Incase of hospitals the location plays a very important role. The kind of services a hospital is rendering is also very important for determining the location of the hospital.
Example: Tata memorial hospital specializes in cancer treatment and is located at a center place unlike other normal hospitals, which you can find all over other places.
In a country like India which is geographically vast and where majority of the population lives in the rural areas place factor for a hospital plays a very important role. A typical small village or town may be having small dispensaries but they will not have super specialty hospitals. For that they will have to be independent on the hospitals in the urban areas.
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