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Auditor blasts Hospital Authority for negligence to violations on terms of grants

Private hospitals have violated terms of their rent-free leases by omitting mandatory facilities, distributing profit surpluses and skimping on free beds required by the terms of their grants, without proper consultation with the Health Department, says the Audit Commission.

The majority of the city's 11 private hospitals are run by non-profit churches. Land grants of many of the hospitals frequently stipulate a ban on distribution of profits and there is a mandatory requirement for provision of low-cost beds. Wednesday's report from the director of audit, however, revealed that the Health Department has done little to ensure compliance.

St Teresa's Hospital in Kowloon, as one example, was required to provide 20 free beds, dating back to the 1960s. The hospital was required to report usage to the Health Department annually. But the department had never received those reports until May 2012, after an audit inquiry.

The hospital's expansion in 1996 resulted in an additional requirement to provide 100 "low-fee" beds. A government inspection in 2009, however, identified only 58. A press report on the shortfall in October, 2009 was dismissed as false and "libelous" by the hospital.

The hospital met the terms after the press report, but the auditor found the Health Department did nothing after learning the hospital had charged patients occupying "low-fee" beds of up to 50 percent higher than other patients for certain medications.

St Teresa's Hospital also may have violated the "profits/surplus plough-back" requirement on its land lease, according to the report. The auditor found the hospital had paid about HK$483 billion to the Congregation of the Sisters of St Paul de Chartres, in the form of "license fees" and "donations" between 2009 and 2010, representing 36 percent of the hospital's surplus.

The commission was concerned that "a substantial proportion" of this fund was spent on improvement works of St Paul's Hospital on Hong Kong Island and development of a nursing school. A small portion was spent for charity outside the city too. The Lands Department has yet to confirm whether such expenses are allowed under the grant terms.

The Health Department was held accountable in most cases for gross negligence, but light was also shaded on decisions made by agencies that look after the city's precious lands.

Hong Kong Baptist Hospital was required to build a social center for the elderly and a day hospital with rehabilitation facilities for an expansion approved in 2002.

When the new, 12-story wing was completed in 2008, however, it appeared to operate only as an in-patient hospital service with three floors of "first-class" rooms.

The grant required the design plan to be approved by the Lands Department, but the government office did not receive a full plan of the building until three years after completion of the addition. The plan was never approved because the Health Department could not verify presence of the required facilities.

Another case involved Union Hospital in Shatin, which now shares the 1.92-hectare site with a luxury apartment, Hill Paramount. Since the plot was sold in 1982, the hospital's developer has made repeated attempts to build residential homes on the site.

Despite reservation from the Health Department and a proven lack of hospitals in the area, the Planning Department suggested that "the hospital site was not required for hospital expansion". The Town Planning Board approved an application to build homes next to the hospital in 2000.

Henderson Land Development paid HK$609 million for the conversion and Hill Paramount was put on sale in 2010. The 161 apartments and houses generated a revenue no less than HK$3.6 billion at the price it was offered.

The auditor found a loophole in the land lease - that the contractual requirement of 200 beds was too low for such a large site and that important development controls, such as minimum floor area and height limits, were not stipulated.

The Audit Commission recommended use of checklists to document inspections by health officials. In the wake of neglect of daily operations at hospitals, the commission also urged the Health Department to improve monitoring and report misconduct.

All of the recommendations were accepted by the appropriate departments. Ko Wing-man, secretary for food and health, said one of the four working groups formed under the Steering Committee on Review of the Regulation of Private Healthcare Facilities will study ways to step up regulation of private hospitals.

kahon@chinadailyhk.com

(HK Edition 11/15/2012 page1)