If an elderly, very unwell person is in hospital and suffers from chronic insomnia then, in general, can this have an adverse affect on the person's ability to recover? if so, how, generally speaking?

Possible: Rest is very important for us all if there is an issue tell the nurse to let the doctor know. The doctor will discuss with the patient and resolve the issue

Yes: Inability to sleep, for whatever reason, can indeed affect recovery, however, chronic insomnia in the elderly is diiferent, and can be related to dementia, specialized treatment is then needed, not sleeping pills or pain killers, input from a neuro-psychiatrist or a geriatrician will help, best wishes