In 1916, despite provision for military casualties being made by the 2nd General Western Hospital and hospitals run by the Red Cross, this provision was not sufficient for the unexpectedly large number of casualties. Grangethorpe was a large house in Rusholme. It was purchased by the East Lancashire branch of the Red Cross Society in 1916, who intended to create a home for disabled men. The war charity was registered in 1916 under the name 'East Lancs Home for Disabled Sailors and Soldiers'. However, the acute shortage of orthopaedic beds for wounded soldiers necessitated a change in purpose for the house and charity. From the beginning, Grangethorpe was equipped as orthopaedic hospital. Management was handed to the War Office in 1917 and Grangethorpe was attached to the 2nd Western General Hospital. The Orthopaedic Section of the 2nd Western General Hospital was opened in 1917, Sir Harry Platt had been in charge since that date. The Orthopaedic Section moved to Grangethorpe in November 1917, along with Platt and J.S.B. Stopford. Grangethorpe Hospital had wards, a nursing home, out-patient clinic and workshops for occupational therapy. At Grangethorpe, Platt and Stopford, among others, pioneered the development of medical and surgical work on peripheral nerves.
In August 1919, Grangethorpe Hospital was taken over by the Ministry of Pensions, which was responsible for injured veterans. This did not mark the end of Grangethorpe, but rather the beginning of a period in which it became a nationally important centre of research into nerve injuries. Workshops were converted into a Cripples Training Centre. A new physiotherapy department and x-ray unit were also built. The number of pensioners requiring treatment fell in the late 1920s. The hospital closed in 1929 and the remaining patients were transferred to the Ministry of Pensions Hospitals at Liverpool and Leeds. The property was given to Manchester Royal Infirmary, under the original name 'East Lancs Home for disabled sailors and soldiers' but it was too expensive for the hospital to maintain. The agreement of the transfer required MRI to provide an orthopaedic unit, but this was difficult as all the patients had been transferred. MRI sold the property in 1936 to Manchester High School for Girls. The money raised went towards a new Orthopaedic Building at MRI. Most of the old Grangethorpe buildings were destroyed through rebuilding and through bombing during the second war.