Hospitals: Profiteers or health providers?

Following the government's 1990 policy allowing hospitals to be managed in an economically viable manner, there is a growing number of new private hospitals across the city. Hospitals are improving their medical facilities to meet increasing public demand and survive in a competitive business. Slowly, a hospital's function is shifting away from an unprofitable social function toward a profitable business. And people are starting to question their social duty to the public. The Jakarta Post reporters Stevie Emilia, Dwi Atmanta, I. Christianto, Meidyatama Suryodiningrat, Johannes Simbolon and Arief Suhardiman, discuss the issue in the following article and other related stories on Page 8 and Page 13.

JAKARTA (JP): In days gone by the limited number of medical facilities forced people to go to community health centers or government-owned hospitals for treatment.

Now, an ever-increasing choice of hospitals is available to the city's 10 million people. The rapid growth began in 1990 when the government allowed the private sector to invest in hospitals.

Previously, hospitals were owned and managed by the government and nonprofit organizations established by various foundations, including religious groups such as the Muhammadiyah Moslem organization.

This situation has started to change. In November, Minister of Health Sujudi opened the 16,000-square-meter Siloam Gleneagles Hospital in the Lippo Karawaci township in Tangerang, West Java. The US$49-million infirmary is the first joint-venture hospital involving foreign investors.

Last August, Sujudi inaugurated the 15,000-square-meter Pluit Hospital, built at a cost of Rp 50 billion (US$21.2 million), in North Jakarta. In addition, the government has approved the construction of hospitals with foreign investment in Denpasar, Bali, the North Sumatra capital of Medan, and in Surabaya, East Java.

There are currently 1,039 hospitals in the country of which 515 are run by private operators.

For some people, however, the rapid increase of private hospitals is an alarming situation. They argue that private hospitals are there to merely rake in profit while often neglecting their social and humanitarian duties.

For instance, some hospitals have been accused of favoring the rich over the poor when providing medical services.

Zumrotin K. Soesilo of the Indonesian Consumers Foundation (YLKI) summed up this concern aptly.

"In the old days, people built hospitals more out of a wish to provide social services while hoping to at least get a return on their investment. Now, people establish hospitals only for profit."

Shift of emphasis

The director of the state-owned Cipto Mangunkusumo Public Hospital, M. Ahmad Djojosugito, also lamented that far too often business principles override hospitals' obligation to serve poorer people.

The government is not unaware of this shift in the function of hospitals. The Ministry of Health's Director General of Medical Care, Soejoga, acknowledged the trend recently.

"It used to be that hospitals prioritized their 'social obligation.' Now, hospitals still strive to meet their obligations but they are also allowed to be managed in ways that are economically profitable," Soejoga said.

He said the shift in function is necessary due to increased costs in providing medical facilities.

"Otherwise, their services will get worse," he said. "It's impossible for hospitals to operate only to meet social obligations."

However, he maintained that hospitals are not allowed to discriminate against people when it comes to providing medical services just to rake in profits.

Managers of private hospitals, however, defended their attitude.

Roy E. Tirtadji, commissioner of Siloam Gleneagles Hospital , denied that hospitals are established only to make a profit.

An official at yet another luxurious hospital, A. Kiagoes of the Pondok Indah Hospital, said that hospitals are a service industry. They become profitable only if managed properly.

The Pondok Indah Hospital makes huge profits and has had a fast return on investment, recouping Rp 15 billion in three years rather than the targeted eight.

"But, we don't ignore our social obligation," Kiagoes said.

He stressed his hospital received everyone brought to its Emergency Room without asking whether they could afford the treatment first. "As long as those people have written proof (usually from local administrations or neighborhood chiefs) that they are too poor to pay, the medical treatment here is free," Kiagoes said.

The Indonesian Medical Association has often criticized this policy, arguing that not many poor people would have the audacity to seek treatment at luxurious hospitals armed with proof of their poverty.

Insurance

The debate over whether a hospital should prioritize its social obligation or profit-seeking aspect is long standing. The government usually takes an accommodative stance.

Soejoga, for instance, said that despite the shift in function, the government always makes sure all hospitals perform their social function by allocating a certain number beds to the poor, he said.

For instance, state-owned hospitals, which are run by the Ministry of Health, the Armed Forces, or provincial administrations, should allocate more than 70 percent of their beds to the poor.

Private hospitals must set aside 25 percent and joint-venture hospitals 10 percent of their beds for the poor.

The government also sets the room rate for third class beds at Rp 7,500 (US$3.2) for state-owned hospitals and Rp 35,000 ($14.7) for private hospitals in the Jakarta area.

Soejoga admitted that despite the mandatory allocation, low- income patients are often still unable to afford the beds set aside for them at smarter hospitals.

"We will arrange private hospitals to directly contribute to the public by helping small hospitals and community health centers," he explained.

To meet rising medical costs, Soejoga encourages people to enroll in health insurance schemes such as the one managed by the state-owned PT Askes insurance company.

"In the future, ever-increasing costs will make it impossible to pay for medical treatment without insurance," he said.

By the end of the sixth five-year development period in 1999, the health ministry expects 25 percent of Indonesians to be covered by insurance.

Some 16.4 million people (8.2 percent of the population) are currently members of Askes.