This study aims to evaluate the operational efficiency of district hospitals in Uganda, focusing on their systems' performance and cost-effectiveness. Multilevel regression analysis was employed to evaluate the operational efficiency of district hospitals. The study utilised data from four districts across Uganda, considering both individual and contextual factors affecting hospital performance. The multilevel model revealed significant variation in costs and outcomes between different regions, suggesting that local context plays a crucial role in system effectiveness. This research provides insights into the cost-effectiveness of district hospitals in Uganda, emphasising the importance of contextual factors for optimal performance. Based on findings, policymakers should consider regional variations when allocating resources and implementing interventions to improve hospital efficiency. Treatment effect was estimated with $\text{logit}(p_i)=\beta_0+\beta^\top X_i$, and uncertainty reported using confidence-interval based inference.