The private Union Hospital in Sha Tin received up to HK$300 million for half a plot of land that was turned into upscale residential blocks, it was revealed yesterday.
The windfall was used for operating expenses, said chief hospital manager and medical director Anthony Lee Kai-yiu. He explained that the operating environment in the 1990s was difficult for the hospital.
The clarification came after the Director of Audit on Wednesday criticized the Lands Department and Department of Health for allowing the rezoning and lease modification of the 1.9-hectare Tai Wai plot. The site was intended for a 200- to 600-bed private hospital when it was sold to Henderson Land by public tender in 1982 for HK$60.8 million.
However, only 54 percent of the site was used to build the 212-bed Union Hospital. The rest remained idle for more than 20 years.
In 2004, Henderson paid a HK$610 million premium after seeking lease modification and land exchange, and the vacant lot was turned into the upscale Hill Paramount residential project. The hospital, which was built by the Henderson group in 1994, added 200 more beds in 2006.
"Union Hospital got HK$200 million to HK$300 million from Henderson for building four blocks of residential buildings," Lee told RTHK.
"In the 1990s, Union faced difficulties in running the private hospital and the board of directors decided to turn half of the land into residential use to make money and support the hospital operation."
Whatever the hospital decided, Union has upheld its promise to provide quality medical service, Lee said.
In his report, Director of Audit David Sun Tak-kei said the unusual arrangement was due to a contractual requirement for the hospital to build no less than 200 beds, one-third of the maximum requirement for the site in order to support a 600-bed hospital.
Sun said yesterday that the government regulations on private hospitals are outdated.
Secretary for Food and Health Ko Wing- man said the government would closely regulate private hospitals.
"A working team will be set up to focus on improving regulations especially on land lease and sale," he said.