In order to reflect the population covered by institutional medical services, the concept of hospital potential capacity is proposed and a formula for its estimation is developed based on a population dynamic model. Using the collected data on hospital outpatient and inpatient services and the demographical information on Chongqing as an example, the demand for medical resource allocation in Chongqing is dynamically estimated. Moreover, the proposed formula is also useful in the estimation of the basic reproduction number in epidemiology. The results can be contributed to the improvement of decision-making in the allocation of medical resources and the evaluation of the interventions and control efforts of the infectious disease.