Objective To develop an automated, data‐driven, and scale‐flexible method to delineate hospital service areas (HSAs) and hospital referral regions (HRRs) that are up‐to‐date, representative of all patients, and have the optimal localization of hospital visits. Data Sources The 2011 state inpatient database in Florida from the Healthcare Cost and Utilization Project. Study Design A network optimization method was used to redefine HSAs and HRRs by maximizing patient‐to‐hospital flows within each HSA/HRR while minimizing flows between them. We first constructed as many HSAs/HRRs as existing Dartmouth units in Florida, and then compared the two by various metrics. Next, we sought to derive the optimal numbers and configurations of HSAs/HRRs that best reflect the modularity of hospitalization patterns in Florida. Principal Findings The HSAs/HRRs by our method are favored over the Dartmouth units in balance of region size and market structure, shape, and most important, local hospitalization. Conclusions The new method is automated, scale‐flexible, and effective in capturing the natural structure of the health care system. It has great potential for applications in delineating other health care service areas or in larger geographic regions.