The lunatics may well have taken over the asylum. Paul Rooney’s Bellevue, which is at the Spacex – the final stop on its trip around the commissioners (it was first shown at part of a group exhibition Under First at the Bluecoat in Liverpool, then at Harewood House near Leeds, before heading south) – features an advertising agency focus group.

Paul has produced a film, the story of which is based on Malcolm Lowry’s short tale Lunar Caustic, and the ad types are working out how best to use Lowry’s writing in their own work.

Lowry himself based the work on his time in a psychiatric hospital, New York’s Bellevue Hospital in 1935, to treat his alcoholism.

Lowry was lauded for his novel Under the Volcano, but most of his other stories were published posthumously – he wrote Lunar Caustic in the ’30s, died in 1957 and the story was published in 1968.

And this is where it starts to get tricky. The ad people, with all their psychobabble (or should that be marketing jargon), trying to figure out a way of working in Lowry’s modernist style is fraught with problems.

The piece was filmed at Harewood House, Leeds and aims to depict the idealised picture-perfect English country house. Bill, the main character, is taking part in the focus group’s meetings, but he also appears to be taking on the character of the failed jazz musician of Lowry’s Lunar Coast – a character that Lowry based on himself. Eventually, that shadow of the past takes over proceedings.

The artifice is inherent in the title – Bellevue became synonymous with ‘mental hospital’.

Lowry could check out of Belleveue whenever he fancied, and according to Rooney this parallels the privileged position that art has in relation to real life; it is easier to visit states of desperation when you know you can leave at any time.

But then the first step to dealing with a problem is knowing you have a problem. Maybe the voluntary nature of attendance is at the heart of a long-term resolution.

Bellevue isn’t the only work at the Spacex from prize-winning Paul Rooney. He picked up the Northern Art Prize and was shortlisted for this year’s Liverpool Art Prize.

The other work is based on writing, he says: “Most of my artwork has a text – such as Lunar Caustic – as a starting point.” And he cites writing as the most crucial aspect of his work. “So as long as I have a piece of paper and a pencil, then I’m OK,” he says.

The exhibition also includes several other new works. Letters that Rot comprises a pile of logs with a narrative text projected from it onto a wall. The text describes the inner pain of a tree which dreams of its own oblivion at the hands, or axe, of a postman called Franz. The two-screen video work Small Talk, shows footage of a petrol station located in the middle of nowhere. Both screens have subtitles that appear to be having a conversation with each other about subjects which include favourite fonts, French cinema and failure.

The sound work Words and Silence replays a fictional call centre worker leaving a message on an anonymous answer machine. The silence, which has the sound of the call centre in the background, is interrupted by the many stories that the worker cannot resist telling.

• Paul Rooney: Bellevue is at the Spacex from Saturday, October 2 to Wednesday, November 27