This report presents the latest estimates of Hong Kong domestic health spending for financial years 1989/90 to 2011/12, cross-stratified and categorized by financing source, provider, and function. Total expenditure on health (TEH) was HK$101 985 million in financial year 2011/12, which represents an increase of HK$8580 million or 9.2% over the preceding year. TEH grew faster relative to gross domestic product (GDP) leading to a rise in TEH as a percentage of GDP from 5.1% in 2010/11 to 5.2% in 2011/12. During the period 1989/90 to 2011/12, total health spending per capita (at constant 2012 prices) grew at an average annual rate of 4.8%, which was faster than the average annual growth rate of per capita GDP by 1.8 percentage points. In 2011/12, public and private expenditure on health increased by 8.3% and 10.0% when compared with 2010/11, reaching HK$49,262 million and HK$52,723 million respectively. Consequently, public share of total health expenditure dropped slightly from 48.7% to 48.3% over the year. Of private spending, the most important source of health financing was out-of-pocket payments by households (34.9% of TEH), followed by employer-provided group medical benefits (7.5%) and private insurance (7.4%). It is worth noting that private insurance will likely take over employers as the second largest private payer if the insurance market continues to expand at the current rate. Of the HK$101,985 million total health expenditure in 2011/12, current expenditure comprised HK$96,572 million (94.7%), whereas HK$5413 million (5.3%) was for capital expenses (ie investment in medical facilities). Analysed by health care function, services of curative care accounted for the largest share of total health spending (65.2%), which was made up of ambulatory services (33.6%), in-patient curative care (26.9%), day patient hospital services (4.1%), and home care (0.5%). Notwithstanding its small share, the total spending for day patient hospital services shows an increasing trend over the period 1989/90 to 2011/12, likely as a result of policy directives to shift the emphasis from in-patient to day patient care. Hospitals accounted for an increasing share of total spending, from 28.2% in 1989/90 to 46.8% in 2002/03 and then dropped slightly to 42% to 44% during the period 2005/06 to 2011/12, which was primarily driven by reduced expenditure of Hospital Authority. As a result of the epidemics which are of public health importance (eg avian flu, SARS, swine flu) and the expansion of private health insurance market in the last two decades, spending on provision and administration of public health programmes, and general health administration and insurance accounted for increasing, though less significant, shares of total health spending over the period. Without taking into account capital expenses (ie investment in medical facilities), public current expenditure on health amounted to HK$45,321 million (46.9% of total current expenditure) in 2011/12 with the remaining HK$51,251 million made up of private sources of funds. Public current expenditure was mostly incurred at hospitals (74.1%), whereas private current expenditure was mostly incurred at providers of ambulatory health care (51.2%). Although both public and private spending were mostly expended on personal health care services and goods (91.1% of total current spending), the distributional patterns among functional categories differed. Public expenditure was targeted at in-patient care (47.3%) and substantially less on out-patient care (27.4%). In comparison, private spending was mostly concentrated on out-patient care (42.7%), whereas in-patient care (24.7%) and medical goods outside the patient care setting (19.9%) comprised the majority of the remaining share. Compared to the Organisation for Economic Co-operation and Development countries, Hong Kong has devoted a relatively low percentage of GDP to health care in the last decade. As a share of total spending, public funding (either general government revenue or social security funds) was also lower than those in most economies with comparable economic development and public revenue collection base. Nonetheless, Hong Kong health care system achieved service quality and health outcome that fared well by global standards, indicating cost efficiency and effectiveness.