Healthcare services are public basic needs and no nation can afford to overlook it. Public at large expects the healthcare organizations to provide healthcare services effectively and at affordable cost. The absence of healthcare facilities not only results in diseases and deformities but also economic, social and political deterioration which prevent individuals from realizing their full potential. Hospitals should anchor their services around the parameters that determine the quality of healthcare services. So it is imperative to understand Ihe functions and the dimensions that compose the entire service structure of a hospital. These functions and dimensions can be used as standards for smooth provision of service and quality assurance. The present study contains in-depth analysis of all the events occurring in a public sector teaching hospital, its organization, and structure; by conducting detailed interviews and discussion with the major stakeholders and direct observation of the operations of the same hospital. The study has threefold purposes. Firstly, it seeks to substantiate the performance and service quality perceived by the general public vis4-vi$ the factual performance and service quality of public sector hospitals. Secondly, it differentiates a teaching hospital from a non teaching hospital in terms of their entire composition, scope and quality of service. Thirdly, it develops a model that can assess the quality of service of a teaching hospital, The model carries dimensions and elements of curing, caring and teaching A qualitative-cum-quantitative approach with multiple data collection mechanisms like observation, discussions and interviews, questionnaire administration and study of records was adopted. Mayo Hospital Lahore affiliated with King Edward MedicalV University, the largest public sector teaching hospital in Pakistan, was chosen as population for the given study. All the departments providing teaching and clinical services were studied. Satisfaction of patients, employees and medical students was assessed through questionnaire administration followed by in-depth interviews. Public perception of performance of and service quality in public sector hospitals was assessed through questionnaire and interviews. Data was organized, descriptive statistics including percentages and graphic presentations were applied. Qualitative data was validated with quantitative data and vice versa. The performance and service quality of public sector teaching hospital were found far better than the general view of the community. The study also showed that a leaching hospital is superior to a non teaching hospital in terms of delivering quality treatment to patients. A model with three distinct dimensions including teaching, curing and caring with their respective elements is developed that can assess the quality of services delivered by a teaching hospital.