Praise be to Allah
If the poor and needy are benefitting from the hospital as you say, then there is nothing wrong with giving charity and donations to support it and enable it to continue, especially since the hospital is not supported by the state.
All that can be done with regard to this man is that people should strive to prevent him gaining control of the money as much as possible, whether that is by means of a good watchdog body, or strong social pressure, or other means. If it is not possible to ward off his transgressions against people’s wealth and the rights of the patients, then one should examine what is in people’s best interests. If the interests served by supporting the hospital are greater and it benefits more people, and the financial corruption caused by this man is less severe in comparison to what is achieved of serving the people’s best interests and treating the sick, then there is nothing wrong with giving charity to the hospital.
If giving charity in the form of medicines, equipment and the like could ward off his evil, or reduce it, then giving charity in this form is better.
If anyone prefers to err on the side of caution and chooses to give his charity to the poor himself, so that he can be sure that it has reached them, then there is nothing wrong with doing that, especially since there are so many poor and needy sick people who go to this hospital or others, and he could even give it to poor and needy people who are not patients of that hospital.
Shaykh Ibn ‘Uthaymeen (may Allah have mercy on him) was asked: In our region there is a branch of a charitable organisation; is it permissible for me to give some of the zakaah on my wealth to them?
He replied: If the people who are in charge of this charitable organisation are people who are trustworthy in terms of their religious commitment and knowledge, then there is nothing wrong with giving some of your zakaah to them and telling them that it is zakaah, so that they do not use it as if it is regular charity.
But if you do not know anything about them, then it is preferable to give the zakaah yourself; in fact it is preferable for you to do that yourself in all cases, because giving the zakaah yourself, being certain that it has reached those who are entitled to it, and being rewarded for your efforts in ensuring that it reaches those who are entitled to it, is better than giving it to someone else to do that on your behalf.
End quote from Fataawa Noor ‘ala ad-Darb (7/408)
And Allah knows best.