Moving the Needle for Private Sector Engagement in MNH in

Indonesia

Edhie Santosa Rahmat

Health System Specialist at USAID Indonesia - Office of Health, Budi Kemuliaan St, Jakarta, Indonesia

erahmat

usaid.

Keywords: Maternal and neonatal care, Private sector, Universal health coverage, Indonesia.

Abstract: A comprehensive assessment for Private sector engagement in Maternal and Neonatal Health care (MNH

care) was done in 9 Indonesia provinces in 2016. The objective of the assessment is to map all existing and

those private sectors who would like to engage in the MNH care after the introduction of Universal Health

Coverage, called as Jaminan Kesehatan Nasional (JKN), in Indonesia. This is important as Indonesia is still

challenged by high maternal and neonatal mortalities as compared to peer countries with similar economic

development. While the private sector is growing in recent years, information on their characteristics and

behaviours toward MNH care is limited. This assessment provides a comprehensive analysis of the existing

private sector, their behaviour toward JKN, what the private investors' willingness and challenges to invest

in the MNH care, and what type of services that they are going to enter in the near future. This study also

recommend to the Ministry of Health and other sector in how to provide good regulatory environment and

to incentivize their present to help the country to meet the people demand due to JKN expansion, in

particular in the MNH care.

1 INTRODUCTION

Indonesia is a country undergoing growth in a

multitude of sectors. The country’s middle-income

population is on the rise, its democracy continues to

become more open, and its economy continues to

grow, making Indonesia the largest economy in

Southeast Asia with a gross domestic product (GDP)

over US$861.9 billion (World Bank, 2015). Despite

these positive developments in the country’s

economic landscape, it has yet to take a similar lead

on many health issues.

One area of health that performs poorly on major

indicators is maternal and newborn health. The

maternal mortality ratio has been estimated at 359

deaths per 100,000 live births, much higher than

both the Millennium Development Goal 4 target

ratio of 110 and the ratio in regionally or

economically comparable countries (Statistics

Indonesia, 2013). The decline in child deaths

(Millennium Development Goal 5 target) remains

stalled—primarily due to the lack of reduction in

neonatal mortality, which has remained around 19

deaths per 1,000 live births over the last two

decades.

The government of Indonesia has not

traditionally put high levels of funding into

healthcare, until the inauguration of Jaminan

Kesehatan Nasional (JKN). This national health

insurance scheme scheduled to reach national

coverage by 2019, has signalled a change in

priorities. As of April 2016, 164 million Indonesians

were covered under JKN (Jong and Parlina, 2016).

In 2015, Social Security Management Agency

for the Health Sector, or BPJS-K received US$3.7

billion in premiums (Jong and Parlina, 2016). This

included US$2.1 billion (57% of the total) from

participants and another US$1.6 billion (43%) from

the state budget for covering the poor and

vulnerable, civil servants, and members of the

military (Ernst and Young, 2015). Current public

sector health infrastructure cannot keep up with the

growing number of people gaining financial access

to care. Partnership with the bustling private sector

would allow the government of Indonesia to meet its

universal health coverage goal, and the Indonesian

market is primed for such an opportunity.

The growth of Indonesia’s economy has led to

growing interest from investors, which, importantly,

also includes investment interest in health markets.

Rahmat, E.

Moving the Needle for Private Sector Engagement in MNH in Indonesia.

In Proceedings of the 4th Annual Meeting of the Indonesian Health Economics Association (INAHEA 2017), pages 20-24

ISBN: 978-989-758-335-3

The establishment of JKN has signalled to the

market that the government is committed to

financing healthcare and increasing access for its

citizens. At the same time, the middle class is

growing, estimated to reach 135 million people by

2030, and utilization of private facilities and

pharmaceuticals is expected to increase as more

people acquire additional resources (Oberman et al.,

2012).

The need for improved maternal and newborn

health, paired with the now drastically increased

market for healthcare in Indonesia, offers a prime

opportunity for others to get involved in ensuring

that health services are high-quality, equitable,

efficient, and effective. Under JKN, reimbursements

related to reproductive and newborn health services

will total at least US$720 million per year in

additional revenue for healthcare providers. The

private sector must all play important roles if

maternal and newborn mortality is to be lowered.

While greater investment in the maternal and

newborn health arena could be a winning situation

for businesses, civil society, and (especially)

mothers, it is important to keep in mind the many

challenges of operating in Indonesia. Indonesia is

home to more than 257.5 million people, a

population that continues to grow (World Bank,

2015). While GDP is on the rise, more than 40

percent of the population (100 million people) is

considered poor or vulnerable (i.e., living on US$2 a

day or less) (World Bank, 2012). Indonesia’s 34

provinces have widely diverse cultures, religions,

and natural resources. From the bustling metropolis

of Jakarta to the ocean-dependent islands of the

Malukus and the indigenous peoples of Papua—each

province has its own context and unique

considerations when it comes to economic and social

development, and thus its own distinct set of

opportunities.

2 METHODS

For this landscape analysis, the USAID funded

Health Policy Plus team interviewed representatives

from 128 private sector entities, including banks,

private equity firms, private hospitals, midwives,

startup incubators, and transportation and consumer

goods firms in the provinces of Jakarta, West Java,

Central Java, East Java, North Sumatera, Maluku,

North Maluku, Papua and West Papua. The

assessment focused on key health system drivers that

affect access to, and the quality of, maternal and

newborn health services; it then identified

opportunities for private intervention.

3 RESULT AND DISCUSSION

The growing space in the health sector offers

opportunities for investment from many sectors.

Greater financial access to health services will

increase the number of patients seeking care from

health facilities and offers the prospect of expanding

infrastructure. In addition to guaranteed health

services under JKN, a multitude of support services

will be needed for public and private providers. This

will offer opportunities for innovation from start-up

companies, technology companies, and others

looking to enter the market. The entry points are

manifold depending on the level of innovation that a

company can bring to the table and what issues

within the system that they want to improve.

The health market in Indonesia is considered

highly regulated by the government and technical

complex, making it a risky—or higher-cost—space

for entry in which funding from development

finance institutions, or governments can help to

lower risk and catalyse investment. The team

identified five themes that provide concrete

examples that could be exciting from a profit

standpoint, while also offering real solutions to

Indonesia’s high maternal and newborn mortality

ratios.

3.1 Scale Successful Private Facilities to

Improve Access

Indonesia’s 70 million women of reproductive age

are increasingly looking to private providers for

reproductive health services (United Nations

Department of Economic and Social Affairs, 2015).

Only 36 percent of deliveries took place in a private

facility in 2007, but this number had risen to 46

percent by 2012, well surpassing the 18 percent who

deliver at a public facility. As the number of women

accessing health services increases—particularly due

to JKN financial coverage—there is increased

demand for high-quality facilities that are

geographically accessible. This opportunity presents

itself in two ways:

1. Invest in high-quality midwife clinics. 75

percent of Indonesian women receive antenatal

care at midwifery clinics and 62 percent give

birth with a midwife (Statistics Indonesia,

2013). A number of midwives were interested in

Moving the Needle for Private Sector Engagement in MNH in Indonesia

opening new clinics, expanding existing clinics,

or simply investing in improved infrastructure

and increased quality for their existing clinics.

Investing in these midwives’ success holds the

potential for both profit and improved health

outcomes. However, many loan products on the

market are currently seen as unfavourable.

2. Expand the scope and reach of established

health service companies. Siloam is the largest

private hospital chain in Indonesia and is

currently working to roll out an “Express”

model. This model is intended to function as a

primary satellite facility that people can access

to receive basic care or seek a referral to a

Siloam hospital. “Express” clinics—which have

cost structures that differ from Siloam parent

hospitals—can function profitably at BPJS

reimbursement rates given high use, while also

increasing brand recognition. There is plenty of

opportunity for other hospitals to establish

similar satellite models, or for a new company

interested in franchising clinics or moving

access outside of urban centres to partner with

hospitals for referral purposes.

3.2 Technology Solutions to Improve

Communication for Service Delivery

Technology solutions to improve communication for

service delivery are potentials for Indonesia rapid

growing in internet and mobile phone access. Only

40 percent of the population is currently online and

just 15 percent of mobile users use smart phones,

projections show that 133.5 million people will be

online by 2019. Much of the incubated start-up

culture in Indonesia is centred on technology and its

application to Indonesian needs. Increasingly, tech

deals are included in Indonesian investors’ portfolios

(Freischlad, 2015). Technology can be focused and

used in important ways to help decrease maternal

and newborn mortality rates:

1. Increase access to information and improve

knowledge sharing for e.g. online training

classes could play an important future role in

Indonesian health. Leveraging phone and

internet platforms to improve knowledge and

foster communication between providers and

referral systems will also be extremely

important. On the other side of the service, the

provision of key health information to patients

about risky behaviours, disease symptoms, or

their rights under JKN is also needed.

2. Expand the reach of providers through

applications that allow patients to communicate

with doctors, even when they cannot travel to a

clinic, could be an additional solution.

Klikdokter, Alodokter and TanyaDokter are

some of the models though none have a large

market share yet.

3. Improve the collection and distribution of

available data, from the current government of

Indonesia, and private sector actors about the

characteristics of the 70 million women of

reproductive age in Indonesia, could be

effectively aggregated into a rich database. New

technology introduced to the health sector in the

future can help collect data in a more systematic

way and offer a better sense of the gaps that

must be filled.

3.3 Transportation Solutions

Transportation solutions could fill gaps of limited

public service transportation in many areas,

addressing current serious barrier to access care.

Road conditions often prevent women from

attending check-ups at their local clinic; at other

times, ambulances are not procured by local

facilities for emergency situations. Furthermore,

there is no national emergency dispatch service in

Indonesia. With the growing culture of ride-share

applications in Indonesia, there is an opening to use

existing networks to provide scheduled and

emergency transportation.

Midwives have noted the growing demand for

transportation services by women who prefer to pre-

schedule transport for upcoming deliveries rather

than procuring a ride in the moment of need, but

there is also a need for emergency transportation.

Leveraging the spread of mobile infrastructure, a

business operating an innovative technology

platform to connect local resources could increase

access to health services, and could save the lives of

women in emergency obstetric situations.

3.4 Improve Quality of Midwifery Care

Through Private Sector Training

Institutions

At present, demand for midwifery training is high

and schools are saturated with students.

Additionally, midwives must be relicensed every

five years, a process that involves continuing

education. Major opportunities in this area include

the following:

1. Expand education institutions outside of the

urban market into peri-urban areas. Most

midwives are educated through private

INAHEA 2017 - 4th Annual Meeting of the Indonesian Health Economics Association

institutions, most of which are located in urban

areas. Only graduates from schools rated A or B

under national system are hired by the civil

service to work in public facilities. This has led

to a saturation of A and B schools in urban

areas. The private institutions take in as many

students as they can for the sake of profits,

which may compromise teaching quality, and

students often graduate without ever performing

a delivery because not enough deliveries

occurred to accommodate each student. The

shift of private institutions out of urban areas

will move students to a wider area, increase

access to smaller classes, and offer greater

opportunities for hands-on study.

2. Grow access points for continued medical

education. Midwives require 25 credits of

continuing medical education to renew their

license every five years. These credits can be

achieved through a number of avenues,

including writing journal articles or attending

seminars. The study team’s interviews found

that a number of midwives are very interested in

attending continuing education seminars on

topics like infection prevention, but that these

courses are sporadically delivered and not

readily accessible, making it costly to attend.

These problems offer two solution areas. First,

private training institutions can leverage their

network of trainers across the country to offer

consistently high-demand courses through a

low-cost, high-volume model. Second,

financiers investing in the expansion of private

hospitals and clinics into peri-urban and rural

areas could also invest in developing e-learning

courses to ensure that staff can maintain their

skills and knowledge. The courses could be

made available for a fee to providers outside of

their network to generate revenue. In many

areas, the growth of internet access is also

providing this opportunity for the first time.

3.5 Tailor Financial Products for

Maternal and Newborn Health

Tailor financial products for maternal and newborn

health could expand the reach of Indonesia’s

banking system to currently only 21.9 percent of the

poorest two quintiles (poorest 40%) of the

population holds savings in a financial institution.

The study team suggests banks to increase their

market share while helping mother and newborn

care:

1. Offer specialized loans for healthcare providers.

Microfinance institutions could provide capital

for successful private midwives hoping to scale

their businesses. Specialized loans for

midwives, with a consistent stream of patients,

could be quite profitable, as midwives have

historically been preferred providers for

reproductive health services. Additional benefits

to the loan product (like managerial technical

assistance) could entice more businesses to take

out loans.

2. Introduce banking products tailored to

improving access to healthcare for women.

Although BPJS reimburses medical costs,

women often endure significant transportation

costs or lost income associated with maternity

leave. Maternity savings accounts can bring

women into banking and help them save for

costs associated with pregnancy that are not

reimbursed by BPJS. Loyalty incentives such as

free ultrasounds, check-ups, etc. for banking

clients could entice more women to open

accounts, while also improving the quality of

antenatal clinic visits.

3. Offer supplemental insurance for maternal

health. Private health insurance companies can

offer private insurance packages that bundle

services associated with maternal and newborn

health costs filling the gaps of JKN

reimbursement and pulling more clients into the

market.

4 CONCLUSIONS

As JKN is rolled out, Indonesia’s health system will

grow, demand for services will increase, and more

money will flow into the health sector. These

changes provide an opportunity for actors outside of

government to get involved in improving access to,

and quality of, maternal and newborn health

services. There are many opportunities for the

private sector to finance and develop new or

growing ideas. These opportunities hold the promise

of profit and market expansion, but also the potential

to save lives and lower maternal and newborn

mortality ratios.

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Moving the Needle for Private Sector Engagement in MNH in Indonesia

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