Financial viability analysis of Dr. Soejono Selong Hospital in Indonesia, 2008

To analyze the financial viability of the Dr.Soejono Selong Hospital in Indonesia in the fiscal year of 2008. This study is retrospective using cost data from providers’ perspective with step down method analysis. It could be found that the total cost of the Dr. Soejono Selong Hospital was 20,852,759,000 rupiah. The proportion of labor cost, material cost and capital cost was 45.93%, 26.35%, and 27.72% respectively. The unit cost of Inpatient Department was 295,960 rupiah compared to the unit cost of Outpatient Department which was 109,105 rupiah. The total revenue was 26.902.360.57 rupiah, while 67% of the total revenue had been contributed from government budget support, and 5.1% of the total revenue was from the Civil Servant Insurance Scheme. Moreover, 11.7% of the total revenue was from the Health Assurance Scheme, and 16.3% of the total revenue was from out of pocket. The revenue from health assurance and out of pocket (initial revenue), about 65%, had to be turned over to the local government, and only 35% of the revenue left to be managed by hospital and used to finance fringe benefit and medical device. Under this condition total cost recovery was 0.96 which means that the revenue could not cover the total cost. However, with the initial revenue, total hospital cost recovery was 1.29, and non-budget cost recovery was only 0.43. Out of pocket was the payment mechanism scheme provided maximum cost recovery for IPD (1.69) and the minimum was health assurance (0.34), while for OPD, the scheme provided maximum cost recovery was also out of pocket, and the minimum belonged to civil servant insurance (0.70). The unit cost was relatively high due to the problem of not optimum of the utilization rate of hospital services, and the inefficiency in resource allocation and wastage in hospital. The recommendations to hospital administrator are to work on improving quality of services and containing the cost particularly for labor and material cost.