From what I've been able to gather from the VA in Milwaukee the Waukesha Annex first came into use right after WWI as a TB hospital. But by 1940 it was no longer used for that purpose. I do know that the use of the word "inmate" was common and only indicates that the person was a patient. According to my source at the VA there is a library in the current VA hospital and an historical centre in Waukesha that should have more info on the hospital. I'm still trying to find out whether the facility was for medical or psychological patients. If I find anything out I will let you know.
Hope this is of some help...