The cash-strapped Hospital Authority will overcome its enormous deficit in three years, the health chief claimed yesterday. However, Dr Yeoh Eng-kiong refused to confirm whether public hospitals would start charging accident and emergency fees of up to $200 a visit from September, as earlier claimed by Hospital Authority chairman Lo Ka-shui. Dr Yeoh, Secretary for Health and Welfare, said he believed the deficit was only temporary and stressed that the authority had a $1.1 billion reserve for 'bad days'. He said the shortfall could be resolved by administrative measures and that the deficit would not trigger an immediate change to the existing pay structure at public hospitals, where services are now subsidised 98 per cent by the Government. The Hospital Authority has this year recorded a $200 million budget deficit - its first since being set up in 1991. It is projected that the deficit will rise to $580 million in the next financial year. Dr Yeoh attributed the deficit to the rising demand for public medical services, a low staff turnover, promotion of student nurses to higher-paid registered nurses and extra spending on new medical technology. Dr Yeoh said the turnover rate of doctors and nurses had dropped drastically from about 10 per cent to about two per cent. But he said the situation could be stabilised in three years when the seven-year-contract terms for public doctors receiving specialist training expired. Dr Yeoh also believes natural wastage will help resolve the deficit as senior medical staff will leave and be replaced by junior newcomers. Other means to balance the books include restructuring of medical services such as improving outreach and community-based medical services to avoid expensive in-patient services, as well as avoiding drug wastage. Dr Yeoh also claimed the deficit will not undermine the quality of services. The authority will continue to hire more medical staff to meet the demands of patients, he said. For long-term medical financing, Dr Yeoh insisted he still believed the creation of a medical insurance scheme was the best option to suit the needs of Hong Kong people. Under the scheme, each person between the ages of 40 and 64 would contribute one to two per cent of their income. Money from the scheme, similar to the Medisave system in Singapore, can only be withdrawn and used on medical and dental care once the account holder has reached the age of 65. Dr Yeoh also rejected criticism from legislator Lo Wing-lok, who complained that the Government had failed to identify the role of public hospitals. 'Please tell me which services should be cut by public hospitals. Do we need to refuse our patients until they are dying?' he asked. 'As doctor, I cannot do that.'