This study is an attempt to analyze the performance of 97 District Headquarter Hospitals (DHQ) of Pakistan by calculating economic efficiency (EE) and cost productivity, over the period 2006-15. The research period is divided into two parts i.e. 2006-2010 (pre-decentralization of the age) and 2011-2015 (post-decentralization of the age) to evaluate the change in hospital performance after the 18th constitutional amendment 2010. Data Envelopment Analysis (DEA) and Cost Malmquist Index (CMI) have been used to estimate the economic efficiency and cost productivity of the DHQ hospitals respectively. Bootstrap Truncated Regression has been used to analyze the effects of internal and external factors on economic efficiency and cost productivity of the hospitals. In Punjab, 32% of DHQ hospitals in 2006-2010 and 40% in 2011-2015 have more than threshold level of economic efficiency scores that is 0.70.It is also observed that almost 60% of Punjab hospitals operate under increasing return to scale. Similarly, 27% of DHQ hospitals are recorded to be efficient at Sindh in 2006-10, while 45% in 2011-15. More than 70% of hospitals in Sindh are working under increasing return to scale. The Spearmen rank test reveals that misallocation of resources is the main cause of inefficiency in the hospitals of Punjab and Sindh. The economic efficiency scores of 23% and 32% DHQ hospitals of Khyber-Pukhtunkhwa are higher than 0.70 in 2006-10 and 2011-15 respectively. All the hospitals in Khyber-Pukhtunkhwa are working under increasing return to scale. In the large province of Pakistan, Balochistan, 25% of hospitals are efficient in 2006-10 and 32% in 2011-15. More than 95% of these hospitals are working under increasing return to scale. The result of Spearmen rank test indicates that the wastage of resources is the main reason for inefficiency in the hospitals of Khyber-Pukhtunkhwa and Balochistan. There is not a desired change in the economic efficiency of the hospitals after 18th constitutional amendment 2010. As far as growth in the productivity of the DHQ hospitals in Pakistan is concerned, 15% growth is found during the study period 2006-15. However, the growth rate, 16%, is higher in 2006-10 than, 12%, in 2011-15. At the provincial level, the DHQ hospitals of Baluchistan are relatively more productive followed by Sindh, Khyber-Pukhtunkhawn, and Punjab during 2006-15. The Bootstrap Truncated regression results reveal that all the coefficients of internal and external factors have a significant effect on the x inefficiencies and cost productivity of the DHQ hospitals of Pakistan. The capitalization and doctor to patient ratio have a larger coefficient and a négative impact on economic inefficiency.Size of hospitals and doctor to patient ratios have a comparatively higher and significant effect on cost productivity according to our results. From the perspective of public policy, the Government should try to improve the quality of the management of these hospitals through a dedicated training programme. Also focus should be on reforming medical education to enhance the quality as well as quantity of the medical workforce so that the cost of these hospitals can be reduced. The impact of fiscal decentralization 2010 is found inconclusive. The central government should also revisit the 18th constitutional amendment. In the distribution of health care resources, the government should give priority to underdeveloped areas. To increase the highly specialized medical staff, the government should focus on specialized medical education. Special perks and privileges should be given to those doctors who are posted in far-flung and rural areas to improve medical service provision and quality of healthcare in such remote areas of the country.