The reason why hospitals give ice chips and not water is to provide the patient with a gradual way to hydrate and cool the body without overwhelming the body's system.
Ice chips are easier to consume for people with certain conditions and also melt slowly, and allow for better absorption by the body and also the ice chips reduce the risk of aspiration or choking.
Ice chips will melt slowly in the mouth and provide a controlled release of fluid, which is especially helpful for people that need to stay hydrated but may also have difficulty in swallowing of large amounts of liquids at once.
Also for people that are recovering from anesthesia or surgery or for people that have certain medical conditions, the risk of choking or inhaling "aspirating" liquid is higher and ice chips are much easier for the person to manage and are less likely to cause these issues like water could cause.
Ice chips also provide some relief for dry mouth, sore throat and even general discomfort, especially in situations in which drinking water is not ideal.
Ice chips also can help to regulate your body temperature and provide your body with a cooling sensation, which is also beneficial for people that have a fever or for people who are overheating.
Ice chips are also a more palatable way to hydrate than drinking water for people that are vomiting or experiencing nausea.