had almost no food, no doctors and no outside help except for a local volunteer. They had no light or heating and the most severe cases were left padlocked in cages, where many died.

Patients were often too ill to understand the war which raged around the building. As shells fell on the horizon they would gather by the side of the road, dazed and bewildered. On one occasion the hospital was attacked and looted by soldiers and drug addicts, who took away the last of its medicines and syringes.

http://home.conceptsfa.nl/~mlassauw/bryan/articles/bryan_adams_rocks_way.htm