In this research, we analyze the impact of digital investments on the operational and labor efficiency of Portuguese public hospital entities, taking into account the legitimacy theory. The costs of public hospitals have systematically increased in last years, then motivating research to improve their operational efficiency. We use a quantitative analysis to test three working hypotheses by estimating a panel data regression. Our evidence shows that technology and development investments tend to increase operating costs, thus reducing the operational efficiency of public hospitals. Regarding size, our finds suggest that larger public hospital entities have higher levels of inefficiency. Moreover, the results are consistent with a negative impact on labor efficiency. This study contributes to the research by providing evidence that digital investments and size lead to increasing operational and labor costs in public health sector, which requires strategic management to improve the future operational efficiency of public hospital entities and subsequently increase their legitimacy.