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In today's highly competitive situation, hospitals are increasingly realizing the need to focus on service quality as a measure to improve their competitive position. In this research paper, the researcher presents a service quality perception study undertaken in two hospitals in Salem city. In the study the SERVQUAL questionnaire was used for measurement of Gap 1 Viz., difference between management's perception of patients' expectations & patients' expectations. An analysis covering a sample of 400 patients and 50 doctors revealed that a gap between managements' perception about patients' expectations and patients' expectations of service quality exists. people. In mid 1990s, the Government spent 6% of the GDP 3 on health, which is one of the highest levels of expenditure in the developing nations. The Central and State Governments set the goals and strategies in consultation with the Central Council of Health and Family Welfare. The Ministry of Health and Family Welfare monitors the workings of the Central Government and provides technical and administrative services along with medical education. According to a World Bank study the per capita spending on health in India is around Rs. 320 per year with a significant input of 75% from private households. The State Governments contribute 15.2%, the Central Government 5.2%, third party employers 3.3% and the municipal government and foreign donors provide about 1.3% to the total spending, of which 58.7% goes to primary health care (curative, preventive and promotional) and 38.8% is spent on the secondary and tertiary ones. 4

Service Quality Measurement in Health Care System- A Study in Select Hospitals in Salem City, TamilNadu