With the health transformation program, universal health insurance was introduced. Thus, it became the most significant health service purchaser social security institution. The services provided by hospitals began to occupy an important place in the expenditures of the social security institution. Thus, the study aims to predict and model the effect of functional characteristics of health facilities on Social Security Institution (SSI) health expenditures in Turkey. While collecting the data used in the study, the hospital’s service levels as functional characteristics were considered, and the data between 01/2009 and 05/2020 were analyzed. Auto-Regressive Distributed Lag Model (ARDL) bounds test was used to analyze the presence of cointegration between variables in the short and long run. Long-run predictions show that while the secondary-level state hospitals reduce the health expenditure of the SSI, the tertiary- level state, university, and secondary-level private hospitals increase the SSI health expenditure. Measuring the services provided by hospitals and the benefits they provide to patients according to objective criteria will be the most significant indicator of the appropriateness of health expenditures.