1

Healthcare in Indonesia: Future Growth Opportunities

Prepared for:

South East Asia Hospital Expansion Summit Jakarta, 27 May 2015

2

Topic

1 Overview: Health industry in Indonesia

2 Where did the smart money go?

3 Reasons to invest in Indonesia’s health industry

4 Challenges to Indonesia’s health industry

3

Key Points in Indonesia’s Health Industry

4

“People in Indonesia

spent over USD 26

billion on

healthcare last year –

more than 300%

growth since 2005.

”

Source: The World Bank

5

“The industry growth

is driven by

population

growth, boost in

the economy and

government

support.”

Source: McKinsey Global Institute

6

“The industry is held

back by low health

expenditures,

shortage of

healthcare

professionals and

inequitable health

financing.”

Source: The World Bank, Spire Research and Consulting

7

Overview: Health Industry in Indonesia

8

Overview: Health Industry in Indonesia

Source: The World Bank, Ministry of Health, Spire Research and Consulting

+255MILLION POPULATION

27%CONSUMING CLASS

56%MIDDLE CLASSPOPULATION

POPULATION

4th Largest Population in The World

Community Health Centers

General Hospitals

Specialized Hospital

9,671

1,882

538

Number of Healthcare Service Providers in Indonesia (2015)

Health Services Provider

Gov-ern-ment65%

Private35%

Percentage of Hospitals in In-donesia Based on Ownership

(2015)

Government Private

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Spread of General Hospitals (Public/Private) in Indonesia

Aceh43/16

Sumut111/48

Sumbar

35/4

Riau24/25

Jambi16/12

Sumsel34/12

Source: Ministry of Health

Bengkulu

17/1

Lampung26/18

Kep. Babel12/3

Kep. Riau17/4

DKI Jakarta52/43

Banten23/35

Jabar108/11

4

Jateng167/51

DIY37/14

Jatim169/8

7

Bali28/17

NTB18/6

NTT37/3

Kalbar29/7

Kalteng

17/1

Kalsel21/5

Kaltim26/15

Sulut35/3

Sulteng22/1

Sulsel49/11

Sultra22/2

Gorontalo

10/1

Sulbar

9/1

Maluku

26/0

Malut19/0

Papua Barat12/4

Papua34/2

10

Number of Hospitals in Indonesia Based on Class & Spread of class A and B Hospitals

Source: Ministry of Health, Spire Research and Consulting

3 10

38 201

8 67 5 15

4 28

0 4

0 2

A B C D Unclassified

58

327

843

462

730

Number of Hospital in Indonesia Based on Class (2015)

Number of Hospital

Class A HospitalClass B Hospital

To promote equitable growth and spread of hospitals, the government gives maximum 67% foreign ownership for new investors.

Spread of class A and B Hospitals in Indonesia

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Medical Staff in Indonesia

Source: Ministry of Health

Ratio of doctor : patient in Indonesia is around 1 : 3,500, much lower than the government’s goal at 1 : 2,500.

2010 2011 2012 2013

25,33333,172

37,36441,841

8,403

16,574

27,333

36,756

Number of General Practitioners and Medical Specialist in Indonesia

General Practitioners Medical Specialist

2010

2011

2012

2013

169,797

230,280

235,496

288,405

Number of Nurses in Indonesia

Nurses

12Source: The World Bank

Indonesia Malaysia Philippines Singapore Thailand Vietnam

35.52 182.83 47

1057.77

95.45 36.48106.63423.43

121.6

2507.43

264.35 111.17

Healthcare Expenditure per Capita (in USD)

2005 2013

Indonesia Malaysia Philippines Singapore Thailand Vietnam

2.793.29

3.91 3.73 3.55

5.38

3.07

4.03 4.4 4.55 4.57

5.95

Percentage of GDP Spent on Healthcare

2005 2013

Healthcare Expenditure in ASEAN region

13Source: Global Health Expenditures Database, WHO

How People in ASEAN Finance their Healthcare Expenditure?

Indonesia Malaysia Philippines Thailand Vietnam0

20

40

60

80

100Breakdown of Healthcare Expenditure by Channel

Private Health Insurance Social Health Insurance

Government-Financed Healthcare Other Private Expenditures

Out of Pocket Payments

14

Where did the Smart Money Go?

15Source: Spire Research and Consulting

Preferred Destinations for Indonesian Medical Tourists

1

Malaysia

2Singapor

e

3India

4Thailand

In 2012, Indonesians

spend around USD 11.5 billion a year for healthcare services

abroad.

16

1

2

15

20

71

Source: Cybermetrics Lab

Best hospitals in various countries based on ASEAN Ranking System

Philippines Heart Center

Queen Sirikit National Institute of

Child’s Health

Singapore National

University Hospital

University Malaya Medical

Center

Rumah Sakit Mitra Keluarga

Group

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Price Comparison of Selected Medical Procedures in Several Countries (in USD)

Source: Malaysia Healthcare Travel Council, 2012

Health

care

Byp

ass

Heart

Val

ve R

epla

cem

ent

Angio

plas

ty

Hip R

epla

cem

ent

Hyste

rect

omy

Knee

Repla

cem

ent

Spina

l Fus

ion

0

4,000

8,000

12,000

16,000

20,000

Thailand Singapore India Malaysia

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Reasons to Invest in Indonesia’s Health Industry

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Singapore

Malaysia

Indonesia

Thailand

Philippines

Population Growth

Income Growth Penetration Regulations

Medical Tourism

Country Attractiveness to Private Healthcare Investment over Medium Term

Source: Credit Suisse 2014

Unattractive

Neutral Attractive

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Challenges to Indonesia’s Health Industry

21Source: Spire Research and Consulting

Low health expenditure (USD 106.63) compared to other ASEAN countries.

Shortage of doctors and medical professionals (1 : 3,500 instead of 1 : 2,500).

Inequitable health financing resulting in discrepancy in hospitals across areas.

Challenges to Indonesia’s Health Industry

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