Actually, sleep deprivation, even for one night, is definitely a health issue. And the only reason it's accepted is because it's so common. It's the modern equivalent of drinking out of lead cups.
(And of course a sleep-deprived medical professional is a health hazard to everybody involved. Only a fool thinks otherwise.)
Sleep deprivation is not as dangerous as dying from an acute condition. If you're in the hospital for one night, you're being treated by doctors who want to make sure you're not going to die for the night. If you get admitted for a longer period, it's a different environment altogether. At least this has been my experience.
You get used to the beeping after one night anyway. If not, you can ask the nurse for earplugs or even sleeping pills (although sleeping pills are harder to get).
Then leave. They're not forcing you to stay. Generally no one puts you on observation unless you need it, and by "need it", it means "needs to be disturbed to take tests"
If you think sleep is a higher health factor than the reasons that the hospital want to put you under observation, then just refuse treatment.
If you don't want to be disturbed by patients in the same room, you can pay for that.
(And of course a sleep-deprived medical professional is a health hazard to everybody involved. Only a fool thinks otherwise.)