LEGAL MEMORANDUM XII

______________________________________________________

Date : 18 July 2017

To : EJC
Cc : ME
From : EGS
Subject : Hospital Business

MAIN LEGAL BASIS

1. Minister of Health Regulation Number 56 of 2014 on Classification and

Permit for Hospital;
2. Law Number 44 of 2009 on Hospital

BACKGROUNDS

Hospitals can be established and organized by the central government,

local government, or the private sector. Hospital established and run by
the Government is technical implementing units of governmental agencies
whose main duties and functions are in the health sector or other
governmental agencies (Police, National Army, ministries or non-
ministerial government agencies).

Hospitals established by the regional government should be a local

technical unit or regional technical agency organized on the basis of
financial management of local public service bodies in accordance with the
provisions of legislation. Meanwhile, establishment by the private sector
shall be in the form of a legal entity whose business activities are only
engaged in the field of hospitals.

This memorandum will specifically provide the establishment of Hospital in

Indonesia including the necessary permits for the business.

ANALYSIS

A. FORMS AND CLASSIFICATIONS OF HOSPITAL

Based on its form, the Hospital is divided into:
a. permanent hospital is a permanently established hospital for a long
time to provide a full range of private medical services that offer
inpatient, outpatient and emergency care services.
b. moving hospital is a hospital that is ready for use and is temporary
within a certain period and can be relocated from one location to
another.
c. field hospital is hospital established in certain locations during
emergency conditions in the implementation of potentially
disastrous activities or during the period of emergency response.
Based on the type and classification of services provided, the Hospital is
categorized in the General Hospital and Special Hospital. The General
Hospital is a hospital that provides health services in all areas and types
of diseases. On the other side, Special Hospital is a hospital that provides
primary care in one area or one particular type of disease based on
discipline, age group, organ, type of disease or other specificity

B. TYPES OF CLASS IN HOSPITAL INDUSTRY

Hospitals are divided into two main types of class, which are General
Hospital and Special Hospital.

In the General Hospital, it has more specific types as follow:

a. Class A General Hospital is a general hospital having facilities and
medical service capabilities of at least 4 (four) basic specialists, 5
(five) medical support specialists, 12 (twelve) other specialists and
13 (thirteen) subspecialists.
b. Class B General Hospital is a general hospital having facilities and
medical service capabilities of at least 4 (four) basic specialists, 4
(four) medical support specialists, 8 (eight) other specialists and 2
(two) subspecialties.
c. Class C General Hospital is a general hospital having facilities and
medical service capability of at least 4 (four) basic specialists and 4
(four) medical support specialists.
d. Class D General Hospital is a general hospital having facilities and
medical service capability of at least 2 (two) basic specialists.

In the Special Hospital, it has more specific types as follow:

a. Class A Special Hospital is a special hospital having the facilities and
capabilities of at least a specialist medical service and subspecialty
medical services according to the complete specialist.
b. Class B Special Hospital is a special hospital having the facilities and
capabilities of at least a specialist medical service and subspecialty
medical services according to limited specialist.
c. Class C Special Hospital is a special hospital having the facilities and
capabilities of at least a specialist medical service and subspecialty
medical services according to minimal specialist.

C. DUTIES AND RESPONSIBILITIES OF HOSPITAL

In carrying out its duties, the Hospital has the following functions:
a. The provision of medical treatment and health recovery services in
accordance with hospital service standards;
b. Maintenance and improvement of individual health through the
second and third level medical services as required by medical
needs;
c. Enforcement of education and training of human resources in the
framework of improving the ability to provide health services; and
d. Implementation of research and development and screening of
health technology in order to improve health services by taking into
account the ethics of health sciences.
D. ESTABLISHMENT PERMIT
Establishment permit is a permit granted to establish a hospital after
meeting the requirements for establishment.

The establishment permit is given for a period of two years and may be
renewed for one year and may be renewed for one year. An extension of
the establishment permit is obtained by applying no later than two
months before the term of the establishment permit ends by attaching the
establishment permit.

The owner or manager that will establish the Hospital shall apply for the
establishment permit to the licensor in accordance with the Hospital
classification to be established by enclosing:
a. Photocopy of deed of incorporation of legal entity in accordance
with the provisions of laws and regulations, except for Government
agencies or Regional Government;
b. Feasibility study;
c. Master plan;
d. Detail Engineering Design;
e. Environmental management and monitoring documents;
f. Photocopy of land certificate / proof of ownership of land on behalf
of the hospital owner's legal entity;
g. Permit statute of interference (Hinder Ordonantie/HO);
h. Business Place Permit (SITU);
i. Building Construction Permit (IMB);
j. Recommendations from health authorities in provincial/regency/
municipal government according to hospital classification

E. OPERATIONAL PERMIT.
Operational permit is a permit granted to conduct health services after
meeting the requirements and standards.

Such operational permit is granted for a period of five years and may be
renewed as long as it meets the requirements. Extension of operational
permit shall be made by applying for extension not later than six months
before the expiration of operational permit.

If the operational permit expires and the owner of the Hospital has not
requested for an operational permit, the hospital must terminate its
service activities except emergency services and the patient who is
currently in the hospital.

To obtain an operational permit, the manager submits a written

application to the licensing officer in accordance with the Hospital
classification by attaching the following documents:
a. Establishment permit of the hospital, for the application of
operational permit for the first time;
b. Hospital profile, including vision and mission, scope of activities,
strategic plan, and organizational structure;
c. Content of self assessment instrument according to hospital
classification which includes service, human resources, equipment,
building and infrastructure;
 d. Blue Print and photos of buildings and supporting facilities and
infrastructure;
e. Permit to use building (IPB) and functional certificate;
f. Documents on sustainable environmental management;
g. List of human resources;
h. A list of medical and nonmedical equipment;
i. Lists of pharmaceutical preparations and medical devices;
j. Minutes on the result of the test of the function of the health
equipment accompanied by the completeness of the utilization
permit from the authorized institution in accordance with the
provisions of the laws and regulations for certain equipment; and
k. Administrative and management documents. The administrative
and management documents include:
i. Legal entity or ownership;
ii. Hospital bylaws;
iii. Medical committee;
iv. Nursing committee;
v. Internal examination unit;
vi. License of health work license or work permit;
vii. Standard operating procedures for medical staff credentials;
viii. Letters of clinical staff assignment; and
ix. Certificate of test result / calibration of medical device.

F. MISCELLANEOUS
Changes in operating permits are resumed in case of change:
a. Ownership
b. Type of Hospital
c. Hospital Name; And or
d. Hospital Class

Changes in operating license are re-submitted by enclosing:

a. Notarial deed, decision letter from authorized official, and/or court
decision concerning change of hospital ownership status;
b. Recommendation from health authority official at
provincial/regency/municipal government according to hospital
classification;
c. Feasibility studies and strategic plans for hospital type of changes
that include feasibility in service, socio-economic, policy and
regulatory aspects; and
d. A letter filing on change of operational permit from the owner of the
Hospital

Hospital permit may be revoked if the permit is expired; no longer meet

the requirements and standards; proven to violate the laws and
regulations; and/or by court order in the context of law enforcement.