Perú tops the global ranking in terms of mortality rates from COVID-19. This study explores the effects of geographic proximity to overburdened hospitals on mental health outcomes during the COVID-19 crisis in Perú. By using microdata along with a difference-in-differences approach, the analyses reveal a significant increase in depression symptoms for individuals residing in closer proximity to overwhelmed hospital facilities. Results are consistent regardless of whether we use administrative data or self-reported information from national health surveys. Heterogeneity analyses indicate that women, young adults, and people from relatively more affluent households drive these adverse effects. In line with health and urban economics perspectives, negative externalities, primarily congestion and chaos proxied by in-hospital mortality and hospitalizations, and acoustic pollution from ambulance noise are the channels that explain these adverse effects on mental health.