Indonesia, as the largest economy in Southeast Asia and a leading member of ASEAN and the fourth most populous country in the world, with a population of over 270 million people as of 2024, represents a significant opportunity for Health Management System (HMS) software providers. The healthcare sector has seen significant growth, driven by increased government spending, private sector investment, and a growing middle class with rising healthcare expectations.

Public health expenditure as a percentage of GDP has increased from 1.85 per cent in 2000 to 3.41 per cent in 2020, according to the East Asia Forum. The existing healthcare infrastructure in Indonesia does not have the resources to deal with the increasing demands for healthcare services as the population of the country continues to grow. Indonesia currently has 2,985 hospitals, including 1,058 public and 1,927 private hospitals. In addition, there are over 10,205 public Health Community Centers as of 2021. Growing economy and aging population has led to the need of hospital management system. A Hospital Management system makes it easy and helps manage day-to-day functions in a hospital. Things such as patient Management, scheduling appointments and surgeries, laboratory management, insurance management and taking note of and managing inventory of the medicine and surgical equipment.

Hospital Management System could potentially address the issue of accessibility. As the world’s largest archipelagic country, with over 18,000 islands, Indonesia faces significant challenges in providing equal access to healthcare services. HMS could ensure that all communities across the Indonesian territory have equal access to healthcare services. In August 2023, the Indonesian Government enacted the new omnibus Health Act No. 17 of 2023 (“New Health Act”), which serves as a ‘super-integrated’ act, revoking, combining, and harmonizing 11 existing health sectoral acts and regulations. The New Health Act provides more easement, relaxation, and simplification, as well as liberalization of hospital and clinic business activities for foreign investments. Prior to 2021, all types of hospitals and advanced clinics (klinik utama) business activities were limited to 67% (for all foreign investors) and 70% (for ASEAN foreign investors). Since 2021, the Indonesian Government has taken initiative to expand the liberalization of these sectors, by generally allowing 100% foreign ownership (for clinics, this remains subject to type of clinic). The Indonesian government has also been actively promoting digital health through different initiatives. The country’s Ministry of Health (MOH), alongside CHISU (Country Health Information Systems and Data Use), is working to connect the health facilities in Indonesia and its information systems to improve the availability of quality health data to improve health services in Indonesia. MOH Reg. 24 and the New Health Act mandate all healthcare service providers (including hospitals, clinics, health clinic laboratories, and healthcare service providers providing telemedicine services) to implement medical records on electronic digital basis at the latest by 31 December 2023. Therefore, this seems to be the right time for international healthcare management software’s companies to enter the market.

Although regulations have become far simpler and more favorable for international companies, they must still consider other crucial factors, such as compliance with local data protection laws like the Personal Data Protection Act (PDP) & cultural nuances. Partnering with a local entity can facilitate smoother market entry. Clearly define the goals and objectives of the new hospital management system. These may include improving patient care quality, enhancing operational efficiency, reducing costs, streamlining administrative processes, or enabling better data management and reporting. One of the pressing challenges faced by the healthcare system is the scarcity of hospital beds. Implementing a robust patient management system coupled with a centralized bed allocation system could significantly improve the situation.

The Indonesian and broader ASEAN markets are increasingly focused on expanding its health services for its citizens, originating substantial opportunities for HMS software providers. Success in these dynamic markets requires a well-thought-out strategy that addresses regulatory, cultural, and operational challenges. By understanding the local landscapes, building strategic partnerships, and demonstrating clear value, HMS software providers can unlock the potential of these promising markets.ASEAN business partners can assist you with entry into the HMS market in Indonesia. In order to make the market penetration as smooth as possible, we can help you in finding a local partner to expand your HMS software into the Indonesian market. Please contact ABP for further details.