This chapter discusses rationale of hospital administration. Management is the “process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims” the hospital is an organization. The hospital organization is a subsystem of the larger social system. It draws its inputs from the environment, i. e. the community, processes them and gives output to the community. There is increasing concern about the efficiency in hospital operations. Professionalization is another distinct feature of the hospitals. The majority of those who hold therapeutic or nontherapeutic positions in the hospitals are trained as professionals. The hospital is an integral part of a social and medical organization, the function of which is to provide for the population complete health care, both curative and preventive and whose outpatient services reach out to the family and its home environment.