Lawmakers have given an initial green light to a plan which would allow a private hospital run by Chinese University of Hong Kong (CUHK) to defer the repayment of a HK$4 billion (US$509 million) government loan by five years, while asking for an annual review on the new arrangement.

Members of the Legislative Council’s health services panel on Friday gave their backing to the proposal which would allow the CUHK Medical Centre in Sha Tin to delay the repayment of its loan, despite casting doubt on the cash-strapped institution’s ability to begin payments by the new due date of 2028.

Among them was Business and Professionals Alliance lawmaker Priscilla Leung Mei-fun, who described the postponement plan drawn up by the government and the hospital as a “blank cheque”.

“I hope it will be written that if the proposal passes in the Finance Committee, the hospital’s person-in-charge must come and show us their financial situation every year,” she said, referring to the final endorsement needed from the Legco committee that scrutinises government budgets.

Peter Shiu Ka-fai from the Liberal Party also questioned the hospital’s ability to stick to the new repayment schedule, adding that lawmakers were not consulted before the proposal was submitted.

Opened in September 2021, the non-profit-making CUHK Medical Centre is the city’s 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 HK$4 billion loan, approved by Legco in 2015 and given to the hospital in 2017, was interest-free until 2022. The first annual instalment of HK$629 million was scheduled for next month, with the tenth and final one due in 2032.

Under the proposed arrangement, the hospital would only be required to pay the first instalment in March 2028 and the last in March 2037.

Speaking to the panel on Friday, Secretary for Health Lo Chung-mau said the hospital would face 10 years of negative cash balances and operational difficulties if it were forced to repay the loan this year, adding it deserved a chance to continue its operation due to its contribution to the healthcare system.

“The commitment of CUHK Medical Centre to adopt packaged charging, supporting the Hospital Authority’s services and other more transparent and standardised measures is an important part of the government’s policy on private hospital development,” he said.

“Despite its financial difficulties, [the hospital] is still willing to shoulder its social responsibilities and devote itself to the fight against the Covid-19 pandemic … [It] was the only private hospital in Hong Kong to admit Covid-19 patients transferred from the Hospital Authority.”

The proposed repayment plan requires the hospital to provide public medical services amounting to 120,749 days of bed usage, or 23 inpatient beds per day, for 15 years to make up for the interest of around HK$1.1 billion it originally needed to pay between 2023 and 2028.

The services could be delivered in the form of admitting patients transferred from public hospitals, directly charging patients at public hospital rates, as well as through providing outpatient services including consultations, MRIs and X-ray scans, or other services requested by the government.

Lo said the government would place directors on the hospital’s board and request it to report its business plan and financial status annually in 2026 and 2027, while CUHK should repay the loan if the hospital failed to do so in 15 years.

Tommy Cheung Yu-yan, the panel’s chairman, said while most attending members supported the proposal, there was a lack of information disclosed regarding the hospital’s financial situation. He said he hoped Legco’s Finance Committee would be able to review the institution’s financial report.

CUHK councillor Anthony Neoh said he would review the conditions for disclosing financial reports to the committee based on the centre’s contract with an independent financial consultant.

Edward Leung Hei from the Democratic Alliance for the Betterment and Progress of Hong Kong said the hospital should provide more inpatient beds and operations to ease the long waiting time in the public sector such as cataract and joint replacement surgery.

“The proposal needs to state clearly how the hospital can shoulder more social responsibilities,” he said.