Introduction: Suggestion system is a cooperative management method, which has been applied in organizations during the recent years. Suggestion system provides an opportunity for the staff, customers, and contractors to submit their ideas and suggestions to the manager to be applied if befitting. In this study, we aimed to evaluate efficacy of the suggestion system in Hashemi Nezhad Hospital of Mashhad University of Medicine Sciences. Materials and Methods: This descriptive survey was performed in all the staff (n=110) of Hashemi Nezhad Hospital of Mashhad, in 2012. The data collection instrument, which was a self-designed questionnaire including 22 items in three domains of hospital performance, efficiency, and personnel satisfaction, was distributed among the personnel. Validity of the questionnaire was determined by 10 Management experts, and its reliability was confirmed by a pilot study and Cronbach's alpha (α=0.9). The data were analyzed using SPSS Version 16. Results:The results indicated that suggestion system had a moderate effect on all the three domains (hospital performance [38.51%], efficiency of hospital [37.57%], and personnel satisfaction [32.88%]). Conclusion: Efficacy of the suggestion system was in an average level. Conducting further studies on problems before the implementation of suggestion system can be effective in promoting efficacy of this system.