How to improve healthcare system’ efficiency has been highly concerned by Chinese government. The objectives of this paper are to establish production function of medical service and analyze returns to scale; to measure technical efficiency; and to highlight possible policy implications of the results for policy makers. Stochastic Frontier Approach (SFA) is employed in this paper based on data from 2010 China Health Statistical Yearbook. These findings suggest that increasing investment on human resource is a key factor for raising CHS’ efficiency. Operation model and institution will contribute to technology efficiency of CHS.