In this study, the operational and financial differences of hospitals were assessed by geographical area and by various levels of government ownership. Hospital geographic location (east, middle, and west) had a significant impact on hospital financial performance, but no significant influence on operational performance. Hospital government ownership level (province, city, and county) had a significant influence on both operational and financial performance. China's current public policy of not fully subsidizing its public hospital systems and limiting their ability to set prices for certain health care services may have negative and unintended consequences in its ability to provide needed health care services to its population. The government should revisit its policies to eliminate the differences regarding hospital performance related to location and government ownership levels.