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Privately owned hospital chains expanding aggressively.

The opportunity is open the wider for private business in hospital operation with middle class growing critical about health care marked by the growing number of companies offering health insurance service. Among the business leaders first seeing the opportunity is Sudwikatmono by building the Pondok Indah Hospital followed by the Lippo Group, which teamed up with Siloam Gleneagles from Singapore in 1994.

The appearance of the international class hospital marked a new era in health care in the country. The hospital offers health care for middle to high class members of the community with a deluxe building and facilities, capital intensive, high technology to operate like a five star hotel. The hospital uses the hotel terms for its room classes such as president suite, room, suite room, VVIP and VIP. In compliance with the government regulation it also has rooms of class I, II and III.

The modern hospital was duly welcome by many people certainly high income people. The rupiah fall during the monetary crisis, made it too expensive to go abroad for hospital treatment even for rich people. Those who previously chose to be treated at Raffles Hospital in Singapore or Mt. Elizabeth in Australia, or John Hopkins in the United States, had to rely on the local hospital of equal class such as RS Siloam Oleneagles Karawaci which puts up a rate of Rp 3 million per night for its President Suiite. The hospital has an occupancy rate of 70% at present.

It is no wonder if PT Siloam Gleneagles Health Care (SGHC), which is a joint venture between PT Lippo Land Development and Gleneagles Development Pte. Ltd. (a subsidiary of Parkway Holding, Singapore), has continued to expand its wing. After being successful in Karawaci, SGHC acquired publicly listed PT Baligraha Medikatama Tbk. (the operator of Graha Medika, Kebon Jeruk) in 2000. The acquisition of the company made SGHC a publicly listed company. Tow years later, SGHC established RS Siloam Gleneagles Lippo Cikarang, Bekasi. In the same year RS Sumber Waluyo, Surabaya, was acquired at a price of US 19.5 million. Now it has an employment of 2,500.

In 2003, total revenue from the four hospitals under SGHC was recorded at Rp 289 billion or an increase of 12% from the previous year. The total operating profit rose 52% from Rp 9 billion in 2002 to Rp14 billion in 2003. Last year, SGHC posted a net profit of Rp 508 million. Siloam Graha Medika was the largest contributor to the operating profit accounting for Rp 13 billion, followed by Sumber Waluyo Rp 5 billion, and RS Siloam Oleneagles Karawaci Rp 2.4 billion. RS Siloam Oleneagles Cikarang still posted a loss of Rp 6.5 billion last year.

SGHC indicated its plan for further expansion. It plans to make its presence in Makassar where it hopes to build a new hospital over a 13,000 hectare plot of land. The project is estimated to cost Rp 70 billion as initial investment. The management of PT Siloam Healthcare Tbk will seek loan from banks to finance the construction of new hospitals in Java and outside Java. A large clinic will be built in Serpong at a cost of Rp 8 billion and expansion of RS Siloam Gleneagles Lippo Cikarang will cost around Rp 45 billion.

A number of banks such as Bank Syariah Mandiri and Bank IFI have indicated readiness to support the projects. The management of Siloam is optimistic that business in hospital operation will flourish in Indonesia as there are few hospitals with international reputation in the country. It is estimated that annual income would rise by 30%.

SGHC acquired RS Sumber Waluyo as it has assisted reproduction technology or tube baby technology. SGHC wants to develop tube baby technology in Jakarta by opening fertility center in Siloam Graha Medika, which is an expansion of obstetric and gynecology service of the hospital. Siloam Gleneagles seeks to adopt global best standard practices in each of its hospitals.

Each of the hospitals under SGHC, has facilities and advantages over each other. Siloam Graha Medika Kebon Jeruk, has 205 sick beds with 234 specialists and 321 paramedics. Its main services are provided by its urology center that treats prostatism in urinary tract, obstetric and gynecology center which has handled more than 50,000 women experiencing trouble in delivering their babies. The hospital is also well known for its fertility center with specialization in helping infertile pairs cope with difficulty to get pregnant by offering tube baby technology or in vitro fertilization. Other main services include gastro enterology and its skin center.

RS SG Lippo Karawaci has 160 sick beds, 161 specialists (42 of them are full time specialists in the hospital) and 266 paramedics. Its main services are Neuro Science, affiliated to the University of Fujita Health, of Japan and the Institute of National Neuro Science, Singapore. The hospital also is a health center treating people having hearth and blood vessel disorder. It has liver clinic treating people having diseases affecting liver organs.

RS SG Lippo Cikarang has 79 sick beds, 120 specialists and 94 paramedics including paramedics from South Korea to treat many Koreans in that area.

RS SG Sumber Waluyo, Surabaya, has 160 sick beds, 210 specialists and 153 paramedics. The hospital is well known for its tube baby service. Last year its fertility center was 45.5% successful in pregnancy cases and until now it has handled 1,784 cases of artificial insemination.

SGHC has a foundation called Yayasan Otak Siloam (Siloam Brain Foundation) offering lower cost of surgery and treatment. The foundation has treated more than 100 patients. In addition, the SGHC has Hearth Service Center in cooperation with the Peduli Kasih Program of Indosiar. It has helped 15 patients cope with surgery cost.

RS Hermina continue expansion

The networks of the maternity and baby hospital group of RS Ibu dan Anak Hermina which now has 6 branches plans expansion in September-October in 2004 by building a new hospital in Bandung with 90 sick beds to be followed with ones in Semarang and Malang. In Semarang Hermina will cooperates with the maternity and baby hospital of Mardi Waluyo and in Malang with maternity hospital of RSB Tangkuban Perahu to build a new hospital

The one to be built in cooperation with RSIA Mardi Waluyo will be located at JI. Padanaran, Semarang, with a capacity of 40 sick beds now under construction. It is expected to be completed by the end of this year. The one to be built in Malang will have a capacity of 40 sick beds. The plan is still in the early stage of preparations.

Investment for the construction of new hospital in Semarang and Bandung is around Rp 15 billion to be raised in payments from physicians opening practices in the hospital. Each doctor will be required to pay Rp 100 million to Rp 150 million. Physicians show strong interest to invest. In Bandung more than 100 physicians agreed to invest in a maternity hospital. Bank loans are used only if necessary. Hermina has a vision to become a leading maternity and baby hospital in the country.

The maternity and baby hospital of Hermina was first known only as a maternity clinic with 7 sick beds. The hospital was established in 1967 with the name of maternity clinic Djatinegara located at J1. Jatinegara Barat, East Jakarta. Three years alter its name was changed with RB Hermina sponsored by Hermina and gynecologist Beodionono Wibowo.

In 1983 a Hermina Foundation was established as the operator. On April 25, 1985 the Maternity and Baby Hospital of Hermian was launched officially with capacity of 25 sick beds. In 1990, the hospital was expanded. The maternity hospital became a maternity and baby hospital with a capacity of 50 sick beds. Now it has a capacity of 78 sick beds.

After success in Jatinegara, Hermina opened its first branch in Poodomoro, North Jakarta in 1996. The branch operated with initial capacity of 35 beds. Now the hospital is a four story building with a total floor-space of 2,877 sq.m. and 53 sick beds including 39 for mothers and 9 for babies and 8 for perinatalogy. Later it opened another branch in Bekasi later in the same year. The new branch occupies a five story building over a land plot of 6,113 sq.m. with a capacity of 138 beds.

In 2000, the number of hospitals with specialization in gynecology, maternity care, child health continued to expand. Hermina opened the RSIA Depok with a capacity of 70 beds. Two year later it opened two new such hospitals in Daan Mogot with 50 beds and in Bogor with 45 beds. Altogether the group has a capacity of 443 beds.

The expansion of the maternity and baby hospitals of the company group required change in its operating body from a foundation to a limited company named PT Medikaloka Hermina. Meanwhile its services have been expanded with specialist services including cardiac surgeons, ear, nose and throat specialists, eye specialists, mental specialists and psychologists, nutritionists and genital disease specialists and facial treatment specialists.

RS Mitra Keluarga Bekasi Timur commissioned

RS Mitra Keluarga group is not to be left behind. The group already has a hospital in Bekasi named RS Mitra Bekasi in West Bekasi operating since 1993, but as it has limited capacity, it opened a new one in East Bekasi on June 7, 2004 called RS Mitra Keluarga Bekasi Timur only 3.5 km away from the one in West Bekasi.

RS Mitra Keluarga is owned by large pharmaceutical company the Kalbe Farma Group. The first hospital of the group started operation in the 1980s in Jatinegara, Jakarta. In 1996, it teamed up with Health Care from Australia to improve the quality of its services. Later that year the Australian company acquired the entire shares of Mitra Keluarga Jatinegara and Mitra Keluarga Surabaya. Kalbe Farma, therefore built a new RS Mitra Keluarga Surabaya in the Darmo Satelit area.

In 1998 Health Care handed over its shares to its affiliate Mayne Health and the name of RS Mitra Keluarga Jatinegara was then changed with RS Mitra International.

Still in 1998, RS Mitra International Bintaro was established under PT Mitrajaya Medikatama, a joint venture between PT Enseval (of the Kalbe Farma Group) and Australia's Mayne Nickless Limited (Health Care of Australia Group).

The share split was 40% for Enseval and 60% for Mayne Nickless. Mitra Bintaro started operation in October, 1998 with specialized clinic and 20 consulting rooms. It started treating in-patients only in November, 11998 with the opening if the Cenderawasih and Merpati treatment rooms.

Toward the end of 2001, RS Bintaro was wholly taken over by its Australian shareholder and after three years or in March, 2004 it was sold to Affinity Health also from Australia.

The Kalbe Farma Group continued without foreiogn partner in expanding its hospital business. It has the RS Mitra Keluarga Surabaya at Darmo Satelit in the East Java capital ande in the same year it opened a new one named RS Mitra Keluarga Kemayoran in Jakarta and in Nov. 2002 RS Mitra Keluarga in Kelapa Gading, Jakarta came on line to be followed with the opening of RS Mitra Keluarga Bekasi Timur in East Bekasi.

Number of privately owned hospital increasing

With limited financial capacity the government encourages the private sector to expand business in hospital sector. As a result the number of priovately owned hospitals grew rapidly. By 2002, private hospitals already contributed 49.8% to health care services up from 43.3% in 1995 and 32.5% in 1989.

The contribution of government hospitals meanwhile declined from 56.7% with 604 hospitals in 1995 to 51% with 601 hospitals out of a total of 1,178 units in 2001. Since 1992, the government reduced hospital subsidy encouraging government hospitals to operate more commercially.
Hospital chain of RS Siloam Gleneagles in Indonesia

Name of hospital/ Branches In-patient capacity
 Owners (Sick beds)

RS Siloam 1. RS Siloam Graha Medika, 205
Gleneagles/ Kebon Jeruk
Lippo Group 2. RS SG Lippo Cikaran, Bekasi 79
 3. RS SG Lippo Karawaci, 160
 4. RS Siloam Sumber Waluyo, 160

Source: Data Consult

Maternity and baby hospital chain of Hermina

Name of hospital/ Branches In-patient capacity
 owner (Sick beds)

RSIA Hernina/ 1. Jatinegara Barat 87
Grup Hermina 2. Podomoro, Jakarta 53
 3. Bekasi 138
 4. Depok 70
 5. Daan Mogot, Jakarta 50
 6. Bogor 45
 7. Bandung (operational Oct., 90
 8. Semarang (in cooperation 40
 with RSIS Mardi Mulyo)
 9. Malang (in cooperation 40
 with RSB Tangkuban Perahu)

Source: Data Consult


Name of hospital/ Branch Capacity
owners (beds)

RS Mitra Keluarga/ 1. RS Mitra Keluarga Surabaya 139
Grup Kalbe 2. RS Mitra Keluarga Kemayoran, Jakarta n.a
 3. RS Mitra Keluarga Kelapa Gading 130
 4. RS Mitra Keluarga Bekasi Barat 200
 5. RS Mittra Keluarga Bekasi Timur 300
 (operational on July 7, 2004)

Source: Data Consult

Number of hospitals and capacity by operators/owners, 1989-2002

Operators/owners 1989 1995 2000 2001

Health ministry Units 57 61 59 31
 Beds 17,180 18,960 18,329 13,966
Regional Units 347 353 357 386
administrations. Beds 41,152 42,695 44,695 46,316
Defense ministry Units 114 190 111 111
 Beds 11,547 18,355 10,846 10,977
Other agencies/state Units 81 -- 68 70
companies Beds 8,017 -- 6,928 6,836
Private companies/ Units 325 462 550 580
foundation Beds 29,216 38,614 44,837 47,180
 Total Units 924 1,066 1,145 1,178
 Beds 107,112 118,624 125,507 128,284

Operators/owners 2002

Health ministry Units 31
 Beds 13,789
Regional Units 389
administrations. Beds 49,950
Defense ministry Units 112
 Beds 10,775
Other agencies/state Units 78
companies Beds 6,729
Private companies/ Units 605
foundation Beds 48,971
 Total Units 1,215
 Beds 130,214

Source: Medical service directorate general
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Title Annotation:Infrastructure
Publication:Indonesian Commercial Newsletter
Geographic Code:9INDO
Date:Jul 13, 2004
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