Prince of Wales Hospital is planning to build a 400-bed block by 2021 in an effort to stop patients having to wait for hours in the emergency department for beds to become free.
The site earmarked for the new building is currently home to nurses' quarters which may disappear completely, leaving staff to find alternative accommodation.
During this winter's annual surge of inpatients, occupancy rates in the 1,360-bed Sha Tin hospital were over 120 per cent - the highest among all public hospitals. At one point 80 patients admitted by the hospital were waiting for hours in the 24-hour emergency unit before they could be given a bed.
The hospital's chief executive, Dr Hung Chi-tim, said: "We really need extra beds and manpower to address the shortage of beds.
"Our patients usually suffer from complex conditions and need longer hospital stays. The ageing problem is increasing the burden on us," he added, referring to forecasts that by 2041 a third of the population in Hong Kong will be aged 65 or above.
It is understood the bill for the new building will be an estimated HK$8 billion.
Hung's deputy, Professor Philip Li Kam-tao, said an 80,000 sq ft site currently used for offices and accommodation for nurses was the likely location for the new block. It would house the cancer, paediatric and maternity wards, creating room for the general wards to expand.
Li said many other local hospitals had already scrapped the old practice of offering on-site accommodation to nursing staff. He said the hospital would still provide a place for medical staff to rest if they were on night duty.
In the decade following the new block's completion, Li expected the hospital, which serves the New Territories East district, would still need another 400 beds to cope with an expanding and ageing population.
To help deal with the problem in the short term, Hung said that this year an extra 50 beds would be provided on general wards, and an extra four beds added in the high-dependency unit.