I volunteer in the sewing room of childrens hospital, and I have seen what the hospital laundry does to fabric. It is really hard on fabric, it will fade very quickly, even top quality fabric.
Also, we cannot sew with fleece - it melts in the dryer. I don't know what would happen to poly batting.
Of all the things I've sewn for the hospital, I've never made an isolette blanket. Now I'm curious about what they use. I'm going to have to ask.