Upon seeing it, Derek Jarman predicted that the film "would finish Lindsay in the British film industry". It was a fairly accurate prediction as the remainder of Lindsay Anderson's career was spent in the United States. Anderson later wrote a letter to Malcolm McDowell in which he wrote "I've been in London - how long? - about three or four weeks... Time is rather featureless at the moment. I'm sure you'll understand when I say it's a dispiriting place to return to. The dark waters have closed over 'Britannia Hospital'."
David Sherwin wrote the script in 1979 and it was originally set to be produced that year by Twentieth-Century Fox. There was a shake-up at Fox and the new head of the studio cancelled the project after reading the script. Funding was then secured through EMI, who would eventually withdraw the film from cinemas a month after release.
The movie was in development for quite a long time. According to the "Going Mad in Hollywood" diaries by David Sherwin, this picture was originally going to be financed by 20th Century Fox, supervised Sherry Lansing. The project went under at Fox but was picked up by EMI Films through Barry Spikings.
Britannia Hospital is so described in the movie as having 53 wards and 1100 beds. It employs a nursing staff of over 3000 and operates in the south-eastern catchment area [of London]. The medical facility hosts 90,000 patients per year from a population of two and three quarter million.
The member of the Royal Family that was visiting Britannia Hospital is only ever referred to in the film as "H.R.H." and is billed in the closing credits as "H.R.H.". The character resembled and was unofficially meant to be the late Queen Elizabeth the Queen Mother, Elizabeth Angela Marguerite Bowes-Lyon, the wife of King George VI and mother of Queen Elizabeth II.
Some of the characters from the first film If.... (1968) of Lindsay Anderson's trilogy that didn't appear in the second film O Lucky Man! (1973), appeared in this third part. People appearing in the movie included actors who had worked on both these first two pictures or had worked with director Lindsay Anderson before.
Britannia Hospital (i.e. its exterior) was portrayed by Friern Hospital in Colney Hatch in the London borough of Barnet, England. The psychiatric medical facility was formerly known as the Colney Hatch Lunatic Asylum. The hospital was built as the Second Middlesex County Asylum and operated between 1851 and 1993. When the hospital closed, it was converted into an upmarket apartment block called Princess Park Manor.
The film's interior scenes were filmed at studios in Wembley, London. The exterior shots - of which there were many - were filmed at Barnet Frier Hospital, New Southgate, north of London. The hospital continued to operate normally throughout the filming in September 1981, although some disruption was inevitable: the hospital's green fields were covered with marquees, providing dressing rooms, toilets and wardrobe facilities, and a kitchen to feed the 500 cast and 200 crew was installed in the grounds. Near the entrance, a pair of gatehouses and two tall wrought-iron gates were erected, to be knocked down by the stampede of protesters at the end of the film. The hospital itself was chosen because of its impressive Victorian architecture - albeit not quite Britannia's 500 years old - and it received a payment of £5,000 for its involvement.