Objective: Telemedicine, as an information-based tool, is widely recognized as an effective solution for compensating for the imbalanced allocation of medical resources in China. This study specifi-cally aimed to analyze the impact of telemedicine functions on the operational efficiency of public hospitals, with a particular focus on their heterogeneous effects on hospitals of different levels. Methods: A cross-sectional research design was used based on the 2022 Health Informatization Statistical Survey data, and 8 944 public hospitals were used as research objects to analyze the impact of telemedicine on hospital revenues and business capacity. Multivariate linear model, propensity score matching (PSM), and grouped regression methods were employed to evaluate the impact of telemedicine on hospital revenues, number of consultations, and the number of discharges. Results: The descriptive results showed that telemedicine was available in 35.51% of public hospitals. The analysis also demonstrated that various factors, such as hospital level, academic category, area of the hospital, administrational level and number of beds all had a significant influence on the operation of the hospital. Moreover, the regression results showed that opening telemedicine could increase hospital revenues by 0.140 (P < 0.01), hospital consultations by 0.136 (P < 0.01), and the number of discharges by 0.316 (P < 0.01). After correcting for endogeneity using the propensity score matching, the results showed that the effect of opening telemedicine on hospital revenues, consultations, and the number of discharges was 0.191 (P < 0.01), 0.216 (P < 0.01), and 0.353 (P < 0.01), respectively. Further heterogeneity analysis was conducted to explore the differential effects of telemedicine on hospitals of different levels. Grouped regression showed that telemedicine had a positive impact on the income of secondary hospitals, with a coefficient of 0.088 (P < 0.05), and it had a more significant positive impact on hospital consultations in secondary hospitals, with a coefficient of 0.127 (P < 0.01). An even greater impact on the number of discharges in primary hospitals, with a coefficient of 1.203 (P < 0.01). Telemedicine, on the other hand, did not have a significant positive impact on the overall revenue and operational capacity of tertiary hospitals. Conclusion: Telemedicine had a significant promoting effect on hospital revenues, hospital consultations and the number of discharges, and this effect was differentiated between hospitals of different levels. Through the construction of telemedicine, primary hospitals were able to significantly improve their business capacity and revenue, which played a positive role in improving the operation of primary public hospitals.