The aim of this paper is threefold: to test the dimensionality of the SERVQUAL instrument in the Northern Cyprus health care industry, to assess the service quality provided in public and private hospitals in Northern Cyprus and to identify the service quality dimensions that play important role on patient satisfaction. Data were collected in two phases from the same sample, which consisted of 806 systematically selected people above the age of eighteen. Factor analysis revealed a three factor solution, namely; reliability-confidence, empathy and tangibles. This result does not support the five factor model of the original SERVQUAL. Gap analysis showed that private hospitals have smaller gaps than public hospitals in all three service quality dimensions. Finally, logistic regression findings indicated that while all three dimensions are somewhat influential on patient satisfaction, in public hospitals tangibles dimension seems to exert no significant influence on satisfaction. Findings are important both for public and private hospital managers and for policy makers.