Examining the degree and dynamics of policy influence: A case study of the policy outcomes from Hub-funded research into not-for-profit hospitals in Indonesia

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AusAID KNOWLEDGE HUBS FOR HEALTH

HEALTH POLICY & HEALTH FINANCE KNOWLEDGE HUB

NUMBER 27, APRIL 2013

Examining the degree and dynamicso policy in uence: A case study o thepolicy outcomes rom Hub- undedresearch into not- or-proft hospitals inIndonesia

Mia Urbano

Nossal Institute for Global Health

Shita Dewi

Gadjah Mada University


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Examining the degree and dynamics o policyin uence: A case study o the policy outcomes

rom Hub- unded research into not- or-profthospitals in Indonesia

First draft April 2013

2013 Nossal Institute for Global Health

Corresponding author:

Mia Urbano

[email protected]

This Working Paper represents the views of its author/sand does not represent any of cial position of the

University of Melbourne, AusAID or the AustralianGovernment.

ABOUT THIS SERIES

This Working Paper is produced by the Nossal Institutefor Global Health at the University of Melbourne, Australia.

The Australian Agency for International Development(AusAID) has established four Knowledge Hubs for

Health, each addressing different dimensions of thehealth system: Health Policy and Health Finance;Health Information Systems; Human Resources for Health; and Womens and Childrens Health.

Based at the Nossal Institute for Global Health, theHealth Policy and Health Finance Knowledge Hub aims

to support regional, national and international partnersto develop effective evidence-informed policy making,particularly in the eld of health nance and healthsystems.

The Working Paper series is not a peer-reviewed journal; papers in this series are works-in-progress. Theaim is to stimulate discussion and comment amongpolicy makers and researchers.

The Nossal Institute invites and encourages feedback.We would like to hear both where corrections areneeded to published papers and where additional work would be useful. We also would like to hear suggestionsfor new papers or the investigation of any topics that

health planners or policy makers would nd helpful. Toprovide comment or obtain further information aboutthe Working Paper series please contact; mailto:[email protected] with Working Papers as thesubject.

For updated Working Papers, the title page includesthe date of the latest revision.

ACKNOWLEDGMENTS

The authors would like to acknowledge the followingcolleagues who provided contextual insights andmethodological assistance that we have drawnupon greatly in this case study: Dr Kris Hort and Dr Tanya Caul eld from the Nossal Institute, Dr Laksono Trisnantoro from CHSM in Yogyakarta and MarionBrown from the Burnet Institute.


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Health Policy and Health Finance Knowledge Hub WORKING PAPER 27

Examining the degree and dynamics of policy in uence: A case study of the policy outcomes from Hub-funded research

into not-for-pro t hospitals in Indonesia

SUMMARY

This paper presents a case study examining the policyin uence of research and related activities on not-for-pro t (NFP) hospitals in Indonesia, undertaken by theHealth Policy and Health Financing Hub at the NossalInstitute for Global Health at the University of Melbournein collaboration with the Centre for Health ServiceManagement (CHSM) at the University of Gadjah Madain Indonesia.

In 2009, CHSMs research found that non-statehospitals accounted for 50 per cent of the total number of hospitals in Indonesia, and NFP hospitals were thedominant non-state hospital provider, accountingfor 82 per cent. CHSM also identi ed that in someprovinces, NFP hospitals were the only health careprovider located outside district capitals. However,they were struggling to remain nancially viable andmaintain charitable services for the poor. The drift tofor pro t practices was widespread.

On sharing their ndings with a then disparate network of NFP hospitals, CHSM learned that revenue wasundermined by the large number of taxes for whichNFP hospitals were liable. The intent was formed for CHSM and NFP hospital associations to lobby jointlyfor a tax exemption and for recognition of the charitablemission of NFP hospitals in law.

Within two years, CHSMs research contributed toobservable changes in policy processes, structuresand outcomes. The paramount policy in uence wasbringing policy attention to the major role of NFP

hospitals within the health system for the rst time.

A new delineation according to ownership typebetween public and private hospitals was enshrined inthe Hospital Act, with public de ned as not for pro t. A right to tax exemptions for public hospitals wasincorporated into the Hospital Act. A new Ministry of Health decree in 2011 allowed not-for-pro t hospitalsto apply to the ministry to receive non-monetaryassistance. Government policy-making forums havebeen opened up to the non-state hospital sector. A

peak body of NFP hospital associations was formed tostrengthen their capacity and resource base for policyadvocacy.

Factors facilitating the in uence of the research werethe drafting of Indonesias rst Hospital Act and therelatively recent opening up of channels for civil societyinput. The researchers themselves were signi cant for their activist role.

While the research provoked a reappraisal of the role of

NFP hospitals in serving the poor, there was scepticismabout calls for tax exemption due to their recent for pro t practices.


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multiple sources of evidence or interpretations. Theapproach is relevant for health policy investigation,given the formative in uence of context and culture onhealth systems and the importance of examining the

relationships, interests and behaviour of policy actors.Keene and Packwood (2000) contend that althoughcase studies are labour intensive, they are usefulwhere policy change is occurring in messy real worldsettings.

This case study uses a framework-based approach,drawing on the policy in uence template (or framework) that was developed by the Hub for useby all four AusAID-funded knowledge for health Hubs(Hort and Annear, 2012). The framework states that the

aims of the case studies are to:

(1) identify and describe policy changes (or wherechanges did not occur);

(2) identify and describe research or knowledgeevidence provided through Hub activities; and

(3) evaluate the extent to which research or knowledgeinputs are related to policy change in the speci ccontext and identify factors which might haveconstrained or facilitated policy in uence.

Based on an extensive literature review, the framework identi es the following elements as requiringconsideration in the case studies: Policy context: type of decision; political context;

policy maker interest in evidence & relation with theresearcher;

Knowledge or evidence input: type of knowledgeand extent to which this is generalizable or contextspeci c

Communication: method and factors in uencing

communication Potential in uence on policy: ranging from changes

in attitudes of policy makers to proceduralchanges, and changes in policy content or policyimplementation.

The frameworks implicit assumption is that answeringthe questions within each domain will generatesuf cient evidence for forming a judgment about thepolicy in uence of the research.

Because of the need for a high level of detail andunderstanding of context and actors in a single-

INTRODUCTION

This paper presents a case study examining thepolicy in uence of research and related activities onnot-for-pro t (NFP) hospitals in Indonesia, undertakenby the Health Policy and Health Financing Hub at theNossal Institute for Global Health. The Hub is one of four Knowledge Hubs for Health funded by AusAIDover 2008-12, with the aim of providing evidence thatin uences policy or practice and communicating thatevidence effectively to users and policy makers.

One of the research activities undertaken by the Hubwas a collaborative study with the Centre for HealthService Management (CHSM) at the University of Gadjah Mada of the role and growth of non-statehospitals in Indonesia during 2010. Although thepolicy implications of this research are still the subjectof discussion and advocacy, the period in which thisdiscussion has taken place offered time to re ectcritically on the degree and dynamics of the researchsin uence on policy.

The speci c focus of the case study is to identifywhether the research had any policy in uence and, if so, how that in uence occurred, and any lessons learntrelevant to the process of in uencing policy. The Huband CHSM are distinguished throughout the casestudy, to aid understanding of the speci c factors andactors that led to policy in uence. The Hub collaboratedwith CHSM throughout the entire process, includingin the development of research plans, analysis of

ndings and the preparation of reports. However,CHSM led communications and disseminationrelated to the research within Indonesia. This study

therefore represents the Hubs in uence overall. Thestudy presents decisions, events and perspectives inextensive detail, but its authors concede that it is likelyto be a partially reconstructed account of the efforts of CHSM and NFP hospital associations.

METHODOLOGY

The Hub commissioned this exploration of researchin uence on policy as a case study. Gilson (2012) arguesthat health systems need to be reviewed in their localpolitical and social context, and so case studies arevaluable, being highly contextualised and canvassing


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the national newspaper Kompas and the CHSMand Hub researchers involved.

Ethical clearance for the case study was given bythe Ethical Committee of the Faculty of Medicine atthe Universitas Gadjah Mada. Because the researchactivities were conducted exclusively by nationalresearchers within Indonesia, it was decided thatethical screening by an Indonesian academic institutionwas appropriate.

KEY EVENTS AND ACTORS

History of Non-State Providers

Non-state providers have a long history in Indonesia. The rst non-state hospital was founded by the DutchEast India Company in 1626. Religiously af liatedhospitals developed in the mid-19 th century and ourished by the early 20 th under the sponsorship of so-called zending or missionary groups from Europe(Trisnantoro, Dewi et al 2012). Even in colonial times,these hospitals had a two-tiered ward system, somewards catering for fee-paying Dutch nobility. Donationsfrom their parent organisations were cut off duringthe Japanese occupation (1943-45), when Dutchdoctors, nurses and missionaries were sent back tothe Netherlands.

It was only after Independence in 1945 that theIndonesian government established the state hospitalsector. For-pro t or private commercial hospitals werepermitted in the 1990s as the economy grew. The 1997 Asian nancial crisis had a devastating impact uponIndonesia and created the impetus for social safety netschemes for the poor, including health insurance.

The policy environment in Indonesia has changedmarkedly in the past two decades. After PresidentSoeharto stepped down on 21 May 1998, hisauthoritarian system was abolished. A free generalelection was held in June 1999. Indonesia shiftedto a democratic system and embarked upon liberalreforms, including the guarantee of political freedomand participation. The liberalisation of politicalinstitutions brought about mixed effects, includingpolitical instability in some provinces. The governmentresponded with what has been referred to as the bigbang decentralisation in 1999. This systemic shiftadded further complexity to an already intricate policy

issue case study, the team comprised one insider,namely the lead Indonesian researcher, who hadintimate knowledge of the actors and events, andone Australian researcher who had been independent

of the research. The Indonesian researcher broughtdetailed knowledge of the chronology of researchactivities, the stated and informal objectives of theresearch and the efforts to engage particular policymakers. This researcher could draw on rst-handexperience of context and relationships in order toassess whether the research had policy sway. The Australian researcher, being independent, offered theability to explore disinterestedly the perceptions andassumptions of stakeholders on these same issues,particularly the extent, or lack of, policy in uence.

The case study took 12 weeks, beginning 15 March2012. The methodology comprised three phases:

1. Production of a timeline: At the outset, the teamconstructed a detailed historical timeline, narratedby the Indonesian researcher. Although the timelineis linear, the team did not assume that any in uenceon policy was sequential or cumulative. Rather thetimeline was used as a summary of noteworthyinteractions and decisions in the research, and as

a vehicle for exploring stakeholder interpretationsof their signi cance and meaning.

2. Document review, in both Indonesian and English,including:

research outputs from CHSM and the Hub,including policy briefs, published papers,books, draft regulations, minutes of meetingsand other communications includingstakeholder emails, focusing on major ndings,authorship and audience; they served as thebasis for the question guide on the in uence of research outputs for policy and on the existenceof a concerted communications strategy;

policy instruments and the text of draftregulations, which were compared againstCHSM research ndings and recommendations.

3. Semi-structured stakeholder interviews: Thesewere undertaken with a total of 24 stakeholderswho had had any contact with the researchover the previous two years. This includedrepresentatives from parliament, NFP hospitalassociations, the ministries of Health and Finance,


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also found that NFP hospitals were sometimes theonly health care provider outside district capitals, as isthe case in Papua province. Added to the nding thatthe number of NFP hospitals in remote and rural areas

was decreasing overall, CHSM concluded that if thesehospitals decline, there is a growing risk of the poor losing their access to health care (p. 9).

When CHSM shared its ndings at a seminar with NFPhospital associations in June 2009, the associationsidenti ed the loss of funding from parent religiousorganisations and the lack of tax breaks as constraintson their growth. Additionally, they pointed to theincreasing costs of medical services and drugs, and aproliferation of new taxes that were creating signi cant

nancial pressures on NFP hospitals and threateningtheir viability. These pressures included: the needto offer competitive doctors salaries to attract andmaintain the minimum level of specialist servicesrequired for their operating licences; 1 the imperativeto compete for fee-paying patients, to provide incomefor clinicians and offset delays and funding gapsin compensation schemes for charitable services,such as through JAMKESMAS (Jaminan KesehatanMasyarakat or Social Health Insurance); and the lack of direct or indirect government subsidy for charitableservices. As a consequence, NFP hospitals hademulated for pro t practices in the recent decade,such as the introduction of rst-class or VIP wards,fees and impressive modern hospitals to attract wealthyclients. CHSM identi ed that in other countries, such as Vietnam, non-state hospitals received tax exemptions. This comparison was noted by one researcher as acompelling rationale for Indonesia to be fair (interview,22 March 2012). CHSMs policy intent and pursuit of a tax incentive, in particular, were formed at this time.

In 2009, Indonesia was drafting its rst Hospital Act,and this presented an unparalleled opportunity tolegislate the desired tax exemptions. CHSM lobbied theparliamentary drafting committee for the incorporation

1 Chapter 4 in Trisnantoro, Dewi et al (2012) includes a casestudy of a 2006 survey on the incomes of government doctorsfrom eight provinces of Indonesia by the University of GadjahMada, the Indonesian Doctors Association and HealthInsurance Limited Corporation. The survey found that more

than two-thirds of their income came from dual practice in thenon-state sector, speci cally salary (22.6 percent), incentives(35.1 percent) and private practice (14 percent).

environment. At this time, the House of Representatives(DPR, the parliament) assumed charge of centraldecision making. For the rst time, the DPR exercisedits right to make laws and exercise authority over

government. The DPR also played an active part inpolitical processes through policy discussions andthe approval (or rejection) of appointments of chiefs of government agencies.

The collapse of the Soeharto regime lifted the controlof the state over society and opened up possibilitiesfor freedom of speech, association and participation.Subsequently, social movements have developedand become more sophisticated, seeking for policyto respond to popular demands expressed through

peaceful demonstrations, petitions and public hearingsin assemblies. CHSMs research and policy effortswere undertaken and must be read in this context.

Sequence of Events

An overview of the research and policy intent and of themain actions is provided here and is illustrated in Figure1 below, a summary of the chronology of the researchproject.

In 2009 CHSM mapped the recent growth of the non-state hospital sector. Information was compiled fromMinistry of Health hospital registration data from theprevious 10 years, including the number, location,accreditation and ownership of state and non-statehospitals. This study revealed that non-state hospitalsaccounted for 50 per cent of the hospitals and 37 per cent of the beds, con rming their major role in universalhealth care coverage in Indonesia. A striking ndingof the research team was that NFP hospitals weredominant among non-state hospitals, accounting for

82 per cent of all non-state hospitals. NFP hospitalswere mainly run by foundations (yayasan) or networksof hospitals linked to religious institutions; but thiscategory also included clinician-owned small hospitals.Importantly, the study found that the growth of NFPhospitals had levelled off, some even converting their legal status to for pro t. The research identi ed thatNFP hospitals were facing a fundamental con ictbetween the charitable mission and values on whichthey were founded, and the lack of resources toprovide funding for these charitable services either through the owner or through subsidies from thegovernment ((Trisnantoro, Dewi et al 2012). CHSM


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PELKESI is an association of Christian church-ownedhospitals, founded in 1983. The association comprises124 general hospitals, mother and child hospitals,maternity clinics, health clinics, and other smaller health

posts. http://www.pelkesi.or.id/

PERDHAKI, an association of Catholic church/convent-owned hospitals, was founded in 1972. http://www.perdhaki.org/

YAKKUM is a foundation owned by the IndonesianChristian Church and the Javanese Christian Church). Yakkum owns 12 hospitals. http://www.yakkum.or.id/

All of the above associations are members of PERSI, theIndonesian Hospital Association. Government of ceswere also involved. In the Ministry of Health, the Bureauof Regulation is responsible for drafting regulations,decrees and standing orders for the ministry, whilethe Directorate-General of Health Services overseesprimary, secondary and tertiary health services. In theMinistry of Finance, the Directorate-General of Taxationoversees taxation regulations and their implementation,and the Centre of State Revenue, under the FiscalPolicy Agency, is closely linked to the directorate-general in overseeing issues of taxes and levies.

of tax concessions and for a revised formulationof hospitals designated as public to include NFPhospitals (alongside government providers). Within four months, these two elements were incorporated into

the new Hospital Act, a swift conversion of researchndings to policy in uence. From this time, CHSM and

NFP hospital associations engaged with the Ministry of Health to develop the regulations to implement theseelements. Efforts began in early 2010 to produce andratify regulations within the stipulated period of twoyears from the passage of the act. However, at thetime of this case study, the regulations had not beenapproved.

Key Stakeholders

At the time of the case study, there were a number of associations that managed or coordinated networks of NFP hospitals.

Muhammadiyah is a Muslim foundation establishedin 1912. It owns and manages 457 general hospitals,mother and child hospitals, maternity clinics, healthclinics and other smaller health posts. http://www.muhammadiyah.or.id/


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an explanation of whether and how the researchin uenced policy. The ndings are presented in threeparts. Part 1 describes the policy context and basisfor research decisions; Part 2 documents the researchand dissemination process; and Part 3 considers thecontribution of the CHSM research to policy changes.

Part 1: Context

This section describes the rationale for the research,the process whereby an intent to in uence policy wasformed and the signi cance and context of issues.

FINDINGS

This section provides a detailed account of the impetus,efforts and outcomes arising from the CHSM researchto in uence tax exemption policy for NFP hospitals. The

ndings are organised according to the six domainsof the policy in uence framework: policy issues,policy context, research inputs, communications,policy in uence and implications. Within eachdomain, convergence or incongruity in perspectivesis highlighted, as is information that contributes to

FIGURE 1. CHRONOLOGY OF CHSM RESEARCH ACTIVITIES AND POLICY DEVELOPMENTS RELATING TO NOT-FOR-PROFIT HOSPITALS

RESEARCH ACTIVITIES

POLICY DEVELOPMENTS

Jun 09 Dec 09 Jun 10 Dec10 Jun 11 Dec 11 Jun 12

CHSM mapping

of non-statehospital sector

Policy brief on needfor supportive

policy for NFPhospitals

CHSM holds twodissemination

seminarswith NFPS

Advocacy toparliamentary

drafting

committee for Hospital Act

CHSM engageswith Kompas

newspaper on findings

Multi-stakeholder study visit toMelbourne

Formation of joint MoH-NFPworking groups

Launch of CHSM

websiteon NFPs

NFP hospitalsinvited onto

parliamentary

draftingcommittee for Hospital Act

Hospital Actpassed

inclouding right

to taxexemption for NFP Hospitals

Multi-task stakeholder

Taskforce on

Tax Relief formed

within Ministryof Health

Taskforceproducesacademic

review

Draftregulation

on tax

exemptionproduced, but

not tabled.

Head of taskforce

moves on tobecome

ministerialadviser.

Further twopolicy briefs

Regulation onnon-cash

support for

NFP Hospitalsis enacted.

Formation of informal NFP

Hospital

association

Kompaspublishes

feature articleon financialburdens for

NFP Hospitals

CHSM convertsfindings to

book manuscript

CHSM - NFPhospitals draft

alternativeregulation on

tax deductible

donations toNFP Hospitals

Kompaspublishes

another reporton financial

burdens for NFP Hospitals Case studyproduced


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hospital care will increase given that Indonesia is facingan epidemiological transition to the double burden of communicable and non-communicable disease andthe higher care needs also associated with an ageing

population (Trisnantoro, Dewi et al 2012).

However, the identi cation of the policy issue evolvedas research ndings emerged and in response toengagement with the stakeholders, particularly NFPhospital associations.

The initial nding of the high proportion of NFP hospitalswithin the non-state hospital sector prompted CHSMto engage with NFP hospital associations. Throughthis dialogue, it became clear that nancial pressures

on the non-state sector were undermining the capacityof NFP hospitals to ful l their charitable mission anddriving them towards provision of services for pro t.Part of the problem identi ed was the large number of taxes for which NFP hospitals were liable, as well as thelack of any tax concessions.

As a result of this dialogue, it was recognised that theprimary policy change needed was the introductionof tax concessions for not-for-pro t hospitals. Relatedsecondary policy issues identi ed were:

the need for NFP hospitals to reaf rm their charitablemission and their not-for-pro t operation, in order to justify tax concessions;

the need for NFP hospitals to examine other aspectsof the nancial and operational pressures; and

the need for government to recognise the roleand contribution of NFP hospitals to publicpolicy objectives and to include their role in policydevelopment.

Current status o the issue in the policy cycle: When

stakeholders were asked their views on the status of the issue in policy making, to aid their response, theywere shown an English or Indonesian version of a tabledescribing a seven-stage progression of how researchin uences policy, as devised by the Hub (Appendix1). The stages are: research priority setting; evidence-

ltering and dissemination; expanding policy capacityand improving policy-making processes; agendasetting; policy formulation; policy implementation; andpolicy evaluation.

Interestingly, all stakeholders regarded the issue inquestion to be tax exemption for not-for-pro t hospitals.Despite a potential range of options for tackling the

Policy issues

Defnition and rationale o policy issues: Thedecision to research the role of NFP hospitals inthe Indonesian health system and to pursue a taxexemption policy in particular resulted from a sequenceof research discoveries and was arguably in uencedby the equity principles of the Hub and CHSM.

The research was rst conceived by the Hub, incollaboration with CHSM, to support national researchpartners to examine the role of the non-state sector inhealth provision in middle income countries, speci callyin Indonesia and Vietnam (Hort, Akhtar et al 2011). Thisscope was consonant with AusAIDs priority areas of health system strengthening in Indonesia and of savinglives through increased access to health care for all,particularly to maternal and newborn care (AusAIDIndonesia Partnership Priority 2). According to the Hubdirector, Dr Krishna Hort, the research was also in linewith the Hubs interest in the poor and how servicesare available to them, rather than provision to the better off (interview, 3 April 2012).

The Hub director decided that it was important andtting for CHSM as the Indonesian research leader to

de ne further the direction of the research, accordingto its rst-hand discernment of priorities. The Ministryof Health and NFP hospital associations were notinvolved in decisions on the research focus and policyoptions at the outset.

CHSM elected to focus on the non-state hospitalsector for several reasons. CHSM was aware that other reviews had been undertaken on the non-state sector in Indonesia but not speci cally on hospitals. 2 CHSMidenti ed that hospitals consume a substantial portionof the national health budget and government health

nancing schemes (e.g. out-of-pocket payments, non-state health insurance and social health insurance),increasing the governments exposure for health(Trisnantoro, Dewi et al 2012). From a preliminaryinternal assessment, CHSM found that non-statefacilities are a fast growing provider in Indonesia,stimulated by gaps in coverage by state sector facilitiesand the deregulated policy environment for the non-state sector. CHSM also reasoned that demand for

2 Global and synthesis reviews have been undertaken onambulatory and outpatient care within the non-state sector.Cited in Hort, Akhtar et al., 2011.


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a comparatively low policy priority. For some, this wasindicative of the low priority the non-state sector hasin the Ministry of Health. One stakeholder supportedthis view by pointing to public statements made by the

minister of health in the case of a high-pro le negligencesuit against a for-pro t hospital in 2009; he said hewouldnt intervene because of it being a private (thatis, non-state) hospital matter (interview, 22 March2012, citing Minister of Health: I cannot pinch OmniHospitals ear, by Tau k Wijaya, detikNews, 4 June2009).

Anticipated outcomes o the research: Throughthe research by CHSM in 2009 and 2010, speci cpolicy objectives were formed. Despite CHSMs long

engagement in health systems research in Indonesia,the major role and scale of NFP hospitals was agenuinely surprising nding for both the researchersand the Ministry of Health. Once the ndings emerged,the decision to support the tax exemption was a resultof, rather than the motivation for, the research.

The CHSM study on non-state hospitals identi ed aneed for the exposure and elimination of hospitalswith false non-pro t statushospitals that claim tobe not for pro t but employ for-pro t practices. The

study urged that with the drift to for-pro t practices,NFP hospitals should also show a more humanitarianimage by moderating the ostentation of NFP doctorsand serving remote areas (Hort, Akhtar et al 2011).

The entitlement to tax exemptions hinged on thedistinctive characteristics of not-for-pro t hospitalproviders and their charitable services. CHSM feltthat the research should clarify the meaning of theseconcepts in order to defend the survival of NFPhospitals in the radically developing architecture of

health care delivery. The research therefore consideredthe following questions: How can a charitable identitybe quanti ed, measured and distinguished from other ownership types? Does the presence or absence of certain services make an organisation not for pro t? Isthere a distinction between not-for-pro t and for-pro tservices that results in perceptibly different patientoutcomes? Are there different standards of conductand accountability of the owners of NFP hospitals? Ispolicy needed to support these charitable services?

Strategically, the researchers sought to use their ndings to inform and galvanise the NFP hospital

nancial sustainability of not-for-pro t hospitals,after the inclusion of tax exemption in the Hospital Act, researcher advocacy concentrated largely onimplementing this exemption.

There was also a consensus among the researchers,NFP hospital association representatives and theparliamentarian interviewed, that the inclusion of the taxexemption clause in the Hospital Act suggested that theissue had formally reached the policy implementationstage, but that it would not be effective until regulationswere passed. In Indonesia, regulations to implementclauses in new legislation need to be passed within twoyears of the adoption of the act.

The most senior CHSM researcher was adamantthat new strategies, such as the formation of a peak body for NFP hospital associations, would propelimplementation of the tax clause (interview withProfessor Laksono Trisnantoro, 27 April 2012). Another researcher was less sanguine that a regulation wouldbe approved, and felt that it was better to pursue a newregulation recognising the charitable status of not-for-pro t hospitals in order for them to be able to receivedonations (interview, 27 March 2012).

However, in spite of the legislative changes, commentsby representatives from the ministries of Healthand Finance suggested that the issue was still at anincipient, agenda-setting stage and did not yet havesuf cient endorsement. This was coupled with remarkssuggesting that the tax exemption was accorded a lowpriority overall.

One of cial from the Ministry of Health remarked, Aslong as we (the Sub-Directorate of Medical Servicesthat oversees hospital issues) have money to conduct

the meetings between the ministry, academics andhospital associations, we will keep following up thisissue (interview, 26 April 2012). Another stakeholder said, The Ministry of Health may be more inclinedto provide a tax exemption to the teaching hospitalsthan the not-for-pro t hospitals, because incentives toteaching hospitals address the supply of doctorstheyare desperately needed. Workforce under-supply is ahigh priority (interview, 15 April 2012). An of cial fromthe Ministry of Health said, If the policy has a politicalnuance, we can speed up the process; political interest

is a powerful way to speed things up. These remarkssuggest that the tax exemption for NFP hospitals is still


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than personal terms, that there was a distrust of themotives for the tax exemption. It was suggested thatexemption could be interpreted as a means by whichNFP hospital foundations could increase their pro ts.

The current nancial independence of foundationsand the limited oversight by the Ministry of Healthreinforce this suspicion. Lastly, it was apparent throughinterviews that there was a questioning of the Ministryof Healths commitment and political will concerningissues connected to the non-state sector. The ministryslow understanding of the operational realities of NFPhospitals was cited as evidence of low commitment.However, in some ways this is a circular argument; itarguably underestimates both the complexity of theoperating environment and that NFP providers havebeen a neglected issue in health sector development.It is not unreasonable for the Ministry of Health to havea low understanding at this time, so a lack of politicalwill would need to be substantiated by other evidence.

A number of other possible reasons for the lowunderstanding or low priority of regulation can be drawnfrom stakeholder statements. First, as one explained,the right to tax exemption enshrined in the Hospital Act is not operational until there is a governmentregulation ( peraturan pemerintah ). A governmentregulation is the highest order of regulation and requiresthe relevant technical ministry to draft it and then obtainthe presidents signature. The complexity with the taxexemption regulation is that the technical ministry is theMinistry of Health, since it falls under the Hospital Act,but taxation is under the jurisdiction of the Ministry of Finance. The two ministries are therefore required tocollaborate in the drafting. Secondly, the Hospital Acthas given rise to many other regulations over whichthe Ministry of Health has authority, and which it has

prioritised.

An important dimension of stakeholder involvement inthis case study was variation in the capacity to engage. As one stakeholder remarked, NFP associations arenot created equal in size and capacity (interview, 3 April2012). Some associations, such as Muhammadiyah,have a long history of political engagement, andothers less so. One stakeholder also suggested thatin the post-independence period, Christian-af liatedgroups may have wished to stay outside the political

realm (interview, 3 April 2012). There was agreement,however, that PERSI was best placed to serve as the

associations with regard to their distinctive statusand mission. As one researcher stated, a secondarymotivation arising from the research ndings was toremind not-for-pro t hospitals of their social mission to

provide charitable services to the poor, and that it ison that basis that they are entitled to tax concessions(interview, 27 April 2012). Notably, through the courseof the research, Muhammadiyah, PELKESI andPERDHAKI recon rmed to CHSM their foundationscommitment to remain not for pro t.

Involvement and attitudes o those involved

Using research ndings to in uence policy has so far directly engaged representatives from the following:

a cluster of NFP hospital associations, primarilyMuhammadiyah, PERSI and PERDHAKI; the Sub-Directorate of Medical Services and the Bureau of Lawwithin the Ministry of Health; the Ministry of Finance;parliamentarians (2009 sitting); Kompas newspaper;the Hub; and CHSM. Interestingly, the Kompasrepresentative observed that citizens or the end userswere missing from those consulted and should beinvolved in the future.

CHSM engaged NFP hospital associations from the

outset, sharing preliminary study ndings with themin mid-2009, which opened the door for them to joinCHSM as invited members of the drafting committeefor the Hospital Act. CHSM supported NFP hospitalassociations to inform and advocate to the Ministry of Health.

The sequence of engagement by CHSM can be readas careful management of diverse views about other stakeholders and the issue. Based on past experience,stakeholders appeared to have con icting expectations

and interpretations of a number of issues. For example,there was disagreement between parties as to whether the NFP hospital associations, the Ministry of Healthor even CHSM was responsible for leadership on theissue. One association stated, The act dictates thatthe Ministry of Health should be in the leading role,whereas the Ministry of Health looked to the hospitalassociations to spearhead the process.

The need for NFP hospitals to restore their humanitarian image, identi ed by the CHSM research,

also appeared to prejudice stakeholders against taxexemption. A number carefully noted, in general rather


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these differences also explain responses to the effortsto pass the regulation, including enthusiasm, warinessand frustration.

Relationship between researchers and policy makers

A prominent feature of the policy in uence processhas been the activist role of CHSM. CHSM strategised,facilitated networks and meetings, drafted regulationsand advocated for the tax exemption. CHSMrecognised that it had been the leader to date, butthat NFP associations needed additional support tobecome stronger. Indeed, this has been appreciatedby NFP hospital associations. A PERSI representative

commented that the University of Gadjah Mada(CHSM) is the only university that is concerned withnot-for-pro t hospital issues (interview, 27 April 2012).However, CHSM has been explicit in recent wordsand deeds about handing over responsibility to theNFP associations. Without this, two of the researchersraised the risk of researcher capture [meaningthe researcher may be] working in the service of theNFP hospital associations and the Ministry of Health(interview, 22 March 2012). An example is CHSMsdrafting of the tax exemption regulation for review bythe Ministry of Health.

At meetings in early 2012, CHSM urged the NFPhospital associations to appoint a senior person fromeach hospital to form a peak body for pursuing theregulation. CHSM suggested that the associationscould each contribute a small amount to hireprofessionals, such as lobbyists and legal drafters, tosupport their efforts. One further suggestion by CHSMwas for them to petition for a judicial review of the taxlaw (distinct from the Hospital Act) to extend favourableconcessions to the NFP hospital sector. This waspitched to the associations by CHSM as an investmentin their future.

CHSM and the Hub expected that in the future,researchers would return to their natural role asproviders of evidence to both NFP hospital associationsand to the Ministry of Health, to get issues onto thegovernment agenda. One researcher suggestedthat CHSM could investigate issues such as the lowsupply and utilisation of hospital beds in Indonesia ascompared with other ASEAN nations, which impactson the accessibility of care.

NFP hospital association coordinator with the Ministryof Health.

Considering the tax exemption focus, it is striking that

the Ministry of Finance was not invited to attend or contribute to discussion and drafting sessions on theregulation. However, one stakeholder remarked thatboth the NFP hospital associations and the Ministry of Health would prefer to approach the Ministry of Financeonly once a well-substantiated draft regulation existed(interviews, 25 and 27 April 2012).

Policy decision

Perspectives varied on the extent of the policy shiftrepresented by the introduction of the tax exemptionfor NFP hospitals. An intriguing contrast exists betweenthe perception of the researchers, two of whom feltit was an incremental policy change, and that of theparliamentarian, who declared the change huge. The researchers felt that the change was in keepingwith the government priority on improving health careaccess for the poor and giving more attention to thenon-state sector.

Tax exemptions for NFP hospitals had been mootedby NFP hospital associations and government of cialsbefore. 3 The researchers also pointed to the precedentfor tax concessions. For example, NFP educationalinstitutions have been exempted from income tax onthe proviso that their operating surpluses be investedin facilities, equipment or research and developmentwithin four years of the surplus year. Selected strategicand primary industries have also been exemptedfrom import duties. However, the parliamentarianinterviewed considered that the introduction of thetax clause into the Hospital Act was a fundamental

change. The differences in perception regarding theimpact of the tax clause are signi cant. It is likely that

3 One interviewee relayed an anecdote from a Ministry of Financeof cial that during the drafting of the NFP Educational InstitutionIncome Tax Exemption Policy in the late 90s, a draft was alsoprepared to provide the same exemption for the NFP hospitals.When these two drafts were ready to be submitted for signing,it is alleged that the Directorate-General of Tax saw that whileMinistry of Education and the NFP educational institutionswere actively involved during the whole process, there was

no representation from the Ministry of Health. On this basis, itwas decided not to submit the draft on tax exemption for NFPhospitals.


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has also played a role. The deregulation of the healthsystem in the early 1990s has been accompanied byfragmented governance between central and sub-national levels, as well as complexity in nancing

mechanisms. Speci cally, there are limited regulation,information and reporting relating to the non-statesector, including on nancial management, and nopolicy to regulate the distribution of new not-for-pro thospitals. NFP hospital associations consider that theyhave been neglected in policy, with a correspondinglylimited understanding of their operating circumstancesand contribution. However, some decision makers seeNFP hospitals as beyond regulation and transparency,so their motives in pressing for a tax exemption werequestioned.

A nal contextual in uence that has impinged uponacceptance of the tax exemption was ideological or atleast jurisdictional. Stakeholders had opposing viewson how best to redistribute funds for the poor and onwhether a tax exemption was a privilege or a necessity. The Ministry of Finances position was that it is theresponsibility of the government to collect revenuethrough tax which is then used to nance schemes for the poor to access health (for example, JAMKESMAS).From its perspective, a tax exemption is not desirable,because it results in revenue losses for such schemes.One stakeholder commented that the Ministry of Finance thinks of the tax incentive as a disincentive,viewing tax as a due to the state rather than a burden.

On the other hand, NFP hospital associationrepresentatives argued that the Ministry of Finance viewworks only so long as the poor go to state hospitals.In reality, state hospitals are overcrowded, suffer froma lack of supplies and staff and are perceived as lowquality. NFP hospital associations contended thatthey should be supported because they currentlyprovide charitable services, as well as being expectedto respond in times of emergencies and outbreaks(often without funding support), to compensate for shortfalls in state hospitals. The associations notedthat they have previously tried to engage with theMinistry of Health to convey the burden they incur fromthe JAMKESMAS reimbursement scheme, wherebypayments are late and do not meet the actual cost of providing the medical service since the costing model

is based on the heavily subsidised state hospital

The Kompas observer commented that CHSMsengagement in policy deliberation was stronger withindividual NFP hospital associations than with theMinistry of Health.

Contextual infuences

A range of background circumstances explain thecourse of CHSMs research in uence on policychange. As CHSM embarked upon its mapping studyof the non-state sector, the Indonesian parliament wasdrafting its rst Hospital Act. The researchers knew thiswas an unparalleled opportunity to legislate recognitionof the unique charitable role and nancing needs of NFPhospitals. As the government intensi es its introduction

of social protection and universal coverage schemesfor the poor, the researchers felt the sustainability of NFP hospitals would resonate with parliamentarianson this basis. The parliamentarian interviewed for thiscase study, a veteran of hospital administration, agreedthat the policy should distinguish not-for-pro t hospitalsfrom for-pro t ones.

Another enabling factor was arguably the growingopenness of the government to civil society input.Evidently commanding national respect as academics,

CHSM was an invited member of the parliamentarydrafting committee for the act. Upon seeing that onlythe state hospital sector was represented, CHSMinvited NFP hospital associations to participate. Theacceptance on the drafting team of a group thatdescribes its historic neglect by government can beread as the governments recent willingness to consider civil society input. One researcher commented, Inthe newly democratised Indonesia, civil society is stilllearning and nding its roles The government is stillchanging from a bureaucracy to a more executive roleand so its also learning new roles. Having a platformfor the NFP hospital associations to express their viewswas unprecedented and an in uential contextual factor.

There were also contextual factors that likely temperedmomentum for policy change once the Hospital Actwas passed. First, the act coincided with the end of aparliamentary term, so those representatives who hadbeen persuaded of the importance of the tax clausethen left of ce.

The current functioning of the Indonesian health system


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TABLE 1. RESEARCH PRODUCTS AUTHORED BY CHSM

Date Output

January-April 2009

Mapping study of the state and non-statehospital landscape. This identi ed thesize but also the recent stagnation of theNFP hospital sector. It identi ed policyoptions for the survival of the sector and itsservices for the poor.

July 2009 Policy Brief #1, on the need for supportivepolicy for non-state hospitals. This briefproposed tax exemptions for publicor non-commercial hospitals providingcharitable services.

January-May 2010

Production of the monograph TheNon-State Hospital in Indonesia withthe research ndings in Indonesian andEnglish. In press as at June 2012.

August 2010 Policy Brief #2, on steps for implementingthe tax incentive clause in the Hospital Act. The brief recommended that: (1)the Ministry of Health de ne criteria forwhat are NFP hospitals; (2) NFP hospitalstake steps to provide evidence of goodgovernance and accountability; and (3)there be a dialogue between the ministriesof Health and Finance and NFP Hospital Associations to agree on the tax incentivesneeded.

August 2010 Policy Brief #3. This was authored by theCatholic Hospital Association, PERDHAKI.It focused on various tax incentive optionsincluding those relating to income tax, VAT,land and building taxes and import tariffs. The brief also reiterated the right of NFPHospitals to receive a subsidy and grantfrom government, as per the Hospital Act.

December 2010

CHSM and NFP hospital associationscontributed content to the academic reviewthat was required to justify the regulation.

Input was provided to the Ministry ofHealth. It has been under review by theBureau of Law since then.

December 2010

CHSM produced a draft regulation forthe tax exemption for submission to theMinistry of Health.

September 2011

In response to the limited progress of thetax regulation draft, CHSM drafted analternative regulation for donations to NFPhospitals to be tax deductible.

sector. 4 It is notable that through the operation of Law No. 34/2000, which allows regional taxes to be asource of local government income, NFP hospitals arecurrently subject to 30+ local taxes relating to hospital

operations, in addition to central government taxessuch as income tax, value added tax, land and buildingtaxes and tariffs for medical equipment. The argumentfor policy change and tax exemption was therefore anissue of fairness, according to the associations.

The Ministry of Health intends to but has not yet beguna comprehensive hospital costing study that coversstate and non-state hospitals, so it is unlikely that thegaps in JAMKESMAS reimbursement will be addressedsoon. In the eyes of NFP hospital associations and

the researchers, the tax exemption therefore remainscrucial.

Part 2: Generation and Dissemination ofEvidence

To identify whether the CHSM research had policyin uence and how that occurred, it is necessary toexamine the research products that were created andhow they were utilised. This section therefore describesthe research outputs and the approach taken for their

dissemination.

Research activities

Research outputs: The research products authoredby CHSM took a number of forms (Table 1.). The range,listed in chronological order below, is notable in itsbreadth, spanning academic, advocacy and legalformats.

Type of knowledge provided: The type, formsand conveyance of knowledge produced by anyresearchers will have a bearing on its comprehensionand uptake by policy makers. Trisha Greenhalgh(2010) has suggested a distinction between data (anordered inventory of items), information (organisationof data within a context and showing relationships),and knowledge (which judges the signi cance of thatinformation). Policy analysts have also distinguishedbetween theoretical and generalisable knowledge for policy in uence, and practical and context-tied forms.

4 The Indonesia Case-Based Groups (INA-CBGs) is a costingmodel similar to the Diagnostic Related Group (DRG) method.


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They knew that some NFP hospital providers werefacing issues, but the research revealed that theissues were systemic and across the board.

Engagement o potential users in design, processor analysis: Up until mid-2009, CHSM was the principalresearcher and author of research outputs. However,from mid-2009, NFP hospital associations became apartner in the identi cation, analysis and presentation of issues, albeit to varying degrees between associations. To illustrate, in March 2009, CHSM held a seminar in Yogyakarta to present its initial ndings to an audienceof NFP hospital associations, which were asked tocomment on the data.

However, at a second seminar in June 2009, CHSMsought a greater engagement of the associations. It wasat this time that the associations shared their nancialhardships and CHSM realised the reason for their stagnation. The academic review in December 2010was regarded by one researcher as a particularly goodexample of CHSM-NFP hospital collaboration. Therewas attempted, but ultimately limited, engagement of the Ministry of Health in the production of these outputs.Some stakeholders were cautious about engagingthe Ministry of Finance, and so it was marginal to the

research process, but provided instructive critiques onthe tax exemption regulation (described in section onLessons below).

Communications

Strategy: The ndings suggest that CHSM wasvery conscious of the need to package and targetits research, and of the role of communications inpersuading the policy community. CHSM in mid-2009 hired a communications of cer who formulated

and implemented a formal communications strategy.However, it is evident that the researchers themselveshad a clear vision of whom to in uence and when. Thisprocess ran parallel to the formal communicationsstrategy, but the two converged in their trust of interpersonal communication as the most effectivestrategy for in uencing Indonesians.

The NFP hospital associations were the rst audiencefor CHSMs ndings. The intent was two-fold: tooutline the extent of their role in health provision and to

galvanise them on their mission to provide health careaccess for the poor. CHSM held seminars in March and

It is clear that the research outputs were practicalrather than theoretical in nature, speci c to the contextof the contemporary Indonesian health system, andculminated in policy options that were oriented to action.

When CHSM embarked upon the initial mapping, it didnot have an a priori theory. One researcher recountedthe approach to the research:

We never had the need to prove any hypothesis. Wenever did a literature review prior to data collection [thatis, analysing the hospital registration data]. Only whenwe started getting the data did we ask why the datawas looking this way.

It can therefore be viewed that CHSM touched on

all three of Greenhalghs types, progressing froma compilation of data to a realisation of causesof the stagnation of NFP hospital growth, and anaccompanying appreciation of the consequences for health access by the poor.

The signifcance o fndings: The ndings of theCHSM research have been noted earlier, namely thedominance of NFP hospitals in the non-state hospitalsector and the stagnation in their growth over the past10 years. When asked whether the ndings were new

or unexpected, stakeholders highlighted differentaspects, providing insight into the varying knowledgeand policy stakes in the issue. The CHSM and Hubresearchers, despite their long focus on health systemdevelopment in Indonesia, noted, [I]n terms of healthcare provision, it is not shocking but still unexpected tosee how big the non-state sector is. The researchersexpected that for-pro t hospitals would be the major provider. The researchers also felt that the size of NFPprovision within the non-state hospital sector reallygot the attention of the Ministry of Health. For the

most senior CHSM researcher, what mattered mostwas the realisation of two different types of non-stateorganisationsfor pro t and not for pro tand thecharitable duties attached to the latter.

One NFP hospital association stakeholder suggestedthat they were shocked to realise that other countrieshad tax exemptions for non-state hospitals. TheMinistry of Health reported that the research ndingscrystallised the signi cance of NFP hospitals in healthservice coverage, especially in rural areas. They stated

that it provoked recognition of small NFP hospitals thatwere serving the people with their limited resources.


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dissemination event managed by the public relationscompany, PT Mirah Sakethi.

On the last day of the study visit, the group agreed

to establish three multi-stakeholder workinggroups focused on aspects critical to NFP hospitalsustainability. These were: (1) working group on taxrelief, led by Muhammadiyah and with the participationof the Ministry of Health; (2) working group on NFPhospital governance, led by the Christian Association, YAKKUM; and (3) working group on tax-deductibledonations to NFP hospitals, led by PELKESI. Theworking group on tax relief later became a formallyconstituted task force under the Ministry of Health. Although they varied in their effectiveness, these

working groups became ongoing vehicles for small-group policy deliberations on the issues triggered bythe CHSM research.

Materials and methods o communicating: Thefollowing communications materials and approacheswere used to disseminate the ndings and implicationsof the research, and elicit support for NFP hospitalshaving recourse to tax relief and nancial support fromgovernment.

E ectiveness o the communications strategy: Ineffect, CHSM implemented a communications and

June of 2009 to share statistical ndings and trendswith NFP hospital associations and a small number of Ministry of Health invitees. By mid-2009, the strategyconcentrated on in uencing the parliamentarians

drafting the Hospital Act. CHSM produced the rst four-page policy brief at this time, and the communicationsof cer distributed this directly to parliamentarians ontheir way into drafting sessions. Statistical analysis wasminimised in this brief, but it included a full articulationof CHSMs policy recommendations for NFP hospitals,including tax relief.

With the tax exemption clause in place from November 2009, the communications strategy subsequentlycentred on the facilitation of networks and online and

print media formats. In May 2010, the Hub and CHSMorganised a study tour to Melbourne for NFP hospitalassociations and the Ministry of Health, to foster collaboration between them and to expose them toequivalent not-for-pro t organisations in Australia,thus increasing their knowledge, con dence andengagement in drafting the tax exemption regulation.In Melbourne, the study group brainstormed thenext stage of the communications strategy. Thecommunications of cer was not involved in this visit,and instead concentrated on the development of awebsite and online forum and the hosting of a large

Date Material and Method Audience

July 2009 Policy Brief #1: email, hard copy distribution throughseminars and direct to people.

Individual NFP hospital associations,parliamentarians

June 2010 Article published in Kompas, providing positive coverageof NFP hospitals, focusing on the perspectives ofpatients.

General public

August 2010 Policy Brief #2: email, hard copy distribution throughseminars.

NFP hospital associations, Ministry of Health,Kompas

August 2010 Policy Brief #3: email, hard copy distribution throughseminars.


August 2010 Launch of website and online forum to provideinformation and feedback opportunity on the policy briefsand series of seminars hosted by CHSM,http://kebijakankesehatanindonesia.net/.


August 2010 Task force on tax relief formally constituted within theMinistry of Health and meets for the rst time.

Participants: NFP hospital associations, Ministry ofHealth, CHSM researchers

December 2010-September 2011

Task force meets a number of times. Participants: NFP hospital associations, Ministry ofHealth, CHSM researchers

March 2011 Meeting called by CHSM to urge forming of an overallNFP hospital association.

NFP hospital associations


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hospitals but was transferred to another directoratebefore the regulation was passed. The Ministry of Finance was not invited onto the task force. As noted,this was partly because the Ministry of Health and the

NFP hospital associations preferred to engage withFinance once a well-substantiated and supportedregulation existed.

Bringing individual NFP hospital associations together for the rst time to share research ndings and decideon joint action was an important step. It raised thepossibility of a collective identity and action. CHSMmade concerted efforts to reinforce the message of thespecial mandate of the NFP sector and its entitlementto tax relief on that basis. CHSM felt that this both

served as a reminder to NFP hospital associationsof their charitable mission and opened up a dialoguearound the need to actively dispel the doubt about thegood will and motives of NFP hospitals.

Lastly, it is worth contextualising CHSMscommunications efforts within academic norms.While there is an academic imperative to disseminateresearch ndings, this is typically through peer-reviewedpublication. CHSM is an example of a university-based centre that led research into an issue and then

converted that research for a communications andengagement strategy, as well as lobbying, legal draftingand facilitating networks and working groups for theresearchs uptake. The next section examines thepolicy in uence that the CHSM research contributedto, and should be read in light of this unusual level of academic activism.

Part 3: Policy Impacts and Implications

Policy infuence

In contrast to reviewing the contribution to changeof a three-year development program, the in uenceof research on policy does not necessarily have ade nitive timeline or overt boundaries on how thatin uence lters. Weiss, Murphy-Graham and Birkeland(2005) describe the in uence of evidence on policymakers as subtle, subterranean and progressive. They note the conceptual breakthrough provided bystudies in the late 1970s and early 1980s that showedthat policy makers may have found research to be

useful, even if they didnt act on it immediately. In morerecent studies they found: [D]ecision makers mightnot base their next decision on the evidence, but they

engagement strategy for the pursuit of policy changefor NFP hospitals. Policy Brief #1 had a demonstrableeffect on policy. The wording from the brief on the rightof NFP hospitals that are providing charitable services

to a tax exemption was incorporated directly into thetax exemption clause.

The policy briefs overall were the most substantialpublished products of the communications strategy. They were formatted for readability and eschewedheavy or scienti c content. After the rst, briefs 2and 3 were rebranded in the distinctive colours of theUniversity of Gadjah Mada so that the content would beassociated with the universitys credibility, and contactdetails were provided to invite dialogue with interested

parties. The series of briefs demonstrates an ongoingcommitment to communications. The researchersnoted that the briefs were a good way of ensuringconsistency of message, independently of the forumor the messenger. However, they did concede that thebriefs would need to compete for ministerial attentionalongside hundreds of other emails and websites thatthey receive. Positive feedback was received fromNFP hospital associations and the parliament, but ittook some time before the policy brief was eventuallycirculated to the Ministry of Finance.

The website generated a stream of participantfeedback via SMS text messaging for months after itslaunch, signalling that the site had reach and contentworth engaging with. The website has since expandedto cover a range of issues relating to health servicemanagement in Indonesia, and, at 24 June 2012, some42,841 visitors had been logged for the month.

Perceptions of the outcomes of the engagement strandof the strategy were mixed. The CHSM researchers

conceded that they did not suf ciently engage with theMinistry of Health in the rst two years, and so missedthe opportunity to deepen the ministrys understandingof the issues and support for the regulation. CHSMbasically relied on Policy Brief #1 to reach it.

On the other hand, the formation of a formal Ministryof Health task force on the tax clause, which includedNFP hospital association membership, was landmark.However, there was a high rotation of Ministry of Healthrepresentatives on the task force, and meetings were

often instigated by CHSM. For one period, the task force was chaired by the head of the Bureau of Law,who was very knowledgeable and supportive of NFP


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the importance of a focused and data-driven argumentfor the tax exemption, to enrich and strengthen theexisting academic review. The ministry has asked theresearchers to conduct additional studies and, despite

not having any funding for these studies, they are willingto host meetings and discussions within the ministry for this purpose.

The researchers felt that over the course of the twoyears, the NFP hospital associations had become awareof the need to engage in policy advocacy for their ownsurvival. There is now a willingness to address issuescollectively. Some of the smaller Christian hospitalassociations were also observed to be more active,although still careful. As of April 2012, the previously

disparate religiously af liated associations were takingtentative steps to formalise cooperation and form anumbrella association. This contrasts strongly with theperiod after the passage of the Hospital Act. At thattime, CHSM concentrated on the monograph and theNFP hospital associations did not meet at all. While itis likely that many factors have led to the intent to forman umbrella group, it is clear that CHSMs actionswere instrumental. The most senior CHSM researcher appealed strongly to the associations at a meeting inMarch 2012 that they needed to form a coalition andtake the lead in lobbying for their own interests. It is alsopossible that the research ndings from 2009, coupledwith the prolonged deliberation on their nancialhardships, convinced the NFP hospital associationsthat this action was needed. One stakeholder questioned whether CHSMs leadership potentiallydelayed the NFP hospital associations from takingownership and leadership. However, the formation of the umbrella group signals that this is now starting.

Serving as a proxy for the views of the general public,even the journalist from Kompas conceded a personalchange in views through his involvement. He waspersuaded by the CHSMs position there should bespecial treatment in the form of a tax reduction or agovernment subsidy for health care providers thatserve Indonesians living in poverty or in rural areas.

Interestingly, the attitude and behaviour that theresearch team most sought to in uence was the for-pro tpractices of the NFP hospital associations, especiallytheir boards of management. The preparedness of some hospital associations to discuss their for-pro tpractices and to describe the expectations of boards

often found themselves in uenced in more subtle waysin the longer term. This type of indirect in uence wascharacterized as enlightenment .

In the speci c case of CHSM, efforts to in uence policyfor NFP hospitals were active and ongoing at the timeof this case study. CHSM is embarking upon additionalresearch to justify the entitlement of NFP hospitals to taxexemptions, and CHSM and NFP hospital associationsare persevering with lobbying for the two draftregulations with the Ministry of Health. Examination of any in uence of CHSMs research is based on a reviewof the period January 2009-March 2012. It important toqualify that the changes discussed and dissected belowdo not necessarily capture the ultimate in uence of the

research. However, there are many to note at this stage.

It is pertinent to distinguish the two levels of change thatthe researchers sought: (1) Overall, the researcherspursued greater and sustained access to healthservices for the poor, especially in remote areas,through securing the nancial viability and commitmentof NFP hospitals as providers. (2) In particular, theresearchers sought a tax exemption for NFP hospitals.

Policy changes possibly related to Hub activities

or evidence:

(1) Changes in attitudes and behaviours of policy makers.

Of paramount importance, the research was not just aneffort to in uence policy, but brought policy attentionto the major role of NFP hospitals for the rst time. Asa research centre, CHSM is respected by the Ministryof Health, which referred to its sophisticated analysisand using more scienti c methods.

The researchers noted that, over the course of theresearch process, [T]here was a shift in the languageand tone used to refer to NFPs by the Ministry of Health,from being private entities to being partners. Oneresearcher quoted the Ministry as saying, We cannotrely on state hospitals alone. The private hospitals are our partners. In interviews for this case study, the Ministryof Health representative said that the ministry, the NFPhospital associations and CHSM need to join forces We complement each other in terms of what we do.

Change was also noted in the attitude of the Ministry of Health to evidence-based policy for the NFP sector. Theresearchers felt that the ministry was now convinced of


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Together, the two panels represent the change instakeholder relationships over time. In 2009, CHSMwas literally central to policy networking, and muchof the communication was through outreach to

disparate organisations. Parliamentarians were afocus of networking in this period, but only up until thepassage of the Hospital Act in November 2009. Bymid-2012, two new collectives had formed within thisnetwork. NFP hospital associations had organisedthemselves into an informal interest group, which nowincluded YAKKUM and HUSADA, and the Ministryof Health established a task force on tax exemptionthat included NFP hospital associations as members.Engagement of the Ministry of Finance occurred bythis time, through direct advocacy by CHSM; however,it had participated in only one NFP hospital associationmeeting. By mid-2012, CHSM remained active but wasno longer the intermediary

(3) Policy options or strategies considered.

As noted, the nancial burdens experienced by not-for-pro t hospitals and the call for tax concessions werenot a new issue for the associations or the Ministry of Health. Muhammadiyah said that PERSI is thankful thatthe research gave renewed attention to these issues.

However, in some ways, the research merely openedup the exploration of options. PERSI noted that all NFPhospitals want a tax exemption, but they have dif cultyidentifying which tax is most burdensome to them.

A tax exemption for not-for-pro t organisations( yayasan ) already existed under the Tax Act, but theregulation under the act excludes hospitals. A possiblestrategy being contemplated is funding a judicialreview to annul the regulation on the grounds that it isinconsistent with the higher authority of the act. This

would bring the exemption into effect for NFP hospitals,although it would be an expensive process without aguaranteed outcome.

(4) Policy articulation or policy instruments.

The incorporation of tax exemption for NFP hospitalsinto Indonesias rst Hospital Act is a remarkableaccomplishment. Moreover, this feat is directlytraceable to the research and in-person advocacyefforts of CHSM and NFP hospital associations withparliamentarians. Clause 1(h) in the act is taken from

the very wording of Policy Brief #1 and recognises thatall hospitals have the right to tax incentives.

and local governments that the hospitals be income-generating is signi cant. Indeed, one stakeholder saidthat the non-state hospital is sometimes regarded asan ATM for the bupati [district chief]. The researchers

understood that the reason for this behaviour derivesfrom their need to survive but nonetheless stressed theneed for their mission to be ful lled. In recent months,a number of associations, including Muhammadiyah,have reaf rmed their commitment to be not-for-pro tand to cease providing funds to their owners.

(2) Changes in policy-making structures.

CHSM convened stakeholders to discuss and ndoptions for the nancial sustainability of NFP hospitals.It is clear that, as a result, NFP hospitals have played adirect role in changes in policy making structures. Asnoted, NFP hospital associations were accepted asmembers of the parliamentary drafting group for theHospital Act, at CHSMs suggestion, and they werelater welcomed onto the Ministry of Health task forceon the tax exemption. The opening up of governmentpolicy forums to the non-state hospital sector occurredduring the research period. Previously, non-statehospitals had limited channels for representing their circumstances. They felt disheartened at the lack

of Ministry of Health interest in their reduced fundingcircumstances (interview, 26 April 2012). Typically, theywere advised of new regulations, but seldom consultedon their needs. So their inclusion in these forums is both apositive shift for the non-state sector speci cally and civilsociety in general. The Ministry of Health has been willingto work together with the NFP hospital associations indiscussing the draft regulations and options.

The researchers felt that their contribution hadbeen to open the door for policy dialogue for the

NFPs (interview, 22 March 2012). One NFP hospitalassociation agreed, observing that the research hadprovided the opportunity for people from differentorganisations who have the same concerns togather knowledge and experience and put on a ght(interview, 26 April 2012).

The changes that took place in policy making networksand nodes are depicted in Figure 2. The two panelsdepict the organisations involved in policy deliberationson NFP hospitals and the relationships between them

in mid-2009 and mid-2012. Organisations of similar type are shown in the same colour, and arrows depicteither uni-directional or two-way communication.


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FIGURE 2. POLICY NETWORKS AND NODES, 2009 AND 2012

A) PANEL 1: POLICY RELATIONSHIPS AT BEGINNING OF RESEARCH IN MID-2009

B) PANEL 2: POLICY RELATIONSHIPS AT TIME OF CASE STUDY IN MID-2012


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the research engagement process, and this has beena critical gap.

Secondly, with the drift of not-for-pro t hospitals to for-

pro t practices, there is a need for NFP hospitals todemonstrate a renewed commitment to their mandate. There is a government and public perception thatthe tax exemption is self-serving, especially given thehigh charges and VIP wards of the NFP hospitals thatthe decision makers see in Jakarta and other mainurban centres. In order to justify the tax exemption,NFP foundations need to be nancially transparent. As private foundations, they have not had such anoperating environment to date, and not all support one.

Lastly, progress on the regulation has also beenhampered by the fact that it crosses the jurisdictionof the ministries of Health and Finance, and alsorequires authorisation by the president, as opposedto a minister. As also noted, the Ministry of Health isprioritising the regulations arising from the act.

A separate development that can be linked to theCHSM efforts was the promulgation of a new Ministry of Health decree in 2011. The decree allows NFP hospitalsto apply to the ministry for non-monetary forms of

assistance. This decree was drafted with the help of thetask force that was constituted for the tax exemption,and the wording of the decree can be traced to arecommendation in Policy Brief #3. However, to date,the decree has not been well publicised, and there isno mention of it at all on the Ministry of Health website.

Policy implications

Impact o the changes on health systemper ormance: The impact of the changes in policy andpolicy processes associated with the CHSM researchwill take shape over the longer term. However, severalitems deserve note in relation to impacts on healthsystem performance.

One outcome of the research was the establishmentof a twinning program between well-resourced andpoorer NFP hospitals in Nusa Tenggara Timur under the AusAID-funded Australia-Indonesia Partnershipfor Maternal and Neonatal Health. This arose throughthe Hub directors role as a technical adviser to thepartnership, after he became aware of the ndingsabout the sparse distribution of state hospitals in theprovince.

Importantly, the act enshrined a new delineation of hospitals based on ownership. Whereas the termprivate previously referred to all non-state hospitals,the Hospital Act has limited the term private hospitals

to for-pro t non-state hospitals. NFP hospitals arenow considered public hospitals. The exhortatorylanguage on the right of public hospitals to taxincentives was compelling content for a policy brief but is problematic in legislation. A right is reliant on aduty-bearer to ful l his or her obligations, and it is lessspeci c and enforceable than a clause which mandatesgovernment action by a certain date. However, it isnonetheless a coup in terms of the in uence of theresearch on policy change.

As explained, after the passage of the Hospital Act,regulations were needed to implement it. CHSMdrafted the tax exemption regulation for submission tothe Ministry of Health in 2010, as well as a second draftregulation providing for donations to NFP hospitalsto be tax deductible. The rst regulation is currentlyunder review by the Bureau of Law within the Ministryof Health. The progress of these regulations has beenslow and, arguably, has stalled. The reasons for thisare explored below, but CHSMs authorship of the tworegulations is worthy of note as an example of the directin uence of the researchers on policy instruments.

(5) Implementation of policy or changes in practice.

The changes enshrined in the Hospital Act wereprofound, but their conversion into changes in practicehas been halting and has met with resistance. Despitethe timely production of draft regulations, at the timeof the study the regulations for the implementation of the tax concession had not been issued, although theyare required within two years of the passing of any law.

Several reasons for this are suggested:First, the University of Gadjah Mada did not concertedlyengage the Ministry of Health in its advocacy efforts atthe time of the Hospital Act drafting. The researchersfelt that, as a result, the ministry is less informed, andarguably less convinced, of the rationale for the taxexemption. The conversion of the tax exemption into aregulation requires the good of ces of the Ministry of Health with the Ministry of Finance; the latter expectsHealth, as its technical counterpart, to argue the

case. The researchers bypassed both ministries andadvocated directly to parliamentarians. This strategyworked, but the Ministry of Health was missing from


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Changes in law: The de nitive in uence was the use of research ndings and products to enshrine supportivepolicy for NFP hospitals in the Hospital Act, namelythe tax exemption and the revision of their status from

private to public providers. Another in uence toconsider is the engagement of the CHSM researchersin the drafting of laws, as distinct from lobbying for themto be changed. Although the two separate regulationdrafts are yet to be approved, they have constituted avehicle for dialogue about appropriate further changesin law, and they represent the direct engagement of researchers to in uence the letter of the law, whether passed or prospective.

Changes in attitude and behaviour o policy

makers: Findings on the proportion of NFP hospitalswithin the non-state sector provoked genuine surpriseand an increase in policy maker interest. The researchappears to have highlighted, if not legitimated, theimportance of a traditionally neglected sector, NFPhospitals, to the whole health system. This has usheredin a greater acceptance of their role and needs, evenif reservations endure about the underlying motivesof NFP hospital associations. The recommitment of these associations to their charitable mandate, arisingfrom dialogue with the researchers, was an importantchange from current for-pro t practices, especially for the poor.

Changes in engagement in the policy process: The rst level of in uence worth noting is that theresearch prompted previously non-engaged actorsto realise that they have a role to play in health policy. Through the research, the NFP hospital associationsconvened as a group for the rst time to addresspolicy issues in common. Given the diversity of faithsrepresented and their different histories and pro les,this cooperation is signi cant and provides a platformfor sustained advocacy and input. The opening up of parliament and the Ministry of Health to NFP hospitalswas unprecedented. It is also important that over thecourse of the research, CHSM shifted from being theintermediary between policy stakeholders to providingsupport to the NFP hospital associations only.

Links between the research process and policydevelopment: The conclusion drawn by this casestudy is that the in uence of CHSM and its researchupon selected policy changes is vivid and easily traced. This was not the expectation of the authors, who were

Stakeholders agreed that the research highlightedthe importance of non-state hospitals, especially not-for-pro ts, to the health system. The research alsoreinforced the shortcomings of JAMKESMAS for

NFP hospitals. Add to this the meetings between theMinistry of Health and the NFP hospital associations,and it is possible to speculate that the research hasshifted the Ministry of Health to appreciate better therole of NFP hospitals in services for the poor. There isnow an opportunity for the NFP hospital associationsto partner the government in policy making. The statesector,

Documents

Examining the degree and dynamics of policy influence: A case study of the policy outcomes from Hub-funded research into not-for-profit hospitals in Indonesia