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Assessing the Private Sector in Indonesia

Summary

Under USAID’s Health Policy Plus (HP+) project, ThinkWell performed an analysis of Indonesia’s private sector engagement in the health sector. The analysis focused on identifying opportunities to create or expand private sector involvement to fight maternal and newborn mortality.

Breaking New Ground

The growth of Indonesia’s economy has led to growing interest from investors in health markets. The establishment of the national insurance scheme (“JKN”) has signaled 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 the utilization of private facilities and pharmaceuticals is expected to increase.

Given the relatively small contribution of donor funding (less than 1%) to Indonesia’s national health expenditure, the donor community is recalibrating and looking to ensure that their resources have a catalytic impact on the health system. By partnering with the private sector, USAID seeks to leverage expertise and resources to maximize impact. ThinkWell’s investigation assisted USAID to better understand the opportunities for private sector engagement in reducing maternal mortality in Indonesia.

Challenges

Indonesia experiences almost 15,000 maternal deaths and 90,000 newborn deaths every year. The country failed to meet its Millennium Development Goals on these two indicators, and is struggling to catch up to its peers in the region. Private sector health providers dominate more than a third of the market, and their market share continue to grow. As the government of Indonesia rolls out its national health insurance scheme with the aim of enrolling all citizens by 2019, there is a powerful incentive and need to engage with the private sector.

Approach

To better understand the opportunities for the private sector to reduce maternal mortality in Indonesia, under the HP+ project, ThinkWell conducted a landscape analysis across 10 provinces. The team interviewed representatives from 128 private sector entities, including banks, private equity firms, private hospitals, midwives, startup incubators, transportation and consumer goods firms. 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 sector intervention.

Results

Through this analysis, the team identified five themes, or opportunities, for investment:

Five private sector opportunity themes:

  1. Scale successful private facilities to improve access;
  2. Develop tech solutions to improve communication for service delivery;
  3. Develop transportation solutions;
  4. Improve quality of midwifery care through private sector training institutions;
  5. Tailor financial products for maternal and newborn health.

The growing health sector space 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 by public and private providers, creating opportunities for innovation from startup companies, technology companies, and others looking to enter the market. The entry points are many, depending on the level of innovation that a company offers and the issues they want to improve. Within the five themes identified by our team, a number of entry points are laid out to provide concrete examples that could interest for-profit companies, while also offering real solutions to Indonesia’s too-high maternal and newborn mortality ratios.

Click here to view the Assessment Report.

Click here to view the Private Sector Roundtable Meeting Proceedings.

128

private sector interviews conducted

10

provinces covered

Photo credit: (c) 2013 Alamsyah Rauf, courtesy of Photoshare

Photo credit: (c) 2013 Alamsyah Rauf, courtesy of Photoshare

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