Green’s Dictionary of Slang

hatch n.1

(US)

1. a psychiatric institution; thus hatch up v.

B. Fisher ‘A. Mutt’ in Blackbeard Compliation (1977) 58: Life sketch of the pathetic scene when the defendant was torn from his young wife and infant child and sent to the hatch.
[US]W.R. Burnett High Sierra in Four Novels (1984) 416: Not counting screwballs, of course, who ought to be in the hatch.
see sense 1.
[US]T. Berger Reinhart in Love (1963) 397: Take Advantage of My Lunacy and Buy Quick Before I Am Hauled Off to the Hatch.
[US]R. Stone Dog Soldiers (1976) 251: My status was weird because I’m just out of the hatch.

2. (also hatch house) a prison.

[US]B. Fisher A. Mutt in Blackbeard Compilation (1977) 104: Put all troublesome judges in the hatch?
[Aus]Bulletin (Sydney) 30 July 45/2: Humorous description in the N. York Police Gazette [...]: ‘This sentence does not mean that he has to be shut up in the hatch house during the period of probation referred to, but cannot take a drink of liquor.’.
[US]Jackson & Hellyer Vocab. Criminal Sl. 43: hatch [...] A calaboose; a prison; a police station; a jail.
[US]Irwin Amer. Tramp and Und. Sl. 96: Hatch.–A country gaol or police station.
[US]Goldin et al. DAUL 92/1: Hatch. 1. (P) Punishment cells. 2. (P) (Rare) Any cell. 3. Any place of detention, as a station-house, county jail, prison, institution for the criminally insane, etc.

In phrases

hatch out (v.)

(US prison) to conclude one’s sentence and leave the prison.

[US]C. Himes ‘Money Don’t Spend in the Stir’ in Coll. Stories (1990) 195: ‘I ain’t no chump. I’ll sit on my G’s and hatch out my time’.