THE Erskine Hospital, Scotland's only nursing facility for disabled

ex-Service personnel, is to be extensively rebuilt at a cost of millions

in order to conform with new community care guidelines.

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The foundation running the Renfrewshire hospital, which has been

forced to apply for registration as a nursing home to qualify for

central and local government support, announced yesterday it would be

phasing out its dormitory accommodation in favour of modern units more

in tune with changing policies on the care of the elderly and disabled.

The work will accelerate the hospital's continual upgrading of

facilities and is expected to start later this year, the hospital's

annual meeting was told yesterday.

Details of the work were not available, but the hospital's central

building, a listed mansion house, will not be seriously affected.

The appointment of Lieutenant General Sir John MacMillan as chairman,

succeeding Vice Admiral Sir Thomas Baird who has decided to step down

after nine years' service, was also endorsed.

Sir John was confident the hospital could fund the work from reserves,

currently standing at #25.7m.

However, he would not rule out the possibility of a public appeal for

assistance when the full details of the programme are finalised.

However, Sir Thomas sounded a warning note when he indicated he

thought the charity's financial strength would be ''severely tested'' by

the scheme.

The hospital currently needs to raise #1.9m a year to cover its

running costs and that is likely to rise as a result of the planned

work, treasurer Iain Grimmond predicted yesterday.

The hospital, which looks after 355 patients, received #5.6m in

ordinary income and spent #7.4m last year, leaving it with a deficit of

#1.8m before items such as legacies and donations were taken into

account.

Legacies were #500,000 down on 1993 at #3.1m, with donations down

#80,000 to #960,000. However, the charity raised #1.3m through the sale

of investments which, coupled with legacies and donations, left Erskine

#2.9m in surplus for 1994, a slight decrease on 1993.