Replies to LegCo questions

LCQ18: Resources for Hospital Authority

Following is a question by the Hon Frederick Fung and a written reply by the Secretary for Health, Welfare and Food, Dr York Chow, in the Legislative Council today (March 1):

Question:

The Hospital Authority (HA) continuously recorded deficits in the past four financial years. In this connection, will the Government inform this Council:

(a) of the basis and criteria adopted for the allocating funds to HA each year, and how the amount of funds is arrived at; whether the amount of funds is adjusted in response to changes in demand for various health care services; if so, why HA still runs into deficit and there is a shortfall in the provision of certain health care services (e.g. out-patient service); if not, how the Government ensures that its funding policy takes, as the primary factor, the maintenance of the standards of public health care service and not controlling the overall health care expenditure within a certain level; and

(b) whether it has assessed if the persistent book deficit recorded in HA's financial account will give the public the wrong impression that HA is being mismanaged and fees and charges for public health care services are too low, thus leading them to support any future proposals for increasing fees and charges for public health care services?

Reply:

Madam President,

(a) The Government subvention for the Hospital Authority (HA) in 2001-02 and 2002-03 was largely worked out on the basis of the population-based funding model, with an annual growth rate of subvention at around 2.2%. However, in view of the Government's budgetary situation in the years from 2003-04 onwards, a 1% annual growth rate had been applied with additional funds provided for specific programmes to serve the community needs.

Notwithstanding the additional resources made available by the Government mentioned above, the total Government subvention to the HA recorded a net reduction from 2003-04 to 2005-06 as a result of the implementation of pay cuts and delivery of efficiency savings under the Government's Enhanced Productivity Programme. By their very nature, these cost reduction measures should not have long term impact on the level or quality of the HA's services.

The main factors contributing to the financial deficits of the HA in the past few years include: increasing cost in medical treatment due to technology advancement; shortfall in non-medical income; increased staff cost due to salary increments for existing staff; one-off ex-gratia payment to staff departed under HA's Voluntary Early Retirement Scheme; and increased expenditure on insurance and legal services. The full amount of the deficits has been absorbed by the HA's General Reserve. There was no impact on the daily operation of public hospitals and clinics.

(b) The Government has been working closely with the HA to address the financial difficulties faced by the HA. For the year 2006-07, with the Government's recurrent subvention of some $27.4 billion together with other measures taken by the HA, we are hopeful for the HA to more or less balance its budget.

The main objectives of the current round of review on public medical fees are to better target Government subsidies to patients most in need and to instil on the HA users a sense of value of the services that they are receiving in order to influence patients' behaviour and to reduce abuse of services and wastage of medical resources. The review has no direct causal connection with the HA's financial situation.


Ends/Wednesday, March 1, 2006
Issued at HKT 12:56

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