The efficiency and productivity evaluation process commonly employs Data Envelopment Analysis (DEA) as a performance tool in numerous fields, such as the healthcare industry (hospitals). Therefore, this review examined various hospital-based DEA articles involving input and output variable selection approaches and the recent DEA developments. The Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) methodology was utilised to extract 89 English articles containing empirical data between 2014 and 2022 from various databases (Web of Science, Scopus, PubMed, ScienceDirect, Springer Link, and Google Scholar). Furthermore, the DEA model parameters were determined using information from previous studies, while the approaches were identified narratively. This review grouped the approaches into four sections: literature review, data availability, systematic method, and expert judgement. An independent single strategy or a combination with other methods was then applied to these approaches. Consequently, the focus of this review on various methodologies employed in hospitals could limit its findings. Alternative approaches or techniques could be utilised to determine the input and output variables for a DEA analysis in a distinct area or based on different perspectives. The DEA application trend was also significantly similar to that of previous studies. Meanwhile, insufficient data was observed to support the usability of any DEA model in terms of fitting all model parameters. Therefore, several recommendations and methodological principles for DEA were proposed after analysing the existing literature.