Mr. Penguin suggested I give suggest some background reading on Arkham Asylum with the new Batman game coming up.
There are basically three collections that focus on the insane asylum.
Arkham Asylum: A Serious House on Serious Earth by Grant Morrison and Dave McKean.

The patients have taken over Arkham and Batman is forced into a game of hide and seek. The pages are painted very atmospherically and each villain is treated in a manner not seen elsewhere. You really get a sense of how tortured they all really are and learn the history behind the building.
Arkham Asylum: Living Hell by Dan Slott and Ryan Sook

One of my favorite Batman stories which funnily enough has almost no Batman in it. You get to see the asylum from the point of view from the director, a psychiatrist, the guards, and the inmates. The main focus is on a white collar criminal who pleads insanity to invade jail but soon realizes Arkham is not somewhere he wants to be.
Batman: The Last Arkham by Alan Grant and Norm Breyfogle.
Never read it. *shrug*