In the program where I trained, programs were getting the most bang for the buck by having residents do inpatient.
So on the surface, I would suspect they aren't trying to exploit residents. I of course do not know how the dynamics work for that other program.
IMHO the hospital skills one attains as a first year aren't yet plateaued in the learning curve, and since hospital psychiatry at least IMHO shows you the more dramatic and intensive clinical situations, that should be firmly developed before one were to do a complete year of only outpatient. I believe by the time I finished PGY-1, my gutt check barometer said I had a decent idea of how to do inpatient, but I still had more I needed to learn, and wanted to start tinkering with new ideas I accumulated that I had not done yet.
Another factor for consideration is at least for several residents, they don't pass USMLE step III until their 2nd year or later. When you only do outpatient, medical concerns though still important are much less important v. inpatient. In inpatient you have more direct responsibility over a patient's medical problems, while in outpatient, the PCP is supposed to pretty much handle almost everything, and you're just making sure what you do does not conflict with the PCP.
This can affect a resident's medical knowledge, and if that resident still has not yet passed step III, it could be a bad thing. I remember while in inpatient, I had to spend a lot more time making sure the BP, blood sugars and any medical issues. In outpatient if a patient's blood sugar isn't being well controlled, yes I do tell the patient to do more to control it, but I pretty much always end the sentence with "you really need to talk to your PCP about this."
I have also noticed that in general an inpatient psychiatrist's medical knowledge tends to be better than a outpatient only psychiatrist. Just my anectdotal experience.
The opinions I've stated are my opinions, they aren't evidenced based, and a lot is based on personal preference. I wouldn't be surprised to see a psychiatrist countered my opinion with good reasons.