I would say
病院はあのスーパーとホテルの間にあります。 - The hospital is between that supermarket and hotel.
The に particle indicates where something is, so by starting with 病院に, you are saying there is something in the hospital.
You could say something like:
この病院にレストランがあります。- There is a restaurant in this hospital.
The particle で indicates a location where an activity takes place. For instance:
レストランで晩御飯（ばんごはん）を食べました。- I ate dinner at a restaurant.
Also note that the verb ある always takes the に particle, so to say something is somewhere, you would say:
These really are the very basics though, I would recommend you get some sort of beginner textbook and go through it, I used Genki myself and would recommend it.