Background Successful management for functional neurological disorder (FND) requires multidisciplinary involvement starting with providing a definitive diagnosis. Objectives To observe clinical management of patients with FND during hospital admission. Methods A prospective observational study was conducted over six Australian hospitals over a 4‐month period. Data collected included patient demographics, communication of the diagnosis of FND, access to the multidisciplinary team, hospital length of stay (LOS), and emergency department (ED) presentations. Results A total of 113 patients were included. Median LOS was 6 (interquartile range, 3–14) days. Thirty‐five (31%) presented to ED with 9 (8%) re‐presenting two or more times after hospital discharge. Total hospital utilization cost was AUD$3.5million. A new diagnosis was made in 82 (73%) patients. Inpatient referrals were made to neurology (81, 72%), psychology (29, 26%), psychiatry (27, 24%), and physiotherapy (100, 88%). Forty‐four (54%) were not told of the diagnosis. Twenty (24%) did not have their diagnosis documented in their medical record. Of the 19 (23%) not reviewed by neurology on non‐neurosciences wards, 17 (89%) did not have their diagnosis communicated and 11 (58%) did not have it documented. Twenty‐five (42%) referred to neurology were not provided with a diagnosis. Conclusions Current gaps in service provision during inpatient hospital admissions in Australia include low rates of communication of a diagnosis, particularly when patients are not located on a neurosciences ward, and limited and variable access to inpatient multidisciplinary teams. Specialized services are needed to improve education, clinical pathways, communication, and health outcomes while reducing healthcare system costs.