This paper aims at suggesting several ways lo change financial vulnerability and to improve managerial capability of local public hospitals (LPHs) in Korea through the identification of factors affecting profitability. Several findings of the research are as follows: To begin with, LPHs exhibited a statistically significant difference in their profitability from one another, according to tile analyses of their profitable margins from tile general characteristics. It depends on the number of hospitals in the area, the population of the hospital-built area, the number of competing hospitals, the number of staff per 100 beds, the opening of special clinic, the educational function, and the capacity of rooms. However, there was no variable in the managerial characteristics, presenting a significant difference, in contrast with hospitals which have been managed by private companies and made a great amount of profits. Second, according to the analyses of profit differences in behavioral effort-characteristics, a statistically significant difference was revealed upon the basis of the efforts to improve the clinic service, invite special patients, and shorten the period of being hospitalized. Third, the result of analyses about the difference of profitability from medical care and finance is statistically significant in the rate of labor cost, the rate of management cost, bed-occupancy rate, and the period of being hospitalized. Fourth, according to the analyses of the factors influencing the net profit ratio of the entire capital, Adjusted explanatory power(Adjusted $R^2$) was shown up to 65.2%, which is high. To compare the adjusted explanatory power stage by stage, the first stage model applying only two variables such as structural and strategic characteristics exhibited 23.8%, and the second stage model adding financial characteristics showed 51.5%. The explanatory power was much improved up to 65.2% when the third stage model incorporated the outcome of medical care performance. When the return on investment(ROI) was examined by using the multi-variate linear regression analysis at the final model of third stage, it was found that ROI had a positive relationship with the increase rate of patients, labor costs per doctor, and medical care rate of socially protected inpatients. However, it revealed that ROI had a negative relationship with the ratio of labor costs, the number of patients per managerial staff, and occupancy rate of rooms, respectively. The research suggests that in order for LPHs to increase profitability, LPH, should make efforts not only to attract patients to the hospitals without any discrimination of the patients depending on their financial status, but also to develop efficient management methods to reduce labor costs.