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W&P Newsletter – Hospitals and Clinics: Key Highlights of Recent Regulations

 This edition focuses on Presidential Regulation No. 10 of 2021, Government Regulation No. 5 of 2021, Government Regulation No. 47 of 2021 (“GR 47”) and Minister of Health Regulation No. 14 of 2021 (“MOHR 14”), all recently published to further regulate hospital and clinic businesses in Indonesia.

One of the most notable highlights from the regulations is the relaxation of foreign direct investment limitations in the hospital and clinic businesses. The recent regulations also specify key documents for one to operate a hospital and a clinic, based on the risk assessment of their respective business activities.

Foreign Direct Investment Limitations

  1.  Hospitals and Main Clinics
    Private hospitals and main clinics (klinik utama) are now liberalized under the Omnibus Law regime. Accordingly, foreign investors are now permitted to own up to 100% equity in private hospitals and main clinics, compared to the previous regime of only up to 67% (or 70%, for foreign investors incorporated in ASEAN countries).
  2. Pratama Clinics
    Although main clinics are now liberalized, pratama clinics (klinik pratama) remain closed to foreign investors because they are reserved for 100% local Small-Medium Enterprises. The key difference between the main and pratama clinics lies on the type of health care services they offer: the main clinics offer specialized health care services, whereas the pratama clinics offer only basic and limited health care services.

Business Licensing

To operate in Indonesia, the types and number of licenses required are determined based on the risk assessment of the business activities.

From risk assessment perspective, privately-run hospital businesses are categorized as high-risk business and accordingly, required to obtain all of (i) Business Identification Number (locally known as Nomor Induk Berusaha or NIB) (ii), a business license, and (iii) standards certifications.

Whereas main clinics are considered as medium high-risk businesses and therefore they are required to obtain only an NIB and standards certifications.

Although the new regulations are intended, among others, to streamline the business document/ license requirements for hospitals and clinics, we will have to wait and see whether this simplification can actually be achieved.

Relaxation on the Required Number of Inpatient Beds

The previous regulatory regime required all hospitals with foreign direct ownership (whether general or specialty hospitals) to have at least 200 inpatient beds. Under GR 47 and MOHR 14, the required number of inpatient beds for general hospitals remains the same, but for specialty hospitals, the requirement is now reduced to only at least 100 beds. It should be noted, however, that such requirement does not apply to (i) dental hospitals, (ii) ear, nose, and throat (ENT), and head and neck (H&N) hospitals, as they are subject to more specific requirements.

Additional Requirement For Hospitals Introduced by GR 47 and MOHR 14

Despite the relaxation discussed above, both general hospitals and specialty hospitals are required to provide the following additional supporting services on top of the mandatory services required by the previous regulations:

  • laboratory services, medical record services, blood services, centralized sterilization services; and
  • hospital management services.

Furthermore, GR 47 and MOHR 14 also require both public (government-owned) and private hospitals to provide inpatient beds for isolation facilities in normal and outbreak situations or public health emergencies. Under GR 47 and MOHR 14, in an outbreak situation or a public health emergency, public and private hospitals must allocate at least 30% and 20%, respectively, of their total number of inpatient beds, whereas in the absence of such outbreak situation or public health emergency, all hospitals are required to allocate only at least 10% of their total number of inpatient beds for isolation facilities.

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