A mental health hospital could have prevented a "significant" attack on a teenage patient, inspectors have said.
They found the private Ellingham Hospital near Attleborough, Norfolk, had deteriorated further since concerns were raised in June and September.
A report said poor observation and record-keeping by staff meant patients were not safe.
The hospital blamed a shortage of staff and said it had already decided to close two children's wards.
The grandmother of a 17-year-old patient said she had been assaulted a number of times but no record was kept.
She said: "She was supposed to be on a 15-minute watch but was punched and stamped on by another patient for 35 minutes.
"Because they're mentally ill it's like they're second-class citizens and it doesn't matter if they're attacked."
A Care Quality Commission (CQC) report said: "There was inadequate observation of patients by staff, which allowed the attack to continue over a sustained period."
The incident, which Norfolk Police is investigating, happened days before an inspection in September at the Cherry Oak and Woodlands wards.
Inspectors said the hospital was not safe, caring or well-led and downgraded its overall rating to inadequate.
They found inaccurate record-keeping and said patient restraining methods were unsafe.
The CQC said no timetable had been agreed for the closure of the wards, which have 20 beds for under-18s.
A spokeswoman for the Priory Group said: "We fully accept the CQC's findings, and are very sorry that the hospital fell short of the standards people have a right to expect.
"There are simply not enough skilled staff in the region to meet the highly-specialised needs of the young people at Ellingham.
"This has led to a regrettable over-reliance on agency staff who consistently failed to comply with relevant policies and procedures and deliver the care needed."