Hospital efficiency is the cornerstone of, and the leverage for, improving the development of a health-care system. It is important for a hospital to maintain a level of quality in its health-care services and at the same time to attain efficient production at the lowest possible cost. Hospital efficiency is a complex economic concept that depends on factors that can easily be altered, thus differentiating the operation and efficient performance of the hospital. This is due to the particular demands generated from the pursuit of good health. With the help of economic analysis and particularly managerial economics, an effort is made in this chapter to present issues regarding the efficiency of hospitals, the factors that influence it, and its relation to a hospital’s system of financing. In particular, this chapter provides the economic approaches to hospital efficiency, defines technical and allocative efficiency in an analytical in an analytical manner, presents and analyzes the factors that influence hospital efficiency, and describes the relationship between hospital efficiency and funding in an analytical and substantive manner.