From the economic point of view about Hospital and Health care, the resources are scarce, and the selection over various patterns of the available resources must be made with ideal decisions so as to minimize opportunity costs. This piece of research work is an attempt to analyze the economic factors of the Hospital Industry. This work presents ‘hospital’ industry and its economic activities as part of the health care industry. This research paper includes a detailed analysis of the economic traits of hospital Industry, Porter’s five force analysis, the major economic and environmental change and the relative driving factors for the change. There are a very large number of Hospitals of both Profit and not for profit, ranging from small health centers to highly sophisticated super specialty hospitals in Los Angeles, California. ‘Hospital’ is the organization whose principal purpose or function is to provide medical care to patients with many different types of ailments. According to Commerce Clearing House (2004), a beneficiary’s stay in a ‘hospital’ will not be covered by Medicare if the ‘hospital’ is not participating in the Medicare program. If the hospital approved for Medicare participation by the Government and signed a participation agreement, then it comes under ‘Hospital’. However, services offered in a hospital which hasn’t participated may be covered in emergency situations (p. 41). Health care district was authorized by section 32121 of California Health and Safety. California’s district hospitals are considered to be public Hospitals and they are categorized under State’s other public hospitals. Public Hospitals can achieve funding from the federal government as is already done by District hospitals by using intergovernmental transfers to get additional funding (Association of California Healthcare Districts).