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Frost & Sullivan : Indonesian Healthcare Expenditure Market to Reach US$60.6 billion in 2018

Urbanization and a slowly aging population will drive demand for healthcare in Indonesia

Jakarta, 27 March 2013 - Frost & Sullivan finds that healthcare expenditure in Asia Pacific will almost double in the next 6 years with the largest share coming from China, Japan and India. While Frost & Sullivan expects the Indonesian healthcare expenditure market to reach US$60.6 billion in 2018 with a CAGR of 14.9% over the 2012-2018 period.

"Healthcare expenditure continues to experience growth as rising patient demands for better healthcare will result in healthcare reforms in Asia Pacific," said Hannah Nawi, Associate Director, Healthcare Practice, Asia Pacific, Frost & Sullivan. "The increasing life expectancy in the region will also result in more elderly requiring long-term care,"

The Consumer Profile is Changing

Over 2.3 billion people in Asia Pacific will enter the working population age group of 15-64 and 11.3% of people will be above 65 years of age between 2013 – 2018 period.

In Indonesia, the median age is 28 years and the age groups beyond 35 years are projected to grow faster than the average from 2010 to 2014 pointing towards a slow change in demographics, which could put a strain on healthcare delivery institutions.

To improve healthcare access, health insurance schemes were put into place. Although the insurance schemes provided by the government such as Jamkesmas, Jamsostek, and Askes are mostly public, they allow their enrollees to seek basic treatment in private hospitals.

"This was done to help the public health institutions to cope with the increasing patient burden that strains its resources," Hannah noted.

Meanwhile, the urbanization rate is expected to increase at a CAGR of 1.2% between 2013 and 2018 in Asia Pacific.

She continued, "Urbanization and a slowly aging population will drive demand for healthcare in Indonesia."

The Emergence of The Private Sector

Several governments in Asia Pacific have increased efforts to increase number of private hospitals. In Indonesia, up to 67% stake in private hospitals are for foreign investors.

The private sector is emerging, especially in major cities. Majority of private hospital establishments and hospital property transactions have happened in Jakarta followed by cities like Bandung, Surabaya, Manado, Makassar, Tangerang and Bali, depicting the rise of investment activities in healthcare delivery services market in key provinces in Indonesia.

In 2012, there were 544 private hospitals in Indonesia and the number is expected to increase to 731 by 2018.

The Next Step

Nitin Dixit, Senior Industry Analyst, Healthcare, Frost & Sullivan, pointed out that as a next step, the use of technology to drive an improvement of healthcare outcomes is the vision with 100% of provinces and 60% of districts/cities planned for implementation of health information systems by 2014.

This will also support healthcare services across the archipelago where today most specialist medical services are only available in larger cities and the travelling distances to reach them from rural areas are significant.

"For example, the growing use of telemedicine for video consultations and remote diagnostics, and the use of the internet to receive a medical consultation or advice from local physicians without visiting a clinic is another enabler of healthcare access," Nitin said. "These are signs that an informatisation process in Indonesian healthcare is imminent and will enable modernisation of the sector," Nitin concluded.

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