The hospital was modelled on the Alt Scherbitz asylum of the 1870s, near Leipzig in Germany, and represents one of the first "colony" plan psychiatric hospitals in Scotland. The Bangour institution comprised individual villas which would house approximately 30 patients each. The village also incorporated its own railway station, a farm, bakery, workshops, recreation hall, school, shop, library, and latterly, a multi-denominational church.
The hospital was requisitioned by the government War Office during both wars when it became "Edinburgh War Hospital" and "The Scottish Emergency Medical Hospital", reverting back to a psychiatric hospital between and after the wars.
The number of patients rose to over 3000 in 1918 so, as well as temporary marquees, prefabricated huts were erected to cope with the demand for bed space, for both patients and staff. This led to the creation of Bangour General Hospital in the surrounding grounds, which was to become a world leader in many medical fields, in particular its esteemed burns and plastic surgery unit which was established in 1940. It also had a 1st class Maternity Unit serving the whole of the county.
In 1989, St John's Hospital opened in nearby Livingston, and services were transferred from Bangour General Hospital, which closed in the early 1990s. The Village Hospital also started to wind down after the opening of St Johns, with the last remaining ward closing in 2004.