There is a saying in Chinese that it takes 10 years to grow a tree, and 100 years to rear a person. What about a hospital? 

The discussion at the Legislative Council on the government’s proposal to extend the repayment schedule for the CUHK Medical Centre (CUHKMC) in respect of a government loan of HK$4.03 billion ($513.5 million) approved in 2015 has been ongoing. 

The panel discussion revolved around two key issues — whether the repayment (due this March) should be postponed, and, if so, for how long. The original proposal said CUHKMC should start making repayments five years later; now it has been revised into a two-stage plan — postpone payments for two years first, then perhaps for another three years upon review. There are two key considerations at play: First, what values are to be achieved if CUHKMC continues; and second, whether CUHKMC can break even and become capable of repaying the loan within a predictable period.

Private hospital that is semi-public

CUHKMC was proposed in 2014 by the Chinese University of Hong Kong as a nonprofit private teaching hospital. This distinctive status separates CUHKMC from most private hospitals in Hong Kong. Since its commencement of operation, it has participated in so many public healthcare service programs led by the Hospital Authority (HA) that we could perhaps regard it as semi-public.   

For example, CUHKMC is the only private hospital to provide specialist outpatient consultation and day procedure services to patients referred by the HA at standard designated fees and charges. During the pandemic, it was the only private hospital in town that provided patient care to COVID-19 patients transferred by the HA. It also set aside hospital beds for admitting non-COVID-19 patients referred from public hospitals, thus enabling the government and public hospitals to focus their resources on treating COVID-19 patients. It is fair to say that CUHKMC’s participation has helped to ease the burden on the public healthcare system throughout the pandemic, and, in particular, to alleviate the mounting pressure on public hospitals during the height of the fifth wave. 

Last March, my 93-year-old father was diagnosed as COVID-19 positive. At that time, all public hospitals in Hong Kong were full and unable to admit him, while most private hospitals did not accept COVID-19 patients as a matter of policy. I was in Beijing for the National People’s Congress and as a last resort, I turned to CUHKMC. Against all odds, CUHKMC swiftly admitted my father and started the treatment program, thanks to which my father soon recovered. 

Loan arrangement too optimistic 

Pursuant to the terms of the government loan, CUHKMC is required to make repayments in 10 annual installments starting in the sixth year (i.e., 2023) from the first drawdown (i.e., March 2017) instead of its commencement of operation (i.e., September 2021). In other words, the first five-year interest-free period covers the entire construction phase, which, due to serious disruption caused by the pandemic, was extended for six months, leaving the hospital only 18 months to operate before the first installment of the loan, estimated at HK$600 million, was due. Under the current economic environment, it seems unrealistic for any hospital to repay a loan of such magnitude after merely 18 months of operation. The initial design of the loan terms appears to be too optimistic.

In this regard, one aspect concerning CUHKMC’s earnings capability is worth mentioning. CUHKMC is prone to using a package price model, which offers all-inclusive packages covering doctors’ fees and hospital charges irrespective of the length of stay. Under the package price model, it is the hospital that will bear any additional costs incurred if the patient develops complications. This price model renders private medical services more affordable, predictable and transparent, but, at the same time, seems to make them less profitable.  

5 years can work wonders 

The location of CUHKMC is prestigious, as it sits along the major railway line in the New Territories connecting both Futian and Luohu ports to Admiralty. Now that Hong Kong and the Chinese mainland have resumed normal cross-border travel, more patients from the mainland will seek medical treatment at CUHKMC. At the same time, the local population is aging rapidly, which suggests that demand for affordable private medical services by local residents may increase exponentially in the next few years. At the moment, CUHKMC has about 215 hospital beds and provides medical services in more than 30 specialties. If it survives this financial crisis, it could expand in phases to its full scale (i.e., 516 beds) by 2027. It is not unforeseeable that CUHKMC can break even in the next three to five years and achieve continuous surpluses thereafter. 

If we agree that it takes about 10 years for a seed to grow into a well-established tree, then maybe we should be equally patient when witnessing a hospital develop from conception to fully normalizing its operations. CUHKMC is a unique Hong Kong-born comprehensive nonprofit private teaching hospital established by one of the top medical schools in the world. If we give it sufficient time to recover from the pandemic and let it grow for a couple of years, it has the potential to become a world-class private hospital. Since its establishment, it has made remarkable contributions to battling COVID-19, and it bridges the service gap between private and public healthcare in Hong Kong. The proposed two-plus-three-year extension is essential for CUHKMC to turn the tide and unleash its potential. To this young hospital, another five years could, indeed, work wonders. 

The author is a Hong Kong deputy to the National People’s Congress and member of the Legislative Council.

The views do not necessarily reflect those of China Daily.