Indonesia's healthcare system has been under immense pressure, with the COVID-19 pandemic exposing its vulnerabilities and limitations. In response, the government has introduced sweeping reforms through the New Health Law and its implementing regulation, aiming to revitalise the sector and attract foreign expertise.

Lawyers in Indonesia say these changes could transform the country's healthcare landscape, but not without potential legal challenges and implementation hurdles.

 

The COVID pandemic brought Indonesia’s healthcare system to its knees, with the world’s fourth-most-populous country grappling with over 6.8 million cases. This unprecedented medical ordeal provided a wake-up call to the Indonesian government to overhaul its domestic healthcare sector.

In July, the government issued the new implementing regulation (GR 28 of 2024) of the New Health Law (Law No.17 of 2023, or a new omnibus health law) that entered into force in August last year.

The Health Law 2023 introduced a number of important changes, including enhancing the prospects for foreign-trained healthcare professionals to operate in Indonesia.

“The reformations initiated by the Indonesian government include more relaxed licensing requirements and opportunities for healthcare professionals trained overseas to practice in Indonesia,” says Zippora Siregar, senior partner at Indonesian law firm William Hendrik & Siregar Djojonegoro (WH&SD).

 

MANPOWER BOOST

Conventionally, all non-locally trained healthcare professionals need to undergo competency tests and obtain two key licenses before they can practice in Indonesia. The New Health Law and GR 28 of 2024 have relaxed competency evaluation requirements for healthcare professionals who have received their training abroad and intend to practice in Indonesia.

Under the reform, overseas-trained Indonesian professionals, including overseas graduates of recognized foreign universities who have practiced overseas for at least two years, are now exempted from the competency tests. The exemption also extends to foreign professionals including qualified experts in specific medical fields with evidence of competency and at least five years of experience.

 

“As one of the Indonesian government’s top goals is to promote Indonesia as a medical tourism destination by attracting foreign patients to seek healthcare in Indonesia, it could potentially increase foreign investment and collaboration between international and domestic healthcare providers in Indonesia’s healthcare sector which is now growing rapidly.”

- Zippora Siregar, William Hendrik & Siregar Djojonegoro

 

Despite strong opposition from domestic doctors, Siregar is confident that this move could benefit Indonesia’s overburdened healthcare industry by boosting the development of medical tourism.

“As one of the Indonesian government’s top goals is to promote Indonesia as a medical tourism destination by attracting foreign patients to seek healthcare in Indonesia, it could potentially increase foreign investment and collaboration between international and domestic healthcare providers in Indonesia’s healthcare sector which is now growing rapidly,” explains Siregar.

However, Siregar contends that this change is not without legal challenges, including the technical regulations of the competency evaluation process with the medical authority. It’s also essential to address the procedure and timing required in issuing the license to practice for foreign medical professionals.

“This is very critical considering the competency evaluation serves as a prerequisite to obtaining the license to practice in Indonesia,” she adds.

Other key reforms include the creation of a comprehensive National Health Information System managed by the Ministry of Health. The system is designed to consolidate all current health information systems managed by central and local authorities, healthcare institutions, and the broader community, including telemedicine service providers. Under established regulations, the public will have the opportunity to access both public and personal data housed within the Information System.

The establishment of the National Health Information system has given rise to an onus on foreign investors operating healthcare facilities or services in Indonesia to ensure the protection of data privacy.

“The Indonesian government has a key role and must approve any transfer of data and information managed by a healthcare information system operator to entities outside Indonesia,” says Siregar.

Siregar first notes that under the new rules, healthcare facilities, such as hospitals, must integrate their healthcare information systems with the National Health Information System.

Secondly, operators of healthcare information systems are required to safeguard the security of data and information pertaining to individuals' health. “This requirement is designed to provide assurance and should be noted by healthcare facility operators. This is in line with the requirement under Indonesian Personal Data Protection,” explains Siregar, adding that the operators must inform the owners of any breaches in their medical data or information protection.

 

MONEY PROBLEMS

Under the old Health Law, at least five per cent of the national budget and a minimum of 10 per cent of a regional government budget need to be allocated to the health sector.

In a bid to enhance the efficiency of the national government’s health expenditure, the New Health Law has now replaced the mandatory spending allocation for healthcare with a performance-based budgeting system. The allocation budget will be set out in the  Health Sector Masterplan, a document that will be determined by the president and the central government.

“This masterplan will guide the allocation of resources and the achievement of specific objectives,” explains Siregar, but noting that the details of the master plan are still unclear at this stage.

This arrangement has also given rise to questions on whether the abolition of mandatory health sector spending will affect public-private partnerships (PPP) or investment opportunities in healthcare infrastructure and services in Indonesia.

Siregar acknowledges that by removing mandatory health sector spending, a PPP project's structure of investment in healthcare infrastructure and services may be affected. “But based on the precedents, the government support will generally be tailored to the project's needs,” she says.

 

NEW GUARDIAN

In a move that is expected to receive endorsement by the public, the New Health Law has tasked a new disciplinary council, or majlis, with addressing the throning issue of medical malpractice.

“In case of an indication of unlawful conduct in health services, the relevant medical or health personnel must first seek the preliminary recommendation of an assembly (majlis) to be formed by the Minister of Health that will be responsible for the professional disciplinary matters,” notes Siregar.

The disciplinary council is supposed to give its recommendation after receiving a written request from the investigators of the Indonesian national police. The recommendation will address the question of whether an investigation may be conducted.

The council will also have the power to impose sanctions. “According to New Health Law, a medical or healthcare practitioner whose negligence results in a patient suffering severe injury shall be subject to imprisonment for up to three years or a fine of up to 250 million rupiah or $15,720; or death, for which the penalty is imprisonment for up to five years or a fine of up to 500 million rupiah,” notes Siregar.

But the new law hasn’t been clear about the interpretation of “mistakes” and “negligence.” “This lack of clarity could lead to different interpretations and judicial discretion, posing potential challenges in the implementation of the new regulations,” says Siregar.

In addition, “There is also a question as to whether this medical liability provision is also applicable to the overseas-trained healthcare professionals who is practicing in Indonesia and how to enforce it,” she adds.