This study purports to find the predictor of hospital bankruptcy in Korea and to examine the predictive power of the discriminant function model of hospital bankruptcy. Data on 17 financial and 4 non-financial indicators of 31 bankrupt and 31 profitable hospitals of 1, 2, and 3 years before bankruptcy were obtained from the hospital performance databank of Korea Institute of Health Services Management. Significant variables were identified through mean comparison of each indicator between bankrupt and profitable hospitals, and the discriminant function model of hospital bankruptcy was developed. The major findings are as follows : 1. As for profitability indicators, net worth to total assets, operating profit to total capital, operating profit ratio to gross revenues, normal profit to total assets, normal profit to gross revenues, net profit to total assets were significantly different in mean comparison test in 1, 2, and 3 years before hospital bankruptcy. With regard to liquidity indicators, current ratio and quick ratio were signifiant in 1 year before bankruptcy. For activity indicators, patients receivable turnover was significant in 2 and 3 years before bankruptcy and added value per adjusted inpatient days was significant in 3 years before bankruptcy. 2. The discriminant function in 1, 2, and 3 years before bankruptcy were; Z=-0.0166Xquick ratio - 0.1356Xnormal profit to total assets - 1.545 x total assets turnarounds in 1 year before bankruptcy, Z=-0.0119Xquick ratio - 0.1433Xoperating profit to total assets - 0.0227Xvalue added to total assets in 2 years before bankruptcy, and Z=-0.3533Xnet profit to total assets - 0.1336Xpatients receivables turnrounds - 0.04301Xadded value per adjusted patient + 0.00119Xaverage daily inpatient census in 3 years before bankruptcy.3. The discriminant function's discriminant power in 1, 2, and 3 years before bankruptcy was 77.42, 79.03, 82.25% respectively.