Hospitals struggle to survive during crisis

JAKARTA (JP): The Indonesian Hospital Association (PERSI) on Monday warned of mass hospital closures across the country if the economy did not rebound.

"Most Indonesian hospitals are still suffering from the economic crisis which began in 1997", the Association's chairman Dr. A.W. Boediarso told journalists here.

Boediarso said that 1999 has been a fortunate a year as there were no reports of closures from its 1,100 member hospitals.

However he pointed to the potential of a breakdown in the health care system if the economy continued to stagnate, pointing to the fact that 60 percent of hospitals in the Association were near to shutting down at the height of the economic crisis in 1998.

He said for most hospitals it was merely a struggle to survive.

"Most of our members currently only aim to survive by engaging in various efficiency measures until conditions recover," Boediarso said.

Despite these measures, Boediarso claimed that hospitals were still doing their utmost to maintain the quality of their medical services.

He argued that the situation has been exacebated by the fact that hospitals cannot raise the prices of their services to the public.

He blamed the decline in hospital revenue as the main cause of the problems facing hospitals in Indonesia, which was a direct result of the decreasing public spending power during the economic crisis.

"While people's purchasing power has declined, hospitals' operational costs have soared due to the hike in the price of medicines and medical equipment, most of which are still imported," he said.

The depreciation of the rupiah against the dollar in 1998 caused the cost of imported medicines to surge by almost 300 percent.

"Once prices go up, they are unlikely to go down," Boediarso lamented.

Meanwhile, Dr. Hartono, a committee member of the Association said, "In the last two years, our members could only survive by depending on cash flow, without considering loss and profit

"Most hospitals, especially the ones located out of town, have experienced a bed occupancy rate below 50 percent," he said, noting that hospitals need at least a 60 to 70 percent occupancy rate to survive.

Hartono conceded that the "social role" perscribed to hospitals, in some form or another, added to the immense economic burden these hospitals had to bare.

According to a government regulation, state hospitals must allocate at least 25 percent of their total beds to accomodate poor families, for a low tariff, while for private hospitals the allocation is 10 percent.

Another Association committee member, Dr. Wasista, noted that one way hospitals were trimming costs was by converting from brand name to generic medicines.

"PERSI is currently establishing a purchasing alliance group, aimed at helping to boost its bargaining power against medicine and medical equipment suppliers and distributors," Wasista said, adding that the alliance was expected to be effective from next year.

He expressed hope that by making such joint purchases in bulk, prices could be reduced by 30 percent.(02)