The private hospital run by Chinese University of Hong Kong (CUHK) has pledged to provide public healthcare services under an agreement with the government to postpone its repayment of a HK$4 billion (US$509 million) loan, as its CEO said it would not survive if it made the first instalment in March as scheduled.
The proposal to delay the repayment by five years to March 2028, drawn up by the CUHK Medical Centre in Sha Tin and the government, would be subject to lawmakers’ approval on Friday.
Dr Fung Hong, the hospital’s CEO, on Wednesday said it would be left with a negative cash balance of HK$51 million and could not sustain operations if it was forced to repay its first instalment of HK$629 million in March this year as planned.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
He explained that newly opened hospitals usually took about five years to break even, while the centre had only been open for a year and a half since September 2021.
“It is mainly because hospitals have a lot of expensive and advanced equipment and facilities, such as CT and MRI scanners, electrochemotherapy and surgical facilities,” he said in a press interview. “Therefore, we have not broken even after operating for 16 months.”
He said a negative cash flow of as much as HK$2 billion could exist in 2027 under the original schedule, adding that its services were affected by the Covid-19 pandemic, which weakened its liquidity and financial robustness.
The centre is a non-profit organisation and the first private teaching hospital wholly owned by a local university. All of its profits would go to the hospital’s development and the faculty of medicine for research and teaching.
The hospital had 215 beds in January and planned to have 516 by 2027.
New private hospital under Chinese University to accept Covid-19 patients
In 2015, Legco approved a proposal to loan more than HK$4 billion to the centre in 2017. The loan would be interest-free until 2022, and the hospital would then have to pay 10 annual instalments starting in 2023, with the final one due in 2032.
Based on the interest rate of 5.6 per cent in 2022, the hospital would have had to pay HK$629 million in March.
According to the new proposed schedule, the hospital could pay the first instalment in March 2028 and the last in March 2037.
The interest the hospital failed to pay between 2023 and 2028 could be replaced by 120,749 days of bed usage or 23 inpatient beds per day in the form of public services for 15 years.
The hospital would be allowed to fulfil the requirement by admitting patients transferred from public hospitals or directly charging its patients at the rate of public hospitals. It could also provide outpatient services such as consultations, MRI and X-ray scans or other services required by the government.
Fung expressed confidence that the hospital could follow the new plan, leading to positive cash flow in 2023 and profits as early as 2027.
“Based on our experience in these 16 months, we have conducted a financial projection. We have hired an independent financial consultant ... and they have agreed that the projection is reasonable and trustworthy,” he said.
The government would also consider placing directors on the hospital’s board and request it to report its business plan and financial status annually in 2026 and 2027, while CUHK would repay the loan if the hospital failed to do so in 15 years.
In the proposal submitted to the Legislative Council on Tuesday, the government wrote that the medical centre had been “making considerable contributions” to support its anti-epidemic efforts despite facing financial difficulties, so it should be allowed to continue operating.
Can Hong Kong hospitals, already swamped by Covid, survive a flu surge?
During the fifth and most severe wave of the pandemic last year, the centre opened 24 beds for recovering Covid-19 patients from public hospitals to reduce their burdens. It also operated community and mobile vaccination stations.
Medical sector lawmaker Dr David Lam Tzit-yuen, who sits on the health services panel, supported the proposal, agreeing that having both inpatient and outpatient services as part of the repayment would allow the government to ask for a different type of help if it was not in need of hospital beds.
He said the hospital deserved the government’s aid due to its contribution to medical education and its package-price model, rather than one based on services adopted by most private hospitals, could protect residents without medical insurance from being overcharged.
The hospital could also provide more beds to reduce the waiting time at private facilities, he added.
More from South China Morning Post:
- Hong Kong health authorities launch inquiry after staff at private hospital run by Chinese University give mother wrong newborn to breastfeed
- New Hong Kong private hospital CUHK Medical Centre out to lure public patients with price guarantees, as officials seek to ease strain on government facilities
For the latest news from the South China Morning Post download our mobile app. Copyright 2023.
