The Hospital is one of the two stages in the Medical Nightmare. Ned is strapped on a moving stretcher going down a hospital hallway and must avoid doctors from stealing his organs. He must pull a red lever on the stretcher to move it up and down to avoid the surgeons, if Ned is hit by one, he loses one organ. Ned must retrieve the organ back in a mini-game after he passed the hallway stage. The mini-game is a spin-the-wheel type game. Ned is strapped on a giant arrow, surrounded by eight glass jars, each containing an organ. The number of organs depend on how many times Ned was hit by the doctors, 1-8 times. Ned must stop the arrow on a jar containing an organ to have an Organ Beaver place it back in Ned, causing him to scream. He has 8 tries to collect all his organs. If the he gets them all, Ned is free, does a random action (the ones when the player doesn't touch the keyboard for awhile) and sees a part of the shadow revealed. There are two exits, the one on the left takes Ned back to the waiting room while the one on the right takes him to the bathroom. If Ned doesn't get them all, he'll fall off the arrow and a nurse will catch him in a body bag and drop him through a trapdoor. Ned will then restart back at the Waiting Room.
- There's a trick for completing the mini-game. Hit the jar two jars counter-clockwise away from the one with the organ to land on it.
- On newer computers, there's a glitch in the game causing the stretcher to move down the hallway really fast, not giving the player enough time to react. This results in Ned having to retrieve more organs.