Westin Hills Psychiatric Hospital is a fictional hospital that officially specialized in the study of dreams, dream suppression and their effect on the person. Unofficially the hospital was testing and studying the prevention of dreams, specifically nightmares.
The hospital was built some time in the 1980s and immediately began admitting people. It is a prevention stop to keep people from needing to be admitted to Fairview Hospital. This was implied by Dr. Neil Gordon (NoES3) while speaking to Nancy Thompson. The hospital also deals with other types of psychosis, with only 1 wing being dedicated to "The program" as Max referred to it.
A few years later after Dr. Gordon retired Dr. Campbell took over. The town of Springwood had finally accepted the existence of Freddy in their children's nightmares. Under Dr. Campbell they found a way to control the effected population and have had complete success until 2003 when Mark Davis and Will Rollins escaped. Inadvertently reconstituting Freddy's power temporarily and discovering the length to which the town went to safeguard the children. As to date, no new information has been learned about the hospital but it has been upgrading as technology improves.