The 52-year-old faces seven charges including assault and intimidation after three alleged incidents with two women and a male patient between April and September.
Slater has been a voluntary inpatient at Sydney's Northern Beaches Hospital or one of two rehabilitation centres almost every day since April, barrister John Agius SC said.
During that time, he has been diagnosed with a likely bipolar disorder and has, in recent days, begun taking prescribed mood stabiliser lithium, Manly Local Court was told.
"It's important that court bares in mind that we're dealing with a person who has a complex mental health situation," Mr Agius said on Wednesday.
"When someone dealing with a mental health deficiency, as all the medical evidence suggests, one must bear in mind the path to rehabilitation will not be a direct and straight line necessary.
"One could expect some ... diversions along the way."
Police have contested the dismissal of charges, saying Slater's frequency of offending and the inclusion of domestic violence required it to be dealt with at law.
One offence allegedly occurred the day before another court dismissed other charges on mental health grounds in April.
"It's a matter whereby it's too frequent that the courts seeing these applications," police prosecutor Craig Pullen said.
The court was told Slater admitted assaulting the patient in Northern Beaches Hospital in July but says he was being "goaded".
"He was being put down and he had a physical reaction to that – that supports a diagnosis of bipolar for which he's now seeking treatment," Mr Agius said.
Slater appeared in the court hearing via an audiovisual link from a rehabilitation facility.
Should the case be dismissed on mental health grounds, the former cricketer is willing to submit to a mental health treatment plan requiring treatment at a Queensland facility and regular consultations with a psychiatrist.
"This is a stringent plan which as much as possible would cover all bases," Mr Agius said.
The case wasn't one where the court use the offender's sentence to deter the community from similar offending because Slater wasn't "in full control" of his behaviour.
"He should be given one more chance because his bipolar disorder had not been diagnosed at that time," Mr Agius said.
Magistrate Robyn Denes will deliver her decision later on Wednesday.
Slater played in 74 Tests for Australia, scoring 5312 runs at an average of 42.83 after making his debut during the 1993 Ashes tour of England.
He also played 42 one-day internationals before retiring from major cricket in 2004 and embarking on a successful commentary career with Nine and Seven networks.
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