Indonesia’s dire shortage of specialist doctors opens window for investors

*This article is adapted from * The Business Times

INDONESIA needs 29,000 more specialist doctors to meet its current healthcare needs, while the country’s collective educational institutions can produce only 2,700 new specialists per year.

The shortage has been a subject of discussion for the past few years, and is an ongoing and seemingly uphill battle. Estimates suggest that Indonesia would need 10 years to reach the point where it needs to be – at which point, the country’s population would have grown to a scale that would require even more specialists.

Healthcare, however, is no light matter and very often a question of life and death. Take, for instance, the example of paediatric cardiology.

One out of 100 Indonesian babies born each year suffer from congenital heart defects, and out of those affected, a quarter of them would require surgical procedures. With fewer than 1,500 cardiologists in the country – and even fewer who are surgeons and particularly surgeons qualified to operate on infants – this has become a critical problem that is linked with up to 7,000 post-natal fatalities each year.

To combat this, and quite possibly to combat the US$10 billion annual leakage of Indonesians spending medical bills abroad, the Indonesian government has proposed a few solutions via its game-changing Omnibus Health Law (Indonesian Law No 17 of 2023 on Health).

The regime regulates subjects such as healthcare technology and opens the door for accredited foreign medical workers to practise in Indonesia.

While all these recent changes are very welcome in the eyes of investors keen to see evolution and growth in one of Indonesia’s largest sectors, what piqued our interest the most is the Hospital-based Specialist Doctor Education Programme (Programme Pendidikan Dokter Spesialis Berbasis Rumah Sakit/ PPDSBRS).

Historically, specialist doctors in Indonesia can only obtain their degree from universities – but unfortunately, Indonesia has only 92 medical faculties in the entire country. Out of those 92 faculties, only 24 of them produce specialist degrees.

For many years, this has been the biggest limiting factor in the production of specialist doctors, as each faculty also has their own capacity limits in how many advanced students they can train and who would graduate each year.

Apart from developing more medical faculties, the Ministry of Health has launched PPDSBRS, which allows general practitioners (GPs) to train and become specialists via in-hospital training rather than via classrooms.

In PPDSBRS and over the course of several years, GPs are to follow senior specialist doctors to understand how to analyse health concerns, provide a diagnosis, and henceforth provide treatments in a particular field. This is by no means a new concept – the idea of joining a residency programme to become a specialist doctor is commonplace in many developed countries.

The limiting factor, of course, is where PPDSBRS can take place. To maintain educational quality, the programme can only be taken in educational hospitals, of which there currently are 420 accredited hospitals in Indonesia. While the number appears small, the intent is to grant the accreditation to a growing number of hospitals to increase the number of graduate specialist doctors from this programme every year.

To spearhead the programme, the Ministry of Health has also offered full scholarships for 52 GPs to take their specialist degrees in six partner hospitals last year. The fields covered are cardiology, orthopaedics, paediatrics, ophthalmology, oncology, and neurology. Further, graduates will directly obtain the status of “civil servant doctor” when they complete the programme and serve the government.

Decentralised healthcare

The key word is decentralisation. A centralised healthcare system is highly dependent on the availability and service of hospitals: a large and comprehensive provider of healthcare services, but one which also entails a large sum of initial investment, complex operations, and numerous medical and healthcare workers.

While hospitals are an absolute need for their ability to handle illnesses that require urgent attention, large capacities of care, and multiple specialities, they are also extremely expensive to run and require a large inflow of patients to support it.

A decentralised healthcare system, on the other hand, shares the burden with clinics, which are much easier to proliferate, and suitable to serve even the more rural areas or cities with lower populations.

Government-owned GP clinics are widespread and a wonderful first touchpoint for Indonesians in need of medical attention. With a growing number of specialist doctors, Indonesia can then grow the number of specialist clinics as well.

Specialist clinics can offer all the comfort and convenience of a clinic platform – closer to home, shorter wait times, higher availability – while also providing access to specialised doctors.

Opportunities in specialist clinics

Specialist clinics provide the advanced level of care patients may need without the excessive cost of running hospitals – they are, therefore, potentially one of the most lucrative business models in the healthcare industry and one that could save many lives in the outskirts where hospitals don’t exist.

At the same time, Indonesia has ample need for specialised care as it battles numerous chronic diseases rampant in its population. Almost a quarter – 23 per cent – of Indonesians suffer from hypertension and 10 per cent suffer from diabetes. Some 35 per cent of all Indonesian deaths occur because of cardiovascular diseases, while 6 per cent of all diseases in the country are chronic respiratory illnesses.

These chronic diseases require advanced care and constant checkups, which would be costly and fairly inaccessible if they must be provided by hospitals.

However, there are risks – as with any form of investment and business venture – associated with operating specialised clinic chains. As an offline retail format business model, the details around clinic locations are often the most important: identifying locations that can bring patients from surrounding demographics, possible cannibalisation from other clinics, rental costs, minimum wage requirements, so on.

And due to the nature of healthcare businesses, plus the fact that any errors in operations and treatments can lead to serious health risks for patients, extra care must be made to ensure that all medical and health workers are aligned to prioritise the best interests of the patients.

It is imperative that healthcare-related businesses are focused more on efficiency, creating a profitable operation, rather than optimising revenues from pushing patients to conduct unnecessary treatments.

Globally, specialised clinics are a proven success. NYSE-listed DaVita runs 2,675 clinics in the United States and 367 clinics globally, specialising in kidney dialysis. While servicing almost 250,000 patients annually, the company generated an excess of US$12 billion in revenue and US$1.6 billion in operational income in 2023.

In Indonesia, hospital and clinics chains exist but on a markedly smaller scale: the largest Indonesian healthcare chain is Siloam, with 41 hospitals and 30 clinics across the country. Specialised clinics often exist in silos, where commonly a senior specialist doctor opens their own private practice and at most owns a handful of clinics.

In the past, the expansion of hospital and clinics had been halted due to a dearth of specialist doctors. But if we foresee that in the next five years, the population of specialist doctors will grow, then we can slowly start to replicate the massive scale of these global specialised care providers – and this is exactly where forward-looking investors must look.

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