Attempts in Indonesia to improve local healthcare, reduce outbound medical tourism and potentially offer inbound medical tourism by attracting overseas healthcare groups have been hampered by complex and confusing rules. New regulations hope to solve this, such as offering 100% overseas ownership.
The general standard and availability of healthcare in Indonesia is poor. Most hospital expansion will come from private players and private public partnerships.
Increasingly foreigner-friendly investment policies and the significant opportunity in healthcare in the country is likely to attract non-conventional players. Specialist hospital services are now open for 100% overseas ownership and healthcare groups plan to build several new hospitals in the next few years.
Indonesia has long been a source of medical tourists rather than a destination but is now trying to turn that round.
Due to a lack of infrastructure and funding in Indonesia’s healthcare system, many Indonesians travel abroad for medical treatment, especially to Singapore and Malaysia. The total direct and indirect costs associated with this outbound medical tourism are estimated at over US$6 billion annually. The pandemic and subsequent travel restrictions mean Indonesians have been forced to turn to local hospitals and the government has sought to improve the regulatory landscape to attract more investment.
Indonesia’s healthcare industry is expected to see continued growth as the expansion of the country’s middle-class and universal healthcare drive demand. The country has the world’s largest universal healthcare programme, covering over 200 million people.
Indonesia’s hospital sector is now open to 100% foreign investment but implementing regulation GR 47/2021 adds restrictions that may turn investors off.
GR 47/2021 reduces the number of beds for hospitals owned by foreign direct ownership and mandates all hospitals to provide support services, such as laboratory services, blood services, and nutrition services.
Hospitals are classified as high-risk businesses and so will require a registration number and a license. The license will be issued once the business has fulfilled certain conditions and verifications set out by the central or regional government.
Main clinics (those that offer specialised healthcare) are also open to 100% foreign investment, whereas pratama clinics (those that offer only basic healthcare services) are closed to foreign investors and are reserved for local small and medium-sized enterprises.
Hospitals are categorised into two categories:
General hospitals – provide services in all areas and types of diseases
Specialist hospitals – provide primary services for one particular type of disease or other specialties.
There are classifications within each, relating to the number of inpatient beds allocated at each private hospital class. Foreign-owned general hospitals must meet the obligations for either a Class A (min. 250 beds) or Class B (min. 200 beds). However, this does not apply to dental hospitals, specialist eye hospitals, ear, nose, and throat hospitals, and head and neck surgery hospitals.
Private hospitals also have to comply with room rules such as numbers of beds only for members of the national health insurance programme.
GR 47/2021 has also imposed a raft of new obligations on existing hospitals in Indonesia.