I don't think that the large phyc. hospitals will be profitable, but there are a few companies (like CRN and KIDS) that have done a profitable/good job of combining behavorial health services on an outpatient and small residential basis as an outgrowth of their "regular" juvenile business.
It was a guess that a company might be able to make a larger phyc hospital profitable is they were able to get the facility for cents on the dollar, but that's a guess. In the end, I don't think the private corrections companies should go after the large phyc hopsitals, but should focus on their core business, and simply supplement their corrections business with the outpatient/treatment behavorial health business.
If I remember correctly, WHC acquired that phyc hospital back when they "needed some news", and that probably seemed like an "event" that could get the stock going at the time; however, the market did not react well to it back then for the above reasons (i.e. they shouldn't invest in the large capital and overhead of a large phyc hospital).