Objective To evaluate the waste of resources caused by unnecessary hospitalization from the perspectives of direct economic burdens and bed utilization efficiency according to the data of Department of Gynecology of a tertiary grade A hospital in Shanghai. Methods A total of 500 patients admitted in the first half year of 2012 were randomly selected from inpatients of Department of Gynecology of a tertiary grade A hospital in Shanghai. The retrospective review was adopted and the appropriateness of admissions and hospitalization of selected patients was evaluated by a clinical nurse according to the appropriate evaluation protocol (AEP). The direct economic burden caused by the unnecessary hospitalization was calculated according to the total cost and average daily cost paid by patients. The improvement of bed utilization efficiency after eliminating the unnecessary hospitalization was reflected by the average hospitalization days and bed turnovers. Results The rate of unnecessary admission was 12.40% and the rate of unnecessary hospitalization was 22.93%. After the unnecessary admission and unnecessary hospitalization were eliminated, the direct economic burden could be saved by 18%. Average hospitalization days decreased from 6.04 to 4.81, and bed turnovers decreased from 8.06 to 7.06. Conclusion The elimination of unnecessary admission and unnecessary hospitalization by scientific and appropriate measures during the course of providing the hospitalization service can relieve the direct economic burden of patients and efficiently decrease average hospitalization days without affecting the quality of medical services.