This study discusses the factors responsible forutilization of hospital services and the impacts ofunderutilization of the services at the Thana health complexesand overutilization of the services at the District hospitals inthe context of Bangladesh. The factors responsible forutilization are identified as a) patient factor b) providerfactor and c) organizational factors. The impact can be measured in terms of a)quality of care b)allocation of resources and c) satisfaction level of the patient.The study attempts to find out indexes for measurement of theseimpacts. The quality of care can be measured by i) averagewaiting time for admission in hospital ii) the average length ofstay in the hospital iii) doctros spending time per patient iv)nurses spending time per patient v) discharge rate of the patientvi) cost of treatment per bed. The impacts on the allocation ofresources can be measured in terms of cost from the provider andthe consumer side, and the wastage. The impacts on thesatisfaction level can be measured by empirical study usingquestionnaire putting value on it. The impact can be measured bycomparison between the index of over and underutilized hospitalwith that of 100% utilization. To reduce the overutilization of District hospital andincrease the utilization of Thana health complex two alternativesare suggested a) to impose fee in the District hospitals whichwill reduce the utilization and shift to the Thana health complexb) to introduce insurance schemes which may help in increasingutilization rate at the Thana health complex. Whicheveralternative is better can be analyzed through demand and supplyschedules. Both can be estimated empirically.