Swami Vivekananda had explicitly instructed his disciple, Swami Kalyanananda to do something for the monks and other poor people in Haridwar and Rishikesh, the two famous pilgrimage spots in India, as he himself had seen the plight of the people there. At that point in time there existed no healthcare facilities for poor in that region. In June 1901 the work was started in a two-room building which housed the beds for the ailing monks, the dispensary and the quarter of Swami Kalyanananda. The latter moved from one location to another searching for the sick monks and brought them to the hospital for treatment free of cost. He would prepare the diets himself, treated the patients with medicines and also did menial work like cleaning and washing of the patients. The fund for the initiative was collected by Swami Swarupananda who begged for the initial amount in Nainitial.
From the first published report of the Sevashrama (published in Prabuddha Bharat, September 1901), 6 monks were treated as indoor patient in September 1901, and there were 48 outdoor patients of whom about 30 were monks and rest poor householders. In 1902, after the demise of Swami Vivekananda, another of his monastic disciples, Swami Nischayananda, joined the his brother disciple for running the Sevashrama in Kankhal.
The sevashrama effort received much help from Swami Dhanraj Giri, the head of Kailash Ashrama. He had sent two rich businessmen, Bhajanlal Lohia and Harsahaymal Sukhdevdas to see the work of the two disciples of Swami Vivekananda. The two gentlemen were impressed by the work and granted financial help for constructing new buildings for the hospital. The plan for the construction was prepared by Swami Vijnanananda.
Gradually the Sevashrama undertook other works like serving pilgrims of Kumbha Mela in Haridwar, educational activities among poor, upliftment of the so-called untouchables and scavengers who did not have any access to schooling. The Ramakrishna Math with temple and monastery served for the spiritual needs.