132. Bossert T.J, S. Kosen, B. Harsono and A. Gani (1996), ‘Hospital Autonomy in Indonesia’, Harvard School of Public Health, Boston. Accessed at www.hsph.harvard.edu/ihsg/publications/pdf/no-39.PDF

Indonesia initiated a program of hospital autonomy (Unit Swadana) in 1991 to encourage hospitals to recover some of their costs. Indonesian Unit Swadana hospitals are still government-owned with a high level of supervision and control by both the Ministry of Health and by local authorities at the provincial and district levels which depend on the centralized Ministry of Interior. Nevertheless hospital directors are given some control over the portion of their total revenues that comes from the fees they collect at the facility. Unlike many other countries, the fees collected by Indonesian hospitals have been significant — 30- 80% of total income — the rest coming from subsidies from the national and local governments. Prior to being certified as Unit Swadana, a hospital was required to turn over all of the own source revenues to the governmental level which administered them. Under the new Swadana system, hospitals are allowed to retain their fees, and they can, within some percentage limits, use these funds for salary incentives, operations (drugs, spare parts), and hiring of contract personnel. Fee revenue cannot be used for equipment or construction; however, the autonomous hospitals are allowed to use the funds to contract services such as food service and laundry. Hospital managers may set fees for all charges except those charged for beds reserved for the poor (Class III beds). While these fees must be approved by higher authorities, in almost all cases, they are approved. Hospital Director continues to be appointed by the central Ministry of Health. This study evaluated a sample of ten hospitals which included: five Swadana hospitals with 2-3 years experience of hospital autonomy (two in Jakarta, one in West Java and two in Central Java); three public provincial or district non-autonomous hospitals — one in Central Java and two in Jakarta; and two private hospitals one large and one small — one in Jakarta and one in Central Java. A survey instrument was prepared to evaluate process and impact changes in financing, equity, quality, and efficiency that could be attributed to hospital autonomy. The study also gathered interview data on management changes, incentive structures, and budgetary processes. Attempts to gain data on quality were not successful. The authors conclude that funding for all public hospitals has increased — both government subsidies and retention of fee revenue. This finding was somewhat surprising because it was expected that as fee revenues increase, subsidies would drop when hospitals were allowed to retain fee revenue. However, there was no identifiable relationship between Swadana status and funding trends. It was found that Swadana status alone provided little incentive to shift from dependence on subsidy to dependence on their own fee revenue. Equity issues appear to have worsened in general and in some cases — especially in the increase in fees, Swadana status may have contributed to this inequity. There was a recent trend of doubling, tripling, and in some cases more than quadrupling of fees among all types of hospitals. The autonomous hospitals however, charged higher fees and had greater increases than did the non-autonomous public hospitals. The fees of the Swadana hospitals were approaching the fees collected by the private hospitals at both the high and low ends of the fee schedules. Among the hospitals in our sample, there was a general reduction in access for the poor — regardless of autonomy — with a decline in the absolute number of beds reserved for the poor. In addition, the fees charged for the Class III beds in Swadana hospitals were approaching those charged by the private sector for the same type of beds. As expected, the non-Swadana hospitals were less likely to increase fees than the autonomous hospitals. There was no evidence to suggest that hospital autonomy had an impact on personnel decisions.  Since autonomy did not allow the management to hire or fire the permanent salaried staff, this finding is not unusual. There was no apparent difference between centrally controlled hospitals and those controlled by local authorities (provinces and districts). The only clear evidence of improvements that have occurred from hospital autonomy were that management systems improved in autonomous hospitals. Incentive systems for physician payments in these hospitals appear to have improved physician attendance. The authors suggest that these findings should be taken with caution.