ANALYSIS OF THE MARKET STRUCTURE OF HOSPITAL INDUSTRY IN INDONESIA
Background: Over the past decade, private investments in health care including hospital have grown significantly, more than doubling. As the number of hospitals in Indonesia increases, a competitive business environment develops. Identifying hospital market structure can help various stakeholders to optimize the hospital's performance.
Aims: This study analyzed the market structure and concentration of the hospital industry in Indonesia.
Methods: This study used hospital characteristics data from Ministry of Health of Indonesia that retrieved in October 2020. Market concentration is determined by the number of industry players operating in a market, the distribution of services, and the types of services offered. The hospital market concentration was identified by measuring the Concentration Ratio (CR) and the Herfindahl–Hirschman index (HHI).
Results: The results showed that the market share of hospitals in Indonesia was still dominated by government hospitals, which represent 51.4% of the market share. The concentration ratio of four companies (CR4) remains <40, indicating that competition remains relatively open among private hospitals at the national level.
Conclusion: Several cities have established hospital markets that are characterized by robust competition, whereas in other cities, the hospital industry remains oligopolistic or monopolistic. It is important to note, however, that this does not imply that the market structure is ineffective on account of competition; rather, it is the result of a scarcity of hospitals in a number of Indonesian cities.
Keywords: Concentration ratio, Economic competition, Herfindahl–Hirschman Index, Hospital market
Alfarizi, M. and Zalika, Z. (2023) ‘Isu Persaingan Industri Pelayanan Kesehatan Indonesia: Tantangan dan "Perisai” Pengawasan KPPU', Jurnal Persaingan Usaha, 3(1), pp. 5–18. Available at: https://doi.org/10.55869/kppu.v3i1.89.
Bai, T. et al. (2020) ‘The falling growth in the use of private hospitals in Australia', SSRN Electronic Journal [Preprint]. Available at: https://doi.org/10.2139/ssrn.3725863.
Britton, K., Koseki, S. and Dutta, A. (2018) ‘Expanding Markets while Improving Health in Indonesia The Private Health Sector Market in the JKN Era'.
Calkins, S. (1983) ‘The New Merger Guidelines and the Herfindahl-Hirschman Index', California Law Review, 71(2), pp. 402–402. Available at: https://doi.org/10.2307/3480160.
Center for Health Statistics, N. (2017) Table 89. Hospitals, beds, and occupancy rates, by type of ownership and size of hospital: United States, selected years 1975–2015.
Cowley, P. and Chu, A. (2019) ‘Comparison of private sector hospital involvement for UHC in the western pacific region', Health Systems and Reform, 5(1), pp. 59–65. Available at: https://doi.org/10.1080/23288604.2018.1545511.
Czyżewski, B. et al. (2020) ‘Deadweight loss in environmental policy: The case of the European Union member states', Journal of Cleaner Production, 260. Available at: https://doi.org/10.1016/j.jclepro.2020.121064.
Frost and Sullivan (2019) Pasar Pelayanan Kesehatan Indonesia Diharapkan Mencapai Keuntungan, Frost & Sullivan. Available at: https://ww2.frost.com/news/press-releases.
Gwin, Carl.R. (2001) ‘A Guide for Industry Study and the Analysis of Firms and Competitive Strategy'. Available at: https://www.scribd.com/document/137034638/A-Guide-forIndustry-Study-and-the-Analysis-of-Firms-and-Competitive-Strategy-pdf.
Herawati, E. (2017) Rumah Sakit: Pilih Yayasan Atau Perseroan Terbatas?, Rubric of Faculty Members. Available at: https://business-law.binus.ac.id/2017/06/30/rumah-sakit-pilih-yayasan-atau-perseroan-terbatas/.
HPP and TNP2K (2018) The Financial Sustainability of Indonesia's National Health Insurance Scheme: 2017–2021, https://www.tnp2k.go.id/articles. Available at: https://www.tnp2k.go.id/download/516561.%20The%20Financial%20Suatainability%20of%20NHI.pdf.
Kuntjoro and Wibowo, D.B. (2018) ‘Tantangan Pertumbuhan Industri Pelayanan Kesehatan di Indonesia', in Seminar Nasional IV Peran industri Kesehatan dalam mendukung Pertumbuhan Ekonomi di Indonesia. Available at: https://indohcf.com/files/2018-04/03.-dr.-daniel-budi-wibowo-indohcf-2018.pptx.
Lauraéus, T. et al. (2021) ‘Market Structure analysis with Herfindahl-Hirchman Index and Lauraéus-Kaivo-Oja Indices in the Global Cobotics Markets', Economics and Culture, 18(1), pp. 70–81. Available at: https://doi.org/10.2478/jec-2021-0006.
Lubis, A.F. et al. (2017) Hukum Persaingan Usaha. Jakarta: Komisi Pengawas Persaingan Usaha (KPPU).
Md Zain, N.A. et al. (2022) ‘Intra-Regional Medical Tourism Demand in Malaysia: A Qualitative Study of Indonesian Medical Tourists' Rationale and Preferences', Malaysian Journal of Medical Sciences, 29(2), pp. 138–156. Available at: https://doi.org/10.21315/mjms2022.29.2.13.
Ministry of Health of Indonesia (2018) ‘Strategi mendongkrak industri farmasi dan alat kesehatan', in. Seminar Nasional IV Peran industri Kesehatan dalam mendukung Pertumbuhan Ekonomi di Indonesia. Available at: www.indochf.com.
Ministry of Health of Indonesia (2020) ‘Dashboard RS Online'. Available at: https://sirs.kemkes.go.id.
Mwachofi, A. and Al-Assaf, A.F. (2011) ‘Health Care Market Deviations from the Ideal Market', Sultan Qaboos University Medical Journal, 11(3), pp. 328–337.
Naldi, M. and Flamini, M. (2014) ‘The CR4 Index and the Interval Estimation of the Herfindahl-Hirschman Index: An Empirical Comparison', SSRN Electronic Journal [Preprint]. Available at: https://doi.org/10.2139/ssrn.2448656.
OECD (2018) ‘Health spending'. OECD. Available at: https://doi.org/10.1787/8643de7e-en.
OECD (2021) Health at a Glance 2021: OECD Indicators. OECD (Health at a Glance). Available at: https://doi.org/10.1787/ae3016b9-en.
Precedence Research (2022) Hospital Services Market Size, Share, Trends, Growth 2027. Available at: Available: https://www.precedenceresearch.com/hospital-services-marke.
Raghupathi, V. and Raghupathi, W. (2020) ‘Healthcare Expenditure and Economic Performance: Insights From the United States Data', Frontiers in Public Health, 8. Available at: https://doi.org/10.3389/fpubh.2020.00156.
Richman, B.D. (2012) ‘Concentration in Health Care Markets: Chronic Problems and Better Solutions'. Rochester, NY. Available at: https://papers.ssrn.com/abstract=2163749.
Sarwal, R. et al. (2021) Investment Opportunities in India's Healthcare Sector. NITI Aayog.
Scheffler, R.M., Alexander, L.M. and Godwin, J.R. (2023) ‘Soaring Private Equity Investment in the Healthcare Sector: Consolidation Accelerated, Competition Undermined, and Patients at Risk', SSRN Electronic Journal [Preprint]. Available at: https://doi.org/10.2139/ssrn.3860353.
Siloam International Hospitals (2022) Pencapaian Perusahaan - Siloam Hospitals. Available at: https://www.siloamhospitals.com.
Tatarifah, A.J. (2014) Struktur Pasar, Perilaku dan Kinerja Industri Jasa Pelayanan Keseahtan di Provinsi Sumatera Selatan. Undergraduate thesis. Universitas Sriwijaya.
Trisnantoro, L. and Listyani, E. (2018) ‘Jumlah RS di Indonesia Pertumbuhan RS Publik', April. Available at: https://www.persi.or.id/images/2017/litbang/rsindonesia418.pdf.
WHO (2020) Global spending on health 2020: weathering the storm. Available at: https://www.who.int/publications/i/item/9789240017788.
Ying, S. et al. (2022) ‘Industrial dynamics and economic growth in health-care context. Evidence from selected OECD countries', Journal of Business & Industrial Marketing, 37(8), pp. 1706–1716. Available at: https://doi.org/10.1108/JBIM-11-2020-0513.
Zhang, W. (2022) ‘Number of hospitals in Taiwan 2010-2020', Statista [Preprint]. Available at: https://www.statista.com/statistics/934717/taiwan-number-of-hospitals/.
Copyright (c) 2024 Yuyun Umniyatun, Emma Rachmawati, Deni Wahyudi Kurniawan, Mochamad Iqbal Nurmansyah, Mukhaer Pakkanna, Husnan Nurjuman, Slamet Budiarto, Virgo Sulianto Gohardi
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
1. As an author you (or your employer or institution) may do the following:
- make copies (print or electronic) of the article for your own personal use, including for your own classroom teaching use;
- make copies and distribute such copies (including through e-mail) of the article to research colleagues, for the personal use by such colleagues (but not commercially or systematically, e.g. via an e-mail list or list server);
- present the article at a meeting or conference and to distribute copies of the article to the delegates attending such meeting;
- for your employer, if the article is a ‘work for hire', made within the scope of your employment, your employer may use all or part of the information in the article for other intra-company use (e.g. training);
- retain patent and trademark rights and rights to any process, procedure, or article of manufacture described in the article;
- include the article in full or in part in a thesis or dissertation (provided that this is not to be published commercially);
- use the article or any part thereof in a printed compilation of your works, such as collected writings or lecture notes (subsequent to publication of the article in the journal); and prepare other derivative works, to extend the article into book-length form, or to otherwise re-use portions or excerpts in other works, with full acknowledgement of its original publication in the journal;
- may reproduce or authorize others to reproduce the article, material extracted from the article, or derivative works for the author's personal use or for company use, provided that the source and the copyright notice are indicated.
All copies, print or electronic, or other use of the paper or article must include the appropriate bibliographic citation for the article's publication in the journal.
2. Requests from third parties
Although authors are permitted to re-use all or portions of the article in other works, this does not include granting third-party requests for reprinting, republishing, or other types of re-use.
3. Author Online Use
- Personal Servers. Authors and/or their employers shall have the right to post the accepted version of articles pre-print version of the article, or revised personal version of the final text of the article (to reflect changes made in the peer review and editing process) on their own personal servers or the servers of their institutions or employers without permission from JAKI;
- Classroom or Internal Training Use. An author is expressly permitted to post any portion of the accepted version of his/her own articles on the author's personal web site or the servers of the author's institution or company in connection with the author's teaching, training, or work responsibilities, provided that the appropriate copyright, credit, and reuse notices appear prominently with the posted material. Examples of permitted uses are lecture materials, course packs, e-reserves, conference presentations, or in-house training courses;
