This is a psychiatric issue, just not one that requires inpatient care.
Also we don’t discuss palliative care enough as a society eg: you are welcome to refuse treatment and suffer then die of your multiple chronic illnesses, but you will be much more comfortable doing it at home. I’m a DNR before the age of 30 for this exact reason: I wouldn’t do chemo or transplants or any of that either: just let me glide quietly into that good night on a slip-n-slide of benzos and opiates.
I agree with the MD that discharge is the best option. The bed will be much better suited to a patient that is able to perceive inpatient care as beneficial, because this man clearly does not.