Mark out ground in which to place hospital in capital (8)
I believe the answer is:
khartoum
'capital' is the definition.
(capital of Sudan)
'mark out ground in which to place hospital' is the wordplay.
'ground' indicates an anagram ('grind' the letters into a new form).
'in which to place' is an insertion indicator.
'hospital' becomes 'h' (abbreviation for hospital on maps).
'mark'+'out'='markout'
'markout' is an anagram of 'kartoum'.
'kartoum' enclosing 'h' is 'KHARTOUM'.
'in' acts as a link.
(Other definitions for khartoum that I've seen before include "African capital" , "General Gordon died at the siege of this African city" , "Capital of Sudan" , "where Gordon fell" , "'Gordon woz 'ere'" .)