Public hospitals vary widely in their service mix, specialties, and resource capacities, making consistent assessment of service quality a persistent challenge. This study responds to the need for a standardized yet context-sensitive measurement instrument by adapting the SERVQUAL framework to assess service quality in public hospitals in Nepal. Drawing on the experiences of both inpatients and outpatients at a Public Hospital, Kathmandu, a customized service quality scale was developed and rigorously validated using confirmatory factor analysis and structural equation modeling. The results confirm the relevance of all five SERVQUAL dimensions, namely Assurance, Tangibles, Reliability, Responsiveness, and Empathy, while simultaneously revealing substantial service quality gaps across each dimension. Empathy exhibited the largest deficit, indicating a pronounced lack of personalized and compassionate care, followed by shortcomings in physical infrastructure and equipment. Gaps in Assurance, Reliability, and Responsiveness further underscored challenges related to trust, consistency, and timeliness of care. Multiple linear regression analysis demonstrated a consistently negative baseline perception across all dimensions, with gender-based differences observed in perceptions of reliability, while educational attainment showed no significant effect. These findings highlight critical areas for managerial and policy intervention, emphasizing the need for targeted staff training, infrastructure improvement, and system-level reforms to enhance patient-centered service delivery in public healthcare settings.