A "rehabilitation" center that homosexuals are sent to. These centers are supposed to "cure" them of homosexuality. They are not very nice places, and looked down on by most intelligent members of the human race. Primarily used by the gay community as a derogatory term for the institutions.
"Whatever happened to Fred? He never hangs out with us any more."
"Didn't you hear? his father caught him and his boyfriend making out and sent him to a fag farm."