diff --git a/erpnext/controllers/queries.py b/erpnext/controllers/queries.py
index e3aac9aba85..81f0ad3fed1 100644
--- a/erpnext/controllers/queries.py
+++ b/erpnext/controllers/queries.py
@@ -655,6 +655,34 @@ def get_purchase_invoices(doctype, txt, searchfield, start, page_len, filters):
 	return frappe.db.sql(query, filters)
 
 
+@frappe.whitelist()
+@frappe.validate_and_sanitize_search_inputs
+def get_healthcare_service_units(doctype, txt, searchfield, start, page_len, filters):
+	query = """
+		select name
+		from `tabHealthcare Service Unit`
+		where
+			is_group = 0
+			and company = {company}
+			and name like {txt}""".format(
+				company = frappe.db.escape(filters.get('company')), txt = frappe.db.escape('%{0}%'.format(txt)))
+
+	if filters and filters.get('inpatient_record'):
+		from erpnext.healthcare.doctype.inpatient_medication_entry.inpatient_medication_entry import get_current_healthcare_service_unit
+		service_unit = get_current_healthcare_service_unit(filters.get('inpatient_record'))
+
+		# if the patient is admitted, then appointments should be allowed against the admission service unit,
+		# inspite of it being an Inpatient Occupancy service unit
+		if service_unit:
+			query += " and (allow_appointments = 1 or name = {service_unit})".format(service_unit = frappe.db.escape(service_unit))
+		else:
+			query += " and allow_appointments = 1"
+	else:
+		query += " and allow_appointments = 1"
+
+	return frappe.db.sql(query, filters)
+
+
 @frappe.whitelist()
 @frappe.validate_and_sanitize_search_inputs
 def get_tax_template(doctype, txt, searchfield, start, page_len, filters):
diff --git a/erpnext/healthcare/doctype/inpatient_medication_entry/inpatient_medication_entry.py b/erpnext/healthcare/doctype/inpatient_medication_entry/inpatient_medication_entry.py
index bba521313df..e7319085e46 100644
--- a/erpnext/healthcare/doctype/inpatient_medication_entry/inpatient_medication_entry.py
+++ b/erpnext/healthcare/doctype/inpatient_medication_entry/inpatient_medication_entry.py
@@ -264,7 +264,7 @@ def get_filters(entry):
 
 def get_current_healthcare_service_unit(inpatient_record):
 	ip_record = frappe.get_doc('Inpatient Record', inpatient_record)
-	if ip_record.inpatient_occupancies:
+	if ip_record.status in ['Admitted', 'Discharge Scheduled'] and ip_record.inpatient_occupancies:
 		return ip_record.inpatient_occupancies[-1].service_unit
 	return
 
diff --git a/erpnext/healthcare/doctype/patient_appointment/patient_appointment.js b/erpnext/healthcare/doctype/patient_appointment/patient_appointment.js
index 79e1775b9db..3d9f8788de8 100644
--- a/erpnext/healthcare/doctype/patient_appointment/patient_appointment.js
+++ b/erpnext/healthcare/doctype/patient_appointment/patient_appointment.js
@@ -31,14 +31,14 @@ frappe.ui.form.on('Patient Appointment', {
 			};
 		});
 
-		frm.set_query('service_unit', function(){
+		frm.set_query('service_unit', function() {
 			return {
+				query: 'erpnext.controllers.queries.get_healthcare_service_units',
 				filters: {
-					'is_group': false,
-					'allow_appointments': true,
-					'company': frm.doc.company
+					company: frm.doc.company,
+					inpatient_record: frm.doc.inpatient_record
 				}
-			};
+			}
 		});
 
 		frm.set_query('therapy_plan', function() {