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The Hospital Authority (HA) is a statutory body managing all the public hospitals and institutes in Hong Kong (HK). In recent decades, Hong Kong Hospital Authority (HKHA) has been making efforts to improve the healthcare services, but there still exist some problems like unfair resource allocation and poor management, as reported by the Hong Kong medical legislative committee. One critical consequence of these problems is low healthcare efficiency of hospitals, leading to low satisfaction among patients. Moreover, HKHA also suffers from the conflict between limited resource and growing demand. An effective evaluation of HA is important for resource planning and healthcare decision making. In this paper, we propose a two-phase method to evaluate HA efficiency for reducing healthcare expenditure and improving healthcare service. Specifically, in Phase I, we measure the HKHA efficiency changes from 2000 to 2013 by applying a novel DEA-Malmquist index with undesirable factors. In Phase II, we further explore the impact of some exogenous factors (e.g., population density) on HKHA efficiency by Tobit regression model. Empirical results show that there are significant differences between the efficiencies of different hospitals and clusters. In particular, it is found that the public hospital serving in a richer district has a relatively lower efficiency. To a certain extent, this reflects the socioeconomic reality in HK that people with better economic condition prefers receiving higher quality service from the private hospitals. [ABSTRACT FROM AUTHOR]