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Improvement of service quality, customer satisfaction and loyalty give significant contribution to business performance and profitability. This study aims to identify the most critical factors related to hospital service quality in predicting the patients satisfaction and to examining the effect of patient satisfaction on patient loyalty. This research is a quantitative study with a cross sectional approach, involving 280 outpatients and valid questionnaire conducted in two hospital. Finally, the SPSS 21 and AMOS 22 (structural equation modeling) were performed to analyze the data. The lowest index performance is outcome quality (62.10) and highest is quality of personnel (78.89). Meanwhile, the calculation of the patient satisfaction index (PSI) is 75.60. Patient satisfaction is positively influenced by quality of personnel, outcome quality, social responsibility, administrative procedures, and physical aspects. Patients satisfaction has a positive effect on patient loyalty. However, health insurance, quality of medical care, and quality of pharmaceutical care did not influence patient satisfaction. Importance-performance analysis found the hospital institution needs to improve the administrative procedures and outcome quality. Overall the patient is satisfied with the performance of hospital services. Patients are objective controls of an organization. Therefore, hospital managers must be focus on strategies to building relationships with patients.