It is widely theorized that the large Mansion on the island in the lake west of Crossbones once housed the ruler of whatever city once resided there. However, since the various criminal factions of Crossbones prefer a more hands-on style of leadership, the island went largely neglected once everything of value on it had been thoroughly looted.
Over time, however, the island began to serve a different, more grim, purpose. The town had little use for a system of jails. Each organization would dole out punishment and hold captives as it saw fit, but rarely did these actions involve long periods of incarceration. So, whether due to age, stress, or just plan being psychotic, when elements amongst the factions proved too mentally unstable to continue being productive, they were often banished to the island.
This changed due to the efforts of Catalina Higgins, a cleric of Ioun from the Gearspark Complex. She had originally come to Crossbones on a regularly scheduled trading journey when she was unexpectedly invited to an audience with one of the major crime lords of Crossbones. What was initially an intimidating encounter eventually became a therapy session.
Word of her prowess in soothing the mental injuries of the town’s most notorious n’er-do-wells spread quickly. She eventually felt called to re-take the island for the cause of wisdom and sanity, and with the backing of both Crossbones and the Gearspark Complex, she did so, converting the dilapidated mansion into a hospital.
Catalina Higgins and her asylum were targeted by The Divers who covertly seized control of the island from below.
The Party was more successful, however. They rescued a survivor from the first team sent to the island and returned with reinforcements. The reinforcements were nearly drowned in an attack by a modified Apparatus of Kwalish, but The Party carried on.
In the basement of the mansion, they discovered that The Divers were planning to use some sort of otherworldly horror to poison the water supply of Crossbones, but they swiftly dealt with this threat.