This report presents the latest estimates of Hong Kong's domestic health spending between fiscal years 1989/90 and 2004/05, cross-stratified and categorised by financing source, provider and function on an annual basis. Total expenditure on health was HK$67,807 million in fiscal year 2004/05. In real terms, total expenditure on health showed positive growth averaging 7% per annum throughout the period covered in this report while gross domestic product grew at 4% per annum on average, indicating a growing percentage of health spending relative to gross domestic product, from 3.5% in 1989/90 to 5.2% in 2004/05. This increase was largely driven by the rise in public spending, which rose 9% per annum on average in real terms over the period, compared with 5% for private spending. This represents a growing share of public spending from 40% to 55% of total expenditure on health during the period. While public spending was the dominant source of health financing in 2004/05, private household out-of-pocket expenditure accounted for the second largest share of total health spending (32%). The remaining sources of health finance were employer-provided group medical benefits (8%), privately purchased insurance (5%), and other private sources (1%). Of the $67,807 million total health expenditure in 2004/05, current expenditure comprised $65,429 million (96%) while $2378 million (4%) were capital expenses (ie investment in medical facilities). Services of curative care accounted for the largest share of total health spending (67%) which were made up of ambulatory services (35%), in-patient curative care (28%), day patient hospital services (3%), and home care (1%). The next largest share of total health expenditure was spent on medical goods outside the patient care setting (10%). Analysed by health care provider, hospitals accounted for the largest share (46%) and providers of ambulatory health care the second largest share (30%) of total health spending in 2004/05. We observed a system-wide trend towards service consolidation at institutions (as opposed to free-standing ambulatory clinics, most of which are staffed by solo practitioner). In 2004/05, public expenditure on health amounted to $35,247 million (53.9% of total current expenditure), which was mostly incurred at hospitals (76.5%), whilst private expenditure ($30,182 million) was mostly incurred at providers of ambulatory health care (54.6%). This reflects the mixed health care economy of Hong Kong where public hospitals generally account for about 90% of total bed-days and private doctors (including Western and Chinese medicine practitioners) provide 75% to 80% of out-patient care. While both public and private spending were mostly expended on personal health care services and goods (92.9%), the distributional patterns among functional categories differed. Public expenditure was targeted at in-patient care (54.2%) and substantially less on out-patient care (24.5%), especially low-intensity first-contact care. In comparison, private spending was mostly concentrated on out-patient care (49.6%), whereas medical goods outside the patient care setting (22.6%) and in-patient care (18.8%) comprised the majority of the remaining share. Compared to OECD countries, Hong Kong has devoted a relatively low percentage of gross domestic product to health in the last decade. As a share of total spending, public funding (either general government revenue or social security funds) was also lower than in most comparably developed economies, although commensurate with its public revenue collection base.