Mad Hatter outside east hospital room (7)
I believe the answer is:
theatre
'hospital room' is the definition.
(I've seen this before)
'mad hatter outside east' is the wordplay.
'mad' indicates anagramming the letters.
'outside' means one lot of letters goes inside another (some letters go outside others).
'east' becomes 'e' (abbreviation).
'hatter' is an anagram of 'thatre'.
'thatre' placed around 'e' is 'THEATRE'.
(Other definitions for theatre that I've seen before include "Surgeon can be seen here" , "Space for dramatid art" , "Playhouse - operations room" , "Place for operation or play" , "Show" .)