The Sanity System was mostly based on the Gamecube classic: "Eternal Darkness: Sanity's Requiem".
The player characters in Eternal Darkness had a Sanity bar, which determined the possibility of experimenting hallucinations, as well as the intensity of these. These hallucinations were meant to scare and throw the player off, even sometimes breaking the fourth wall. The concept is very original and works as a nice horror game gimmick, but one criticism that could be issued is that the game fails to make the player doubt on the veracity of those hallucinations. The sanity system we designed for Hippocratic Oath set out to focus on that particular element.
The nature of the protagonist's profession as a surgeon and investigator in this time was filled with decisions that would take a toll on their mental health. Becoming the doctor is a big part of the game: not only doing operations, but managing time, resources and choosing how to proceed with the investigation. Every decision has a price, and usually, that price is sanity.
Unlike in Eternal Darkness, the sanity in Hippocratic Oath is not constantly displayed. It is shown once every in-game week and the changes of sanity are signaled, but not specified in quantity nor direction. The hallucinations can affect the player both in and out of the operations, usually elevating the difficulty of different situations, so it is best to avoid going insane. However, many hallucinations aren't clear as to whether or not they actually are real. Many situations in the game are designed to keep the players doubting. This all plays into the paranoia aspect of the game, and gives weight to the decisions, putting the players in risk/reward situations if they want to progress in the game's story.