All kinds of psychosis, not only schizophrenia, involve a breakdown of the I-dynamism, with loss (more or less) of the distinction between Self and World and a loss of insight.
In nonschizophrenic psychoses the tendency to empathic identification and self-reflection is present to heal the mind whenever the influence causing mental disorder abates.
Schizophrenia, by contrast, in our view, is characterized by a defense against that very tendency. In schizophrenia the mind turns against its potential for relatedness; it fights its top integrating function, the I(nner You).
That may explain why the prognosis in schizophrenia is, in general, worse than in other kinds of functional psychosis.
However, any psychosis may lead to such a loss of faith and trust that the person resorts to the schizophrenic defense. Then the vicious circle and the diagnosis of schizophrenia take over.