This report presents the latest estimates of Hong Kong domestic health spending between fiscal years 1989/90 and 2005/06, cross-stratified and categorised by financing source, provider, and function on an annual basis. In fiscal year 2005/06, total health expenditure was HK$71 557 million. In real terms, it grew 6.5% per annum on average throughout the study period, whereas gross domestic product grew 4.1%, indicating a growing percentage of health spending relative to gross domestic product, from 3.5% in 1989/90 to 5.1% in 2005/06. This increase was largely funded by public spending, which rose 8.2% per annum on average in real terms, compared with 5.1% for private spending. This represents a growing share of public spending from 40.2% to 51.6% of total health expenditure during the period. Public spending was the dominant source of health financing in 2005/06, whereas private household out-of-pocket expenditure accounted for the second largest share (34.5%), followed by employer-provided group medical benefits (7.5%), privately purchased insurance (5.1%), and other private sources (1.3%). Of the HK$71 557 million total health expenditure in 2005/06, HK$68 810 million (96.2%) was on current expenditure and HK$2746 million (3.8%) on capital expenses (ie investment in medical facilities). Services of curative care accounted for the largest share (67.3%) and were made up of ambulatory services (35.7%), in-patient services (27.7%), day patient hospital services (3.4%), and home care (0.6%). The second largest share was spending on medical goods outside the patient care setting (10.8%). In terms of health care providers, hospitals (44.0%) accounted for the largest share of total health expenditure in 2005/06, followed by providers of ambulatory health care (31.4%). 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 practitioners). Not taking capital expenses (ie investment in medical facilities) into account, public current expenditure on health amounted to HK$34 849 million (50.6% of total current expenditure) in 2005/06, most of which was incurred at hospitals (76.3%), whereas private current expenditure (HK$33 961 million) was mostly incurred at providers of ambulatory health care (55.8%). 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 about 70% of out-patient care. Although both public and private spending were mostly expended on personal health care services and goods (93.0%), the patterns of distribution among functional categories differed. Public expenditure was targeted at in-patient care (53.7%) and substantially less on out-patient care (24.6%), especially low-intensity first-contact care. In comparison, private spending was concentrated on out-patient care (49.9%), followed by medical goods outside the patient care setting (22.0%) and in-patient care (19.0%). Compared to countries of the Organisation for Economic Co-operation and Development, Hong Kong has devoted a relatively low percentage of gross domestic product on health services 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.