You're probably not old enough to remember them Woolfy. A lot of them where "isolation" hospitals, where they shipped out people with TB and other unmentionable diseases that are largely absent today.
Unfortunately, I am old enough. I even stayed in one that has been converted into a hotel up in the mountains in Switzerland. The rest of the clue is good, but SAN = sanitorium - I've never seen that abbreviation before! I reckon the crossword setter was struggling on that one.