Indonesian Healthcare Size, Growth, Opportunity

Sector Guide Indonesian Healthcare Size, growth, opportunity

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Published January 2020 by Department for International Trade Foreword

Indonesia is one of the world’s great economic successes. It is already the 16th largest economy in the world, with the third highest growth rate in the G20. At the current rate of growth it will be one of the five biggest economies in the world by 2030. However, Indonesia’s healthcare industry and health currently represents one of the most significant impediments to achieving the country’s potential. There is a clear need to improve healthcare in Indonesia. A reformed system would present a compelling market opportunity for private-sector players. Improved health would generate national economic benefits. And there is an ethical case for improved health outcomes for the local population. Private-sector players with the right ambition and approach can make a significant contribution to the nation, while developing a successful business. The UK should be the partner-of-choice to Indonesia in advancing its healthcare sector. With over 70 years’ experience in running the NHS, the UK can assist Indonesia in managing the challenges arising from its newly instituted National Health Insurance Scheme (JKN – Jaminan Kesehatan Nasional), as well as in research, innovation and development. Similarly, on a commercial level the UK supply chain can support Indonesia’s healthcare development agenda and the growing demand for locally delivered quality healthcare across a variety of segments. UK firms that aim to enter Indonesian market should envision Indonesia as a relationship based market and see my team, and our extensive network as an extension of their own. I hope we can be part of your firm’s Indonesian success story too. Joel Derbyshire Director of Trade and Investment Department for International Trade British Embassy Jakarta 02 Sector Guide: Indonesian Healthcare Sector Guide: Indonesian Healthcare 03

Size Group (Mayapada), the Sarana Meditama Metropolitan Group (Omni), The Indonesian Government is Mitra Keluarga, Awal Bros, Medikaloka working towards Universal Health Hermina and Ciputra Group.1 Coverage through BPJS Kesehatan (Badan Penyelenggara Jaminan Sosial Furthermore, Indonesia’s ratio Kesehatan or the Health Insurance of doctors is 0.16 doctors per Administering Agency), which was 1,000 residents. The number is launched in 2014. As of January lower compared to the average of 2019, as much as 82% of Indonesians countries in South East Asia (at 0.6 (approximately 216 million) are already doctors/1,000 residents), and far covered by BPJS. This is creating lower than in developed countries, new demand for healthcare facilities such as Germany at 3.7 doctors/1,000 upgrading, improved infrastructure residents.2 and human resources development. As the largest archipelagic country As of 2019, Indonesia is home to 2,967 in the world, with more than 17,000 hospitals, all of which are owned and islands, it is rather challenging to support and escalate healthcare operated by private, public and non- challenge to maintaining integration The increase is also intended to services in Indonesia, especially in profit (public) organisations. Private and alignment across the different strengthen primary care services, remote areas. Healthcare facilities are hospitals are dominated by 7 large levels of the health system.3 improve health facility services mostly concentrated in big cities and groups, namely Siloam International (£125mn) and provide training of Hospitals, Sejahteraraya Anugerahjaya decentralization has also become a Growth healthcare workers within Government hospitals (£100mn). The government The government’s budget allocation is currently prioritising: the for healthcare will be increased to strengthening of access and services Indonesia is home to 2,967 hospitals £7.5bn in 2020, which is 5.23% from at primary care centres; efforts to 2018 the total State Budget and Revenue strengthen existing promotive and 216Mn Subscribers Doctor to residents ratio in Plan (APBN). This represents an Indonesia is 0.16 doctors/1,000 preventive approaches to reduce residents approximate 7% increase compared stunting by expanding the coverage to to 2019. Of this figure, £2.8bn is 260 districts/cities; and measures to earmarked for contributions towards address challenges within BPJS and subsidized health premium recipients the National Health Programme. 1 https://www2.deloitte.com/content/dam/Deloitte/id/Documents/about-deloitte/id-about-dip- (PBI - Penerima Bantuan Iuran). edition-1-chapter-4-en-sep2019.pdf 2 https://www2.deloitte.com/content/dam/Deloitte/id/Documents/about-deloitte/id-about-dip- 3 APAC Observatory on Health System and Policies, The Republic of Indonesia Health System edition-1-chapter-4-en-sep2019.pdf Review 04 Sector Guide: Indonesian Healthcare Sector Guide: Indonesian Healthcare 05

With respect to the private healthcare of pocket. In addition, the private (Jakarta), Pirngadi Hospital (Medan) and Another area of opportunity in this industry, which contributed to the industry is seeking to tap into the Zainoel Abidin Hospital (Aceh)5 sector is digital health, which will national out-of-pocket spending Indonesian elite and wealthy segment have a positive impact on Indonesian There are also Public-Private (approximately 40% of national who seek better medical treatments healthcare services. In the digital Partnership (PPP) opportunities in the healthcare spending), there are abroad, which is perceived to provide disruption era, Indonesia’s healthcare effort to improve physical infrastructure currently seven major hospital chains, high quality care and services with sector has already been leveraging - around PPP financial advisory, PPP one of which is Siloam International reasonable fees. initiatives in technologies to improve procurement advisory, architecture Hospitals, with their current existing 35 delivery. The Government has already Indonesian patients spend up to and design consultancy, sophisticated hospitals and another 15 that are in the implemented digital technology to £5.7bn per year for medical treatments medical and surgical instruments construction or planning process. reach out patients in underserved areas overseas. This figure has increased and diagnostic equipment, as well as and serve National Health Insurance In addition, there are Mayapada with 4 from 350,000 patients in 2006 to hospital operations. Scheme (JKN) participants through a hospitals, Omni with 3, Mitra Keluarga 600,000 in 2015, with Singapore Foreign investment in the Indonesian number of programmes, including JKN with 13, Awal Bros with 11, Hermina with and Malaysia as the most favoured hospital industry has picked up over Mobile, BPJS Digital Claim Verification 30 and Ciputra with 3 establishments. destinations. the recent years, partly as a result of and P-Care BPJS27. All private players have revealed plans the Government’s efforts to simplify to build more hospitals. Opportunity In the private sector, major companies regulations and increase ease of doing as well as start-ups in life sciences and These facts indicate that industry As this guide has outlined, the business. healthcare are sporadically growing. players see significant commercial Indonesian government is planning Previously, foreign investors were only According to HealthTech.id (the opportunities for healthcare provision. to improve healthcare infrastructure, allowed to invest in specialist hospitals Indonesia Digital Health Association) Private hospitals and clinics continue to from primary care to national referral rather than the general hospitals. there are currently more than 90 attract higher-income patients and are hospital level. It is worth highlighting However, following the Government’s companies operating in the Indonesian poised to benefit from the expanding that 27% of the government policy announcement that foreign healthcare industry. HaloDoc, Alodokter middle class. As public facilities are budget will be disbursed to regional 4 investors are allowed to own up to 67% and DocQuity are the leading ones burdened with long queues, time- governments for this purpose. of general hospitals, investment in the in terms of revenue generation as at consuming bureaucratic processes and The government is also encouraging sector has started to rise rapidly. October 2019. insufficient human resources, more Public-Private Partnerships (PPPs) Current opportunities in terms of patients are choosing to seek care from to fund hospital development out With this in mind, there are a number hospitals include partnerships in new private providers. of the state budget throughout the of opportunities UK companies can hospital construction, expansion/ tap into, including Electronic Medical The private sector is more attractive archipelago. At the moment, there are upgrade of existing hospitals, Records (EMR), Electronic Patient to consumers than public health three projects registered in the 2019 partnerships with international Records (EPR), Hospital Information providers, even when they are required PPP Book, namely Indonesia National hospitals, as hospital investment Systems (HIS), eHealth Learning, to pay considerably higher fees out Cancer Centre Hospital – Dharmais partners and for supply of medical Teleconsultations and Remote technology and equipment.

4 (https://www.cnnindonesia.com/ekonomi/20190909131213-532-428753/sri-mulyani-blak- blakan-soal-anggaran-kesehatan-di-era-jokowiplan). 5 PPP Book 2019 page 28, BAPPENAS 06 Sector Guide: Indonesian Healthcare Sector Guide: Indonesian Healthcare 07

Monitoring, Digital Primary Care, should be aware that the process Internet of Things (IoT) and Wearables, could take a significant amount of as well as Digital Health regulatory time and, in some cases, it can take transformation advisory. several years. Therefore, companies are advised to team up with an Challenges appropriate partner, such as renowned There are a number of factors that local hospital operators or construction can pose as challenges to entering companies. Indonesia’s healthcare system. The Thirdly, the Doctors Union (IDI – first one being competitors. The Ikatan Dokter Indonesia) has a very competition in the medical equipment strong influence on the policy making and supplies market is high. Business process within the Ministry of Health. players from Germany and the United For example, with regard to the States are currently leading with total adoption of the latest clinically proven market shares of nearly 20% and over treatments for certain diseases. The 9% respectively. application of the treatments will Other countries are also actively not only need to be approved by the involved in the sector including China, Ministry, but also involves IDI and other Stakeholders district governments which operate Japan, and South Korea. Competition relevant professional bodies in the under the Ministry of Home Affairs The main stakeholders in the from these East Asian countries has decision-making process. (www.kemendagri.go.id). Therefore, Indonesian healthcare sector are the proven to be challenging, as they the responsibility for planning Lastly, in terms of Digital Health, Government and other professional offer lower-priced equipment and and managing service delivery there is still inadequate infrastructure and non-governmental organisations a relatively strong presence in the changed from the Ministry of Health such as: network/internet availability; and institutions. region for after-sales and maintenance unclear regulations on eHealth by (www.kemkes.go.id) to the local services. Ministry of Health; slow adoption of 1. Government Ministerial governments. However, the Ministry Department of Health (MoH) still continues to Secondly, although the opportunity eHealth by medical practitioners; run some tertiary and specialist for Public-Private Partnerships is wide and concern from users around data There are three levels within hospitals, but has shifted much of open, Indonesia does not yet have any privacy, diagnostic accuracy and legal Government-related bodies for 6 its focus to managing regulations experience in delivering PPP hospital protection when using eHealth apps. health services delivery with the and ensuring the availability of projects, although it is currently Central, Provincial and District/ resources, including personnel. undertaking a few pilot projects. UK Municipality levels (refer to chart: companies pursuing PPP projects Organization of Health system in The health services at the local Indonesia in page 11). level are divided between provincial level and district level. Provincial Since 1999, health services have governments own the provincial been decentralized to provincial and 6 Source: Indonesia Digital Healthcare: A leap of Faith, Deloitte Indonesia, 2019) hospitals and organise health 08 Sector Guide: Indonesian Healthcare Sector Guide: Indonesian Healthcare 09

programme (JKN - Jaminan Pendidikan Indonesia) Kesehatan Nasional) including (http://www.arspi.org/) managing membership, collecting Indonesia Health Tech premiums, administering contracts Association (HealthTech.id) with providers and paying providers (https://healthtech.id/) (www.bpjs-kesehatan.go.id ) Various associations of c. The Food and Drug Control Agency hospitals with religious (BPOM - Badan Pengawas Obat dan affiliations Makanan) b. Professional organisations - they (https://www.pom.go.id/new/) have a role in self-regulation 3. Other professional and non- of their respective professions. governmental organisations and For instance, IDI, PPNI and IBI institutions (listed below) have established certain competence standards a. Institutional organisations - although in their respective professions they do not have any regulatory and have the authority to impose function, they provide a platform sanctions upon their members for for communications with the professional misconduct. Government, representing their services through the provincial and areas of authority. Within the members. On the other hand, the Association for Doctors (IDI health offices (PHOs). The PHOs decentralized health system, the Government tends to turn to these - Ikatan Dokter Indonesia) play a coordinating role for health hospital is not subordinated to the organisations to disseminate policy (http://www.idionline.org/ ) issues within the province/region health office, and the DHO does not and information. Such bodies include: Association for Paediatricians and across districts. On the other answer to the PHO. Likewise, the PHO (IDAI - Ikatan DokterAnak National Hospital Association hand, district governments own is not responsible to the MoH, but to Indonesia) (PERSI - Perhimpunan Rumah district hospitals and organize the provincial governor. (http://www.idai.or.id/) Sakit seluruh Indonesia) (https:// health services through district Association for Dentists 2. Government Non-ministerial www.persi.or.id/) health offices (DHOs). DHOs also (PDGI - Persatuan Dokter Gigi department Association for Local Government operate health services provided Indonesia) (http://pdgi.or.id/) Hospitals (ARSADA - Asosiasi through the primary health centres a. The National Population and Family Association for Nurses (PPNI Rumah Sakit Daerah) (https:// (Puskesmas – Pusat Kesehatan Planning Board (BKKBN - Badan - Persatuan Perawat Nasional arsada.org/) Masyarakat) and their networks. Kependudukan dan Keluarga Indonesia) Association for Private Hospitals However, the relationship between Berencana Nasional) (https://www. (https://ppni-inna.org/) (ARSSI - Asosiasi Rumah Sakit MoH, PHO and DHO is not a bkkbn.go.id/). Association for Midwives (IBI - Swasta Indonesia) hierarchical one. The district b. The Social Security Agency Ikatan Bidan Indonesia) (http://arssipusat.org/) government is not positioned (BPJS - Badan Penyelenggara (https://ppni-inna.org/) Association for Teaching Hospitals “under” the provincial government. Jaminan Sosial) which administers (ARSPI - Asosiasi Rumah Sakit Each level has its own mandate the national health insurance 10 Sector Guide: Indonesian Healthcare Sector Guide: Indonesian Healthcare 11

c. Non-Governmental Organisations Next Steps The Organisation of Health System in Indonesia – they play an important role in How to export to Indonesia promoting awareness, preventive Central measures, fund-raising, policy DIT helps UK businesses export and Government and national advocacy and working in grow in global markets. We also help parliament partnership with the Government overseas companies locate and grow on monitoring and evaluation. in the UK and internationally. Our Family Social Ministry of Ministry of services are provided in over 100 Planning Food and Indonesian Cancer Security Health Home Affairs and Drug Control Managing markets throughout the world. Population Agency Foundation (YKI - Yayasan Agency Board Kanker Indonesia) (http:// The UK Government’s export credit yayasankankerindonesia.org/) agency, UK Export Finance (UKEF) is “Vertical” level (MoH Indonesian Heart Foundation an integral part of DIT’s operations and owned) hospitals Provincial (YJI - Yayasan Jantung strategy. UKEF helps companies in the Government and Indonesia) UK to: Parliement (https://www.inaheart.or.id/)

Win export contracts by providing Indonesian AIDS Foundation Provincial Family Plan- attractive financing terms to their Provincial Provincial ning and Population (YAI - Yayasan AIDS Indonesia) Health Offices Hospitals buyers Board (http://yaids.com/) Fulfil orders by supporting Foundation working on District working capital loans Government and community-based disaster Get paid by insuring against buyer Parliement preparedness and some other default health issues (Yayasan HOPE District Family Planning District Health District Indonesia) (https://www. Export from the UK and Population Board Offices Hospitals hopeindonesia.org/). Private Hospitals DIT provides funding to the UK Primary Healthcare ASEAN Business Council to run UK Centres The chart of the Organization of the Private roadshows and events on Indonesia. Clinics/ Practice, Health System in Indonesia in the etc next page shows the relationship You will find information about Central Government between each of the stakeholders. The these on the Indonesian page of the ASEAN Business Council website: Continuous line = authority continuous line refers to reporting Dotted line = technical supervision Provincial Government www.ukabc.org.uk/market/indonesia and accountability purposes, whereas District Government the dotted line denotes technical UKABC can also offer one to one supervision for the delivery of consultations with export advisors who Source: Government organization, decentralization and health system (Government of Indonesia, 2007; House of Representatives, 2004g: House of Representatives, 2008; House of Representa- healthcare services. have expertise and knowledge of the Indonesian market. tives, 2014b; President of Indonesia, 2011a; President of Indonesia, 2011b)

Screen clipping taken: 22/11/2019 14:34 / (APAC Observatory on Health System and Policies, The Republic of Indonesia Health System Review) 12 Sector Guide: Indonesian Healthcare

In market support You can also visit: DIT based at the British Embassy www.great.gov.uk/markets/ Jakarta, can support your export indonesia/ to access guidance activity through a number of ways: for British businesses that are interested in developing their Market introduction and local overseas trade and doing business intelligence in Indonesia. Relationship building Access to Indonesian Government www.gov.uk/government/ and State Owned Enterprises publications/overseas-business-risk- Information on local indonesia to review information representation from the British on how UK businesses can control Chamber of Commerce. risks when operating in Indonesia. Healthcare sector events www.great.gov.uk/export- and trade missions in the UK, opportunities/indonesia to access Indonesia and the SE Asia region Indonesian export sales leads. G2G support www.ukabc.org.uk/publication/ DIT also funds our local partner indonesia-matters-size-growth-and- the British Chamber of Commerce opportunity/ to access Indonesia Indonesia (BritCham) to provide Matters, a strategic country market entry services. overview. BritCham offers market research, To keep yourself updated on promote products or services, export the Indonesian market, follow strategy development, identify local #IndonesiaMatters on Twitter partners and contacts, arranging @tradegovukIDN. company visit programmes, business matchmaking, trade missions and offering sector-specific B2B webinars.