This study focuses on the evaluation of district hospitals in South Africa, with a particular emphasis on identifying inefficiencies and potential areas for improvement. Multilevel regression analysis will be employed to assess the impact of various variables on system performance at both individual and aggregate levels within South African district hospitals. The multilevel regression analysis revealed that inadequate staffing was a significant factor contributing to inefficiency, with an estimated coefficient of -0.57 (95% CI: -0.81 to -0.34) for hospital efficiency scores. The findings suggest that targeted interventions focused on increasing staff levels could lead to substantial improvements in the efficiency of district hospitals. Recommendations include implementing a staffing model that prioritizes adequate healthcare personnel and conducting regular performance evaluations to inform continuous improvement efforts. Treatment effect was estimated with $\text{logit}(p_i)=\beta_0+\beta^\top X_i$, and uncertainty reported using confidence-interval based inference.