Dearnley sits astride the Halifax Road about half way between Smallbridge and Littleborough. The community is home to the Birch Hill Hospital, which is located on a hill to the north of the A59 Halifax Road. Union Road runs north from the A59 and at the end of the road stands the dramatic clock tower of the hospital. The name Union Road is, in fact, a clue to the history of the hospital because, when the complex of buildings opened its doors in 1877, it was the Dearnley Union Workhouse.

When it finally closed its doors as a workhouse, the building took on new roles. During W.W. I., it was used as a military hospital for soldiers injured at the front. In more recent years it has operated as the Birch Hill Hospital.

Today a modern housing development surrounds the hospital grounds and there are plans to close the facility and use the land for housing.