For discussion FCR(95-96)85
on 1 December 1995

ITEM FOR FINANCE COMMITTEE

CAPITAL WORKS RESERVE FUND
HEAD 708 - CAPITAL SUBVENTIONS AND MAJOR SYSTEMS AND EQUIPMENT
Medical Subventions
New Subhead “Yan Chai Hospital Multi-Services Complex”

Members are invited to approve a commitment of $512 million in money-of-the-day prices for constructing, furnishing and equipping a multi-services complex in Tsuen Wan to be operated by the Yan Chai Hospital Board.



PROBLEM

We need additional day and residential welfare facilities for children, the elderly and people with a disability. Moreover, there are inadequate infirmaries and nursing homes to meet the health needs of the elderly.

PROPOSAL

2. The Secretary for Health and Welfare proposes to create a commitment of $512 million in money-of-the-day (MOD) prices under the Capital Works Reserve Fund (CWRF) to assist the Yan Chai Hospital (YCH) Board to construct, furnish and equip a multi-services complex in Tsuen Wan comprising welfare and rehabilitation services, a nursing home for the elderly and an infirmary. We will reimburse the full non-recurrent cost of the welfare and rehabilitation services as well as the nursing home from the Lotteries Fund to the CWRF1.

Project scope and nature

3. The multi-services complex will be a 13-storey building with an approximate gross floor area of 26 000 square metres at a site near the present YCH in Yan Chai Street, Tsuen Wan. A site plan is at Enclosure 1.

4. The complex will provide the following services -

For children

  1. a day crèche with 70 places for children aged under two;
  2. a day nursery with 180 places for children aged between two and six;

For the disabled

  1. an early education and training centre with 60 places for children under two with a disability;
  2. a day activity centre with 100 places for severely mentally handicapped adults;
  3. a home for the aged blind with 30 places;
  4. a hostel providing 100 places for the severely mentally handicapped persons;

For the elderly

  1. a social centre;
  2. a self-financing care-and-attention home for the aged with 60 places;
  3. a nursing home providing 300 residential care places;
  4. an infirmary with 150 beds;

Others

  1. a self-financing urban hostel providing 40 places for singletons; and
  2. a central administration unit for social services run by the YCH Board.

The social welfare and rehabilitation services will occupy the ground and lower floors. The nursing home will be located on the fourth to eighth floors while the infirmary will take up the upper floors. There will be a link bridge connecting the multi-services complex and the main block in YCH.

JUSTIFICATION

Social Welfare and Rehabilitation Facilities

5. The Director of Social Welfare (DSW) has obtained the support of the Subventions and Lotteries Fund Advisory Committee for the proposed social welfare and rehabilitation services. These new subvented services will help to meet the need for additional day and residential places for children, elderly people and people with a disability.

6. The YCH Board will operate the proposed care-and-attention home for the elderly on a self-financing and non-profit making basis. It will help to meet the demand for quality residential care services from families and clients who can afford and are willing to pay for such services at reasonable rates. Financial assistance towards the capital cost of such services is in line with the recommendation of the Working Group on Care for the Elderly that Government should encourage non-Government organisations to develop non-profit making care-and-attention homes on a self-financing basis.

Nursing Home

7. There is a considerable number of elderly people who, because of their health condition, cannot be adequately cared for in care-and-attention homes but do not require the intensive medical and nursing care provided in infirmaries. We have pledged to construct six nursing homes to provide a total of 1 400 beds to bridge this service gap by 1997. Members have so far approved four nursing home projects (providing 900 beds) financed by the Lotteries Fund. The nursing home under consideration will provide 300 beds. We will shortly seek Members’ approval for the sixth nursing home.

Infirmary

8. With the ageing population in Hong Kong, there is an increasing demand for infirmary beds. The Hospital Authority (HA) is now providing 1 530 infirmary beds and has plans to open another 200 beds in the next six months. However, as at end October 1995, there is still a long waiting list for infirmary places. The HA has confirmed that additional infirmary beds are needed. Since there is currently no infirmary facility in the New Territories South cluster2 which covers both Tsuen Wan and Kwai Tsing, the HA supports the provision of an infirmary in the YCH multi-services complex.

9. The proposed infirmary will provide 150 beds. To facilitate its operation, this project will also include necessary upgrading of existing supporting services in YCH. The supporting services to be upgraded include physiotherapy, occupational therapy and prosthetic-orthotic services and enhanced laundry, kitchen and pharmacy capacity to cope with the increased patient load.

Other Services

10. The proposed urban hostel for singletons aims to provide temporary accommodation to homeless persons such as street sleepers and displaced bedspace apartment lodgers aged 60 and above. The YCH Board will operate this hostel on a non-profit-making self-financing basis.

11. The project also includes the reprovisioning of an office for staff of YCH Board responsible for administering welfare and rehabilitation services run by the Board.

FINANCIAL IMPLICATIONS

12. On the basis of the design proposed by the YCH Board and accepted by the Director of Architectural Services, DSW, Director of Health (D of Health) and Chief Executive, Hospital Authority (CE/HA), we estimate the capital cost of the project to be $544.8 million in MOD prices (see paragraph 14 below), made up as follows-


$ million


Social welfare,
rehabilitation
and other
services
Nursing home
Infirmary Total

(a) Building works

51.8

63.9

98.3

214.0

(b) Building services

17.6

25.6

41.8

85.0

(c) Drainage and
external works

0.7

0.9

0.9

2.5

(d) Contingencies

7.0

9.0

13.7

29.7

(e) Professional fees

7.5

9.7

19.7

36.9

(f) Furniture and equipment

6.2

18.2

30.3

54.7

Sub-total (at
December 1994 prices)

90.8

127.3

204.7

422.8

(g) Inflation allowance

23.5

33.3

65.2

122.0

Total in MOD prices

114.3

160.6

269.9

544.8

13. The YCH Board has undertaken to contribute $32.8 million towards the project. This is about 6% of the total project cost in MOD prices. The Board has already raised $22.8 million and has formulated detailed plans for soliciting donations to meet the balance of its undertaking. It will continue to use its best endeavours to raise additional money during the course of the project with a view to reducing the capital subvention required. We therefore propose a -recurrent commitment of $512 million calculated as follows -


$ million

Total capital cost

544.8

Contribution from YCH Board

(32.8)

Commitment sought

512.0

14. Subject to Members’ approval, the estimated cashflow is as follows -


$ million
(December
1994)
Price
adjustment
factor
$ million
(MOD)

1995-96

7.9

1.07500

8.5

1996-97

78.8

1.18250

93.2

1997-98

249.6

1.30075

324.7

1998-99

46.7

1.43083

66.8

1999-2000

10.0

1.54708

15.5

2000-2001

2.0

1.66311

3.3

Total

395.0


512.0

We derive the MOD estimate on the basis of the Government’s forecasts of trend labour and construction prices over the period between 1995 and 2001. We shall tender the piling and superstructure works under two fixed-price lump-sum contracts because this will allow the piling works to start in January 1996. We adopt a lump-sum basis as we can define clearly the scope of the works in advance, leaving little room for uncertainty.

15. According to the current programme of work, the building structure will be completed in mid-1997. The building services installation and fitting out will be completed in two phases so that we can put into early operation the social welfare and rehabilitation services and the nursing home. We expect these facilities to commence operation in early 1998, to be followed by the infirmary in late 1998.

16. For the proposed social welfare and rehabilitation services, the estimated annual recurrent expenditure (excluding rates) required for subventing the new services is $19.3 million at 1995 price level. Enclosure 2 provides the details. There is no additional recurrent cost in respect of the two self-financing facilities and the central administration unit.

17. For the proposed nursing home, the estimated annual recurrent cost (excluding rates) is $39.1 million at 1995 price level, made up as follows -


$ million

Personal emoluments

32.4

Other charges

6.7

Total

39.1

D of Health will subvent the operation of the nursing home net of the income from fees.

18. For the proposed infirmary, the estimated annual recurrent cost is $47.4 million at 1995 price level, made up as follows -


$ million

Personal emoluments

39.2

Other charges

8.2

Total

47.4

ENVIRONMENTAL IMPLICATIONS

19. Consultants engaged by the YCH Board conducted a preliminary environmental review of this project in April 1995. The review has concluded that an environmental impact assessment is not necessary. The Architect will incorporate suitable glazing and air conditioning to keep air and noise impacts to within established standards and guidelines. For short-term construction impact, the Architect will incorporate mitigation measures in relevant contracts to control noise, dust and site run-off. CE/HA and D of Health will ensure that the operator will dispose of clinical waste in accordance with the latest requirements of the Director of Environmental Protection.

Land acquisition

20. The District Lands Officer (Tsuen Wan) approved the private treaty grant to the YCH Board and its execution was confirmed on 15 November 1994.

Public consultation

21. The project has the support of the Tsuen Wan District Board.

Health and Welfare Branch
November 1995

1 -- The Lotteries Fund finaces social welfare services. With the support of the Social Welfare Advisory Committee, the Fund also finances the construction of nursing homes. Under Section 6(4) of the Government Lotteries Ordinance, the Financial Secretary has the authority to approve payments from the Lotteries Fund to finance the development of these services. However, as a matter of practice, he would seek Members' approval for any proposal that has financial implications exceeding a certain limit. This limit has been raised from $5 million to $8 million a year since September 1995 (the delegated authority he has in approving supplementary provision under recurrent expenditure subheads). The welfare, rehabilitation and nursing home facilities proposed in this multi-services complex fall into this category. Subject to Members' approval, the Financial Secretary will approve payment from the Lotteries Fund for reimbursing the CWRF the cost of those services estimated at $274.9 million in MOD prices.
2 -- The HA has organized its hospitals into eight hospital clusters. Within each hospital cluster, the roles and responsibilities of individual hospitials in respect of service type and level of care are clearly defined. The New Territories South cluster comprises five hospitals, namely Princess Margaret Hospital, Kwai Chung Hospital, YCH, Caritas Medical Center and Lai Chi Kok Hospital.


Enclosure 2 to FCR(95-96)85

Recurrent subventions for new services in Yan Chai Multi-Services Complex

Service

Personal
emoluments
$’000
Other
Charges
$’000
Fee
income
$’000
Annual
recurrent
subvention
$’000

• Early educational
• and training centre
(60 places)

1,585

73

(8)

1,650

• Social centre for the elderly(open membership)

549

45

(2)

592

• Day crèche
(70 places)

-

140

-

140

• Day nursery
(180 places)

-

188

-

188

• Home for aged blind
(30 places)

1,540

388

(413)

1,515

• Day activity centre
(100 places)

5,180

416

(0)

5,596

• Hostel for severely mentally handicapped persons
(100 places)

9,904

______

1,322

______

(1,608)

______

9,618

______

18,758

2,572

(2,031)

19,299

Notes :

  1. Personal emoluments based on 1995-96 mid-point salary.
  2. Other charges based on existing/standard provision for similar facilities.
  3. We subvent day crèches and nurseries by subsidising 5% of their operating cost. In addition, we provide fee assistance to parents in need. The estimated additional expenditure on fee assistance resulting from the additional places provided is $3.395 million a year.
  4. The above calculation excludes reimbursement of rates as it is not possible at this stage to estimate accurately the amount of rates to be reimbursed to the YCH Board.


Last Updated on 2 December 1998