For discussion
on 27.1.99

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

Savings from redesignation of acute beds in public hospitals


This paper informs Members of the background to the programme of redesignation of acute beds in public hospitals, which will give rise to $114 million savings in 1999-2000.


2. To ensure the cost-effectiveness of government services, the Government constantly reviews the expenditure of each policy area to identify whether the services provided are still required and whether they are provided in the most cost-efficient manner. Any savings identified will be re-directed to meet other more pressing needs of the community.

3. In 1995, the Secretary for Health and Welfare (SHW), in consultation with the Hospital Authority (HA), carried out a review of the programme of hospital projects in the pipeline, the changing demographic trend, the movement of population from urban areas to the new towns, and the proportion of different types of hospital bed in the territory. As at 31 March 1994, about 55% of the total 23,287 beds in HA were acute beds, and most of them were located in hospitals in Hong Kong and Kowloon regions.

4. Following the review, bearing in mind the ageing population and their distribution, and the new acute hospital beds to be provided in the new towns, we concluded that about 250 acute public hospital beds, mainly those in the urban areas, should be redesignated into psychiatric/infirmary beds to meet the changing local needs. The redesignation programme would also produce savings for alternative uses as it is less costly for HA to maintain a psychiatric/infirmary bed than an acute bed. The redesignation programme was subsequently carried out in two phases - 1996-97 and 1999-2000. The potential saving from the redesignation was then estimated to be up to $90 million in 1996-97, rising to $180 million in 1999-2000.

5. In 1996-97, the baseline expenditure level of HA was reduced by $90 million as planned. HA reported in 1997 that 155 acute beds had been redesignated into infirmary beds. There now remains a further deduction of $90 million (at 1995-96 Estimates price level) or $114 million (at 1998-99 Estimates price level) in 1999-2000.

Latest Position

6. As pledged in 1995, $114 million (at 1998-99 Estimates price level) will be deducted from HA's baseline expenditure in 1999-2000. HA's initial plan is to convert 68 acute beds to psychiatric beds and another 68 to infirmary beds. HA will report to HWB in due course the make-up of the savings of $114 million so that the target savings could be accounted for and recognised.

7. We will continue to meet the demand of public hospital beds in line with population growth, in particular in the New Territories where population growth is the fastest. From 1996-97 to 1999-2000, the total bed number is estimated to increase from 25,947 to 28,517. The corresponding bed to 1,000 population ratios will increase from 4.03 to 4.17.

8. In 1999-2000 alone, an additional amount of $660 million will be provided to HA for the opening of new beds, $390 million for the 853 new beds to be opened in 1999-2000, another $270 million being the full-year effect of the 754 beds opened in 1998-99. Most of these beds are and will be provided in new town areas.

9. We will continue to review and re-assess the needs for different types of medical services and make appropriate allocation as necessary to ensure public money will be spent on services that meet the community's needs.

Health and Welfare Bureau
January 1999