Although Margaritis, Katharaki and Katharakis (2012) considered place of residence as an independent variable, no conclusions were stated on this topic in terms of its influence on perceived service quality. Zarei, Arab, Froushani, Rashidian and Tabatabaei (2012) consider residence (urban vs. rural) as a demographic characteristic but no further development is made in terms of analyzing this influence on patients’ perceived service quality. Isolated hospitals offer services that are unique to patients located at short distances. As the distance from the hospital increases, more competition exists, either from private clinics or from other public or private hospitals. This might take the patient to choose the hospital based on higher expectations from previously provided services. Based on this argument and in order to fulfill this gap, the following hypothesis will be analyzed: