For discussion
on 27.1.99

LegCo Panel on Health Services
Meeting to be held on 27 January 1999

Implementation of the Enhanced Productivity Program
in the Hospital Authority and the Department of Health


This paper informs Members of the respective plans of the Hospital Authority (HA) and the Department of Health (DH) in implementing the Enhanced Productivity Program (EPP), with a view to achieving productivity gains amounting to 5% of their operating expenditures between now and the year 2002-03.


2. Both HA and DH, as part of the public sector, have undertaken to implement the EPP to improve productivity and efficiency in the delivery of services. The productivity gains delivered will be re-deployed to finance new or improved services for the benefit of the community.

3. As a first step, each organisation in the public sector, including HA and DH, is required to propose a list of initiatives that it will implement during 1999-2000 from within the sum already allocated for the year. Thereafter, each organisation will be required to deliver cumulative productivity gains amounting to 5% of its operating expenditure between now and 2002-03.

4. Since it has only been a few months since the announcement of the EPP, HA and DH have so far been focusing on the formulation of overall strategies and directions, which are set out below. It is too early at this stage to report on the specific initiatives, but we will keep Members informed of the progress.

Productivity Gain Initiatives of HA

5. HA has proposed a number of initiatives to be implemented in 1999-2000. These initiatives are now being examined by the Government and will be reported to Members when they are finalised.

6. To achieve the ultimate target savings in recurrent baseline expenditure of 5% by 2002-03, HA is currently examining various productivity gain initiatives, among which include -

  1. formulating an overall plan for rationalizing medical services in the clusters and among the clusters to facilitate the achievement of productivity gains. One example is to reorganise the delivery of Obstetrics and Gynaecology services on cluster basis to achieve optimal utilisation;

  2. establishing task groups to formulate strategies to facilitate the implementation of various productivity gain ideas and initiatives in the areas such as administration and supporting services. These task groups comprise staff members from both HA Head Office and hospitals, which will make recommendations to HA Head Office and hospitals on effective ways to achieve productivity gains in a longer term; and

  3. deploying 1% of HA's baseline budget in 1999-2000 as "seed money" for one-off expenditure on initiatives, such as investment in energy conservation and food production rationalization, to achieve future real money savings.

7. In its planning process, HA will ensure that resource allocation is performed in the most effective manner and that the hospitals have the ability and capability to enhance productivity, while the quality of hospital services would not be undermined by the proposed redeployment savings or productivity gains.

Productivity Gains Initiatives of DH

8. In DH, each service head has been requested to review his expenditure level and to identify savings and areas for improving productivity without additional resources. Similar request has been made to the organizations subvented by DH. DH is in liaison with these organisations on possible savings that can be achieved.

9. Broad productivity gain initiatives proposed by DH include -

  1. streamlining of existing procedures, e.g. internal administrative procedures;

  2. rationalizing organisational structure within departmental headquarters and across regional offices, e.g. re-structuring of some existing service units;

  3. assessing the cost-effectiveness of service delivery methods and considering improvement measures, e.g. by contracting out some supporting services; and

  4. improving efficiency of service delivery through office automation and computerisation eg wider use of electronic means for correspondence, exchange and storage of information to save paper and courier service.

10. In formulating a detailed implementation plan, DH will take into consideration the current provision of services, feasibility of the proposed plan, and the plan's effect on service standard. It will also make suitable use of the new arrangements announced by the Civil Service Bureau for recruiting non-civil service temporary terms staff so as to allow more flexibility in manpower planning.

Health and Welfare Bureau
January 1999