The foundation of Caritas Baby Hospital date back to the events of 1948, when hundreds of thousands of Palestinians had been displaced and were living in deep poverty in refugee camps following the establishment of the State of Israel and the subsequent war of independence, or Nakba.
Hedwig Vetter, an employee of Caritas Switzerland, traveled to Bethlehem in 1949, where she was confronted with the misery of the Palestinian population. Together with Palestinian physician Dr. Antoine Dabdoub, she set up an outpatient clinic for babies, laying the foundation for Caritas Baby Hospital. In 1952, Caritas Switzerland sent Father Ernst Schnydrig, from the Canton of Valais, Switzerland, to Bethlehem to assess the situation of the Palestinian refugees. He met Hedwig Vetter in Bethlehem. Both Schnydrig and Vetter were convinced that they, as Christians, should help the people living in Jesus’ birthplace. After returning to Europe, Schnydrig began working at the German Caritas Association; from then on, he campaigned to secure financial support in Switzerland and Germany for Caritas Baby Hospital. In 1963, he founded the non-profit association Children's Relief Bethlehem, based in Lucerne.
In April 1978, Caritas Baby Hospital opened its own hospital building. Since then, the hospital has continued to develop and to align their services with global medical standards.