Theme Hospital is a level-based hospital management simulation where players must assemble rooms with various materials to diagnose and treat patients. The building starts empty, and the player must add desks, file cabinets, ultra-scanners, X-rays, and other equipment to diagnose unusual conditions such as Bloaty Head and Slack Songue. There are also additional rooms like a staff room for employees, a toilet, research department, and training room. The size and layout of each room can be set by the player according to available space.
The game requires players to provide radiators, seating, and drink machines in addition to the rooms. However, these rooms don't run independently. Certain rooms like the operating theater require specialized staff, while others need attending nurses for the ward, pharmacy, and fracture clinic. The hospital also needs handymen to maintain facilities and receptionists to direct patients.
As players progress through levels, they face increasingly challenging situations such as VIP visits, emergencies, epidemics, and earthquakes. These events can affect the reputation or bank account, but additional land is available for purchase in later maps as more equipment becomes necessary.