The double-edge sword of corporatisation in hospital sector: Evidence from Indonesia

Hoping to improve their health system performance, many countries have corporatised their hospitals in the past twenty years. What this means for hospital performance remains as yet largely unknown. This study looks into the association of corporatisation and hospital performance in Indonesia. We apply panel data regression analysis to survey data on 54 public hospitals in East Java province. Our analysis suggests that corporatisation is associated with higher hospital income and expenditure, but fails to improve efficiency. These findings suggest that hospital corporatisation policy in Indonesia should increase emphasis on efficiency rather than on financial performance alone.