Provincial hospitals are the most widespread and numerous public hospital system. However, as the health care market has grown to be fiercely competitive in the recent years, the improvement of operating performance has become one of the most important issues faced by provincial hospitals. In order to define the input/output of hospitals and the relative values between input/output, a Delphi survey is employed to collect expert opinions for this study. The output heterogeneity resulting from the different case-mix among hospitals is also considered. The technical efficiency, allocation efficiency, and overall efficiency for twenty-two provincial hospitals are analyzed through DEA and DEA/AR models. The results show that hospitals of varying sizes could always improve their performances as long as they employ appropriate strategies. Moreover, in order to improve the overall efficiency of provincial hospitals, provincial hospitals should not only increase technical efficiency by strengthening their operation systems and management capabilities, but also place emphasis on improving allocative efficiency by adjusting their resource allocation and service mix distributions.