Established in 1972 under Tribhuvan University, the Institute of Medicine (IOM) is responsible for training all categories of health professionals needed in Nepal. Within its first decade, IOM established 12 campuses, with three in Kathmandu and nine outside the Kathmandu Valley.

Initially, the hospital had 301 beds and served as a general hospital, with around 300 outdoor patients each day. However, over time, the hospital's infrastructure and healthcare facilities have drastically improved. Today, the hospital has 700 beds and has expanded to include advanced medical care units, a separate emergency building, a pediatric building, an ENT building, and an orthopedic building.

With the expansion of the emergency building, the hospital is now equipped to provide emergency and mass casualty care to patients. Due to its best healthcare facilities, super-specialty care, and affordable treatment, the hospital has earned the trust of people from all over the state. Despite the availability of newly constructed private hospitals with sophisticated infrastructure within the city, this hospital remains the first choice for the people.