DEVELOPMENT AND PROSPECT OF THE INDONESIAN HOSPITAL INDUSTRY

The hospital industry in Indonesia may be considered far from developed, since in the past, the government’s concentration and development priorities were geared towards other sectors other than the health sector. In recent years, however, with improved education, living standards and purchasing power, health awareness is automatically increased and the people are logically demanding better improvements in the health sector as well. The reflection is clearly observed from the increased number of hospitals, the available hospital beds, hospitalized patients and outpatients during the last five years. The limitation faced by the government in building and developing government-owned hospitals, however, has given a more important role to the private sector to get involved in this particular sector and indeed, the role of the private sector in the Indonesian health care sector has increased substantially during the last five years. Indonesian hospitals, besides providing healthcare, also function as training ground for medical research and personnel. The hospitals are assisted by government-run public health centers or PUSKESMAS, located not only in the city and the city outskirts but also in the sub-districts, rural areas as well as in remote and isolated regions and provide basic medical treatments and services.

Hospitals in Indonesia are classified according to the type and the ownership. In terms of type, the hospitals are classified as follows:

• general hospital, e.g. provision of medical treatment of all kinds of diseases, ranging from diseases of basic nature to those of sub-specialist nature.
• psychiatric hospital, e.g. exclusive provision of psychiatric services.
• special hospital, e.g. provision of medical treatment on the basis of certain diseases and disciplines, such as leprosy, tuberculosis, orthopedic and prosthesis, maternity, ophthalmology, cardiac, cancer, mother and child.

Under the criteria of the management or ownership, there are only two classifications of hospital available, e.g. government-owned and private-run hospital. Government-owned hospitals belong to various institutions, e.g.:

• the Ministry of Health (central government)
• first-level regional administration (provincial/regional government)
• second-level regional administration (regency & city)
• the Indonesian Armed Forces and the National Police
• state-owned enterprises.

Moreover, general hospital owned by the Ministry of Health and the regional administration levels are classified according to the capacity, e.g.

• A-class general hospitals, providing facilities and wide range of medical and specific treatment and services as well as training purposes.
• B-class general hospitals, providing basically the same facilities and services as an A-class hospital
• C-class general hospitals, providing at least a minimum of 4 basic specialization: surgery, internal diseases, pediatrics and obstetrics & gynecology
• D-class general hospitals, providing basic medical treatment.

In line with the government’s policy in the health sector, 75% of the total hospital beds available are allocated for the patients within the low-income segment and in many specific cases, patients with poor economic condition will be exempted from payment obligation of hospital expenses, whereby private-run hospitals are appealed to make 25% from the total hospital beds available to be allocated for the low-income level patients. Having realized its limitations in developing the health sector, the government deregulated the health sector in the early 90’s by allowing the private sector to play a bigger role in providing health services to the public and this policy is responded positively by the private sector. The health sector, prior to this period of time, is exclusively owned and managed only either by the government or social foundations.

By the end of the year 1999, the number of hospitals run by the private sector have accounted for 33% of the total number of general hospitals in Indonesia. Special hospitals have been dominated by the private sector with a total share of 70% from the total number of special hospitals. Recent development trend clearly indicates that the role of the private sector in developing the health sector is expected to further increase in the near future.