Objective To analyze the supply-side of rural clinics from the perspective of hierarchical diagnosis and treatment. Methods Using the Cobb-Douglas function for the quantitative analysis based on the theory of the supply-side. Results The elasticity coefficient for the three kinds of resource supply factors: the fixed assets, the subsidy of the essential medicine and human resources were 0.11, 0.218 and 0.495 by 2012-2014; The reduction of human resource made the maximum contribution for the decrease of the health service output, the contribution rate was 92.62%. In 2012-2014, the elasticity coefficient of the fixed assets increased slightly, the elasticity coefficient of the basic medical subsidy decreased obviously, and the elasticity coefficient of human resources increased first and then decreased. Conclusion The development of rural clinics is in the condition of scale benefits diminishing on Shandong province. Human resource is the most important power producer. The lack of human resources has become the main reason for restricting the development of rural clinics. Financial investment is insufficient to promote the development of rural clinics and the impetus is constantly weak.