The iPirates Brothel works almost identical to hospitals in other PlayMesh titles, so if you have played any of the other PlayMesh free MMO text-based iPhone RPGs you know what to expect.
Hold the iPhone up right so that you can use the Portrait view in iPirates. Go down and select the iPirates Brothel, which is under the Treasure Chest and above PlayMesh. It will say right next to Brothel that this is where you go to "regain health."
If your iPirates character is already at full health you will not be able to use the Brothel and there will be a line of red text that says "You don't need the relaxation therapist." It likely took the PlayMesh developers a long afternoon to come up with that line. Once you are at less than full health from Fights there will be a blue Heal button with a cost listed above it.
At the very top of the iPirates Brothel screen will be your Chest Balance, which is how much money you have in the iPirates Treasure Chest. You have to pay the Brothel bill with money from the iPirates Treasure Chest, so you have to make sure you have a Chest Balance. As long as the Heal Cost is equal to or less than how much money you have in the iPirates Treasure Chest you can Heal in the iPirates Brothel.