Etymology
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sanatorium (n.)

by 1839 as "hospital, usually private, for the treatment of invalids, convalescents, etc., who might benefit from open air;" by 1842 as "place to which people go for the sake of health or to regain health;" Modern Latin, noun use of neuter of Late Latin adjective sanitorius "health-giving," from Latin sanat-, past-participle stem of sanare "to heal," from sanus "well, healthy, sane" (see sane).

Latin sanare is the source of Italian sanare, Spanish sanar. Century Dictionary [1895] notes it was "specifically applied to military stations on the mountains or tablelands of tropical countries, with climates suited to the health of Europeans."

Many of his patients had asked him what this hard word sanatorium meant, and he explained to them, that it was a lodging-house, which was, in fact, the proper alias of sanatorium, and that it was to the benefit of Dr. Arnott's stove and of regularity in the time of giving medicine. [from report on a "Debate on the Sanatorium" in The Lancet, Jan. 11, 1840]

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Definitions of sanatorium

sanatorium (n.)
a hospital for recuperation or for the treatment of chronic diseases;
Synonyms: sanatarium / sanitarium
sanatorium (n.)
pejorative terms for an insane asylum;
Synonyms: Bedlam / booby hatch / crazy house / cuckoo's nest / funny farm / funny house / loony bin / madhouse / nut house / nuthouse / snake pit
From wordnet.princeton.edu