I have another way to achieve the same goal without changing the underlying data:
ggplot(transform(survey, survey = factor(survey,
labels = c("Hosp 1", "Hosp 2", "Hosp 3", "Hosp 4"))), aes(x = age)) +
stat_bin(aes(n = nrow(h3),y=..count../n), binwidth = 10) +
scale_y_continuous(formatter = "percent", breaks = c(0, 0.1, 0.2)) +
facet_grid(hospital ~ .) +
opts(panel.background = theme_blank())
What I did above is changing the labels of the factor in the original data frame, and that is the only difference compared with your original code.