Not sure I'd call the lunatic asylums particularly compassionate.

Prisons lock you up. Asylums actually lobotomized people. Never mind the sort of human experimentation they did. Radioactive oatmeal being one phenomenon that comes to mind from a nearby institution.

Eugenics was often so widely embraced because compared to these institutions IT was seen as the more compassionate approach. 

 I'd definitely agree. 
History of asylums is filled with the most heinous transgressions of human rights. 

I think I was reflecting (probably too simplistically) on the institutional mandates...

To care for (even though that was poorly or inhumanely executed) vs 
To punish. 

But I definitely take your point